NC schools are struggling to survive while rich people and corporations keep getting tax cuts

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February 27, 2023
In Commentary, NC Budget and Tax Center

In 2013, the North Carolina General Assembly started cutting taxes (mostly for big corporations and wealthy people). Most years since have seen lawmakers continue to divert public funds from things like schools, childcare, broadband, water quality, and public safety, to the pockets of out-of-state corporations and the wealthy few. These cuts also put more of the burden on middle- and low-income taxpayers while letting their richer neighbors off the hook. This post is part of a series bringing light to how tax cuts have failed to deliver promised benefits while undermining our ability to pay for things North Carolinians need.

Do you wake up wondering if you’re going to be late to work because the school bus didn’t show up on time … again?

Or when your kid is going to have a full-time, permanent, teacher?

Or why your child comes home crying because they’re not getting what they need to overcome a learning, language, or social barrier?

Or when the A/C in the school gym is going to get fixed?

Or, or, or…

If so, you’re not alone. Things in our schools really are getting worse, and it’s directly because of policy choices being made in Raleigh.

Wave after wave of tax cuts have diverted public dollars into the pockets of wealthy people and corporations, all while the General Assembly has refused to give schools the funding they need to find and keep teachers, bus drivers, janitors, counselors, and other people it takes to nurture our children. At the start of this school year, there were more than 5,500 vacant teaching positions in North Carolina, and less than 500 of those spots had been filled within the first 40 days of the school year.

It didn’t used to be this way. Read more

NC continues to gain jobs, but is losing state employees over pay that isn’t keeping up with inflation

By
November 21, 2022
In NC Budget and Tax Center, News

State labor market data released Friday shows that the economic recovery jumpstarted by federal aid continued through October in North Carolina. North Carolina has added jobs every month over the past year, and the state now has more than 200,000 additional jobs than before the COVID-19 pandemic.

On average over the past six months, we’ve gained nearly 18,000 net jobs per month. The most recent hiring data, from September, also shows that hiring has remained robust even as economic headwinds are causing some concern. North Carolina had 216,000 hires in September, only slightly below the same time last year when we had 233,000 hires.

Amid this relatively sunny topline news is a dark cloud created by our state legislature: a failure to ensure that public servants’ pay keeps up with inflation, which means that North Carolina has continued losing state employees that provide the key services our communities need.

Public employee raises over the past two years have fallen far short of inflation so that when we look at real incomes, many state employees effectively lost over 2.5 weeks of pay when current salaries are compared to last year’s. As a result, North Carolina has lost thousands of state employees since last October. We’re not seeing the same losses in the private sector, local government, or federal government, which have all added jobs over the past year. This indicates that this problem stems directly from the policy choices made in Raleigh not to adequately raise employee pay, and instead to divert over $4.1 billion into reserves.

While inflation is gradually coming down, low pay is making is hard to fill vital positions across the state. North Carolina started the school year with over 11,000 vacancies in our public schools. At the Department of Environmental Quality — the agency tasked with protecting air quality and ensuring our drinking water is safe, among other things — more than 1 in 5 positions are vacant. High vacancy and turnover rates at the Department of Health and Human Services mean longer waitlists and fewer people served for crucial services like psychiatric care, even as need has increased.

It’s crucial to address these shortages not only to meet ongoing needs in our state, but also to make sure that North Carolina is ready to steward a wide variety of federal funds that will be made available to our state in the coming years through the federal Infrastructure Investment and Jobs and Inflation Reduction Acts.

Logan Rockefeller Harris is a Senior Policy Analyst with the NC Budget & Tax Center. Patrick McHugh is the BTC’s Research Manager and contributed to this post.

Local job data: Nearly 75% of NC counties still have fewer people working than pre-pandemic

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February 3, 2022
In Commentary, NC Budget and Tax Center

The last local jobs report for 2021 is in. Significant strides toward recovery were made, but true economic healing has still not been realized in many communities across North Carolina.

Several rounds of federal aid have helped families navigate tough times and made the recovery from the COVID-19 recession much faster than we saw in the wake of the Great Recession. North Carolina has recovered most of the jobs that were lost in the first few months of the pandemic, while at this point in the Great Recession our state was still losing jobs. These are very different kinds of crises to be sure, but there’s no doubt that massive federal assistance in the form of Unemployment Benefits, housing assistance, deferred student loan payments, and more have kept families afloat and hastened the economic recovery.

Chart showing a better federal response to COVID-19 has led to a faster recovery than during the Great Recession.

For all of the progress made in the last year, the project of rebuilding is far from over. The statewide unemployment rate for December (3.7 percent) can make it look like North Carolina has recovered from the shock of COVID-19. Sadly, that’s not the full story in many communities across the state. Nearly three-quarters of our counties still have fewer people working than before the pandemic arrived. In many cases, the losses during COVID-19 piled on top of longer-term declines that date back to before Great Recession. Almost half of North Carolina’s counties have fewer people working than before the economic collapse of 2008, a testament to the fact that we have not made the kinds of investments many, particularly rural, communities need to reverse the flight of jobs to a few urban communities.

The story is not just about the rural-urban divide. Some cities have now recovered the jobs lost to COVID-19, but most are still trying to dig out of the hole. Employment in the Triangle, Wilmington, Greenville, and the Morganton area has surpassed pre-COVID levels. On the other hand, the Greensboro-High Point area is still more than 14,000 jobs below where it was before the pandemic, the Charlotte area is over 15,000 jobs short, and Asheville is still trying to replace 6,500 jobs.

The big question is whether we can muster the political will to keep investing in rebuilding a more economically just state. Last year, our legislature continued to hand out tax breaks to huge corporations instead of supporting people and communities that need it. Federal aid over the past few years made up for some of our state leaders’ failure to do what was needed, but the uneven pace of recovery shows there’s still a lot of work to do.

If you’re interested in the jobs picture in your community or across the state, visit our labor market page to see maps and charts of what’s going on.

Patrick McHugh is the research manager at the N.C. Budget and Tax Center.

The economy in 2022: What will happen? What should happen?

By
February 1, 2022
In Commentary, NC Budget and Tax Center

Predicting the future is messy business even in the most stable of times, and whatever you want to say about the current moment, stability certainly isn’t in these days. That’s why we’re not going to join the ranks of economists putting out forecasts in January.

But that doesn’t mean we no sense of what some of the big stories of 2022 are likely to be. We here at BTC have our eye on a lot of things these days, and here are a few of the big questions that will shape the economic reality people in North Carolina will be dealing with.

Will government investments continue to speed the recovery?

Without swift, massive, and sustained government assistance, COVID-19 could easily have created an economic collapse unlike anything in recorded history. It may be hard to imagine given the enormous human toll that this pandemic has taken, but it could have been MUCH worse. Instead, we’ve seen a lesson in the power of the public purse to keep families above water and speed an economic bounce back.

Chart showing a better federal response to COVID-19 has led to a faster recovery than during the Great Recession.

Compared to the Great Recession when the federal response was much smaller, the recovery from the initial shock of COVID-19 has been remarkably swift. November marked 20 months since the state of the COVID-19 recession, and North Carolina is within 1 percent of pre-pandemic employment levels. Twenty months into the Great Recession and North Carolina was still losing jobs and wouldn’t recover all of the lost employment for more than six and a half years. Of course, the cause of these two recessions were very different, but there’s no question the much larger federal response is a big reason the recovery has been so much faster.

Several major federal packages have kept people from going broke and left some families financially better off than before the pandemic. Supplemental unemployment insurance benefits, stimulus checks, rental assistance, fiscal aid for state and local governments, and more across multiple federal laws helped keep food on tables, roofs over heads, and customers with cash in hand to support businesses.

The big question for 2022 is whether support for people and communities still trying to rebuild will continue. We’re not out of the woods yet, and people have been wrongly predicting the end of this pandemic for a long time. People are still getting sick and losing income, struggling with child care, paying rent, getting enough to eat, and other barriers to financial security. Many forms of aid and economic stimulus (like federally funded unemployment insurance benefits) have already been cut off, and there’s a real risk that the recovery will be slowed by lack of public investment.

What happens with inflation and how do we respond?

Inflation has become a legitimate concern in the past year as a lot of basic necessities have become more expensive. The official measure in December indicated the cost of the average set of goods consumers buy across the country was 7 percent higher than at the end of 2020. This level of inflation is certainly higher than anything we’ve seen in the past few decades, but nowhere near what occurred during parts of the 1970s and 1980s when inflation really did create enormous economic problems. So long as inflation stays constrained near its current levels, it’s unlikely to threaten the course of the recovery in any major way.

Some things are getting more expensive A LOT faster than others, though. Some of the biggest increases were for commodities that already consume a larger share of low-income people’s budgets than their more affluent neighbors. Gasoline was just about 50 percent more expensive at the end of 2021 than a year earlier, piped gas used in homes was 24 percent more costly, and the price of used cars and trucks was up by more than one-third. Another major question is whether the cost of rent will continue to rise. The cost of shelter increased over 4 percent during 2021, but a lack of housing stock and increasing housing costs in communities that were once more affordable could pose a major concern for lower-income renters.

Perhaps even more than inflation itself, the big question in 2022 is what policymakers will do in response. As noted already, the current level of inflation is not a systemic problem yet, but it there are real risks that our policy response may be.

The biggest concern is whether inflation is used to justify cutting off support for communities and people still being financially hurt by COVID-19. Some lawmakers like West Virginia Senator Manchin have leaned on concerns about inflation to justify opposing additional federal support, like the Build Back Better plan. Don’t believe it. Inflation is being propelled by a host of factors that have nothing to do with COVID aid, like strained broken supply chains, corporations jumping on the opportunity to pass on costs to consumers, and gas prices. We can help people hurting because of COVID-19 without driving costs much higher, so the big question for 2022 is whether we inflate the risk of inflation and stop investing in a real recovery.

Supporting a strong recovery does mean helping people who are truly being affected by rising costs. With energy, food, shelter, and transportation getting more expensive, low- and middle-income North Carolinians are going to feel the squeeze the most. Failing to provide assistance could make it harder for people to work, which would create economic problems that affect everyone.

Will the recovery become more equitable? Read more

It’s time to use the state budget to fix North Carolina’s leaky roof

By
September 11, 2021
In Commentary, NC Budget and Tax Center, State Budget

Years ago, a traveling salesman was stuck outside in a thunderstorm, miles from the nearest town. At the next house he came to, a man was standing in the door watching the rain pour. The salesman walked up and asked whether he might be able to stay the night while the storm passed.

“Well,” the man replied, “the only place I’ve got is in the kitchen, and the roof leaks so bad in there you’d get just as wet as staying out here.”

Taken aback, the salesman asked, “Why don’t you fix the roof?”

“Are you crazy?” the man replied. “It’s raining out here!”

“’Course I don’t mean now,” the increasingly frustrated salesman retorted. “Why don’t you fix it when it ain’t raining”?

“’Cause then it ain’t leaking.”

There’s some wisdom in that old country yarn about where North Carolina was when COVID-19 arrived. Our state government is like the roof in the story. We had been through the longest period of uninterrupted economic growth in generations, but leaders allowed our shared home to fall into disrepair. As soon as the storm started, it became even more painfully evident how years of neglect had left our public institutions unable to cope with a crisis.

We also allowed an economic situation to evolve that left far too many families with little or no shelter of their own to fall back on. Big corporations and the ultra-rich did just fine in the wake of the Great Recession, but most families and working people in North Carolina didn’t have the savings to survive without work or income when the pandemic shuttered businesses across the state. Like the traveling salesman, millions of North Carolinians were left out in the storm with little shelter in sight.

Now the combination of broken public institutions and a top-heavy economy are undermining the pace of our recovery. As we document in a recent report, hundreds of thousands of North Carolinians face enormous barriers in their effort to rejoin the labor force. Around 250,000 people in our state, mostly women, can’t work because they don’t have access affordable child care; roughly 100,000 have site concerns about contracting or spreading COVID-19 by working in person, 50,000 lack reliable transportation, and many either can’t access the jobs that do exist or lack broadband needed to work remotely or search for a job. In most of these cases, people of color and women who had the least financial cushion to fall back on when they lost jobs due to COVID-19 face the largest obstacles to rejoining the labor market.

The good news is we have an opportunity to rebuild our collective home. As legislative leaders huddle behind closed doors to hash out a budget, the question is whether they will make the long-overdue choice to fix our public institutions or continue down the path that left us out in the rain when COVID-19 darkened the skies. After years of not passing a budget, North Carolina has billions of dollars sitting in the bank that could be used to help people still struggling to make it through the pandemic. Unfortunately, the proposals made by both the Senate and House failed to tap into those resources and would continue to hand out tax cuts to profitable corporations. State action is also urgently needed to make good use of any potential additional federal support. Years of neglect made it hard for the state to deploy previous rounds of state aid, so investment is needed to get any future relief to where it is most needed.

It certainly hasn’t stopped raining yet, but it’s time to get those hammers swinging to put a new economic roof over the people of North Carolina.

Patrick McHugh is the Research Manager with the Budget & Tax Center.

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