The McCrory administration, state legislative leaders and conservative advocacy groups have been making repeated claims of late that their policies are responsible for turning around the state’s economy after the Great Recession. Unfortunately, the data don’t support this conclusion. In fact, a new report finds that the state’s labor market continues to lag the rest of the nation.
If the claims of legislative leaders were true, North Carolina would have seen faster job creation and bigger drops in the unemployment rate than in the nation as a whole. But this is not the case, according to a new report from the Budget & Tax Center, a project of the North Carolina Justice Center. Instead, North Carolina’s labor market has failed to catch up to the rest of the nation in the years since 2011. In fact, the state’s rate of job creation has been identical to the nation as a whole, while the state’s unemployment rate has remained persistently higher than the national average.
“This is the case of the jobs miracle that never happened,” said Allan Freyer, policy analyst with the Budget & Tax Center and author of the report. “If tax cuts and other policies enacted by the General Assembly were such great job creators, the state would have surpassed the rest of the nation in terms of job creation and unemployment over the past two years, but this has simply not happened.”
Legislators have touted the fact that unemployment dropped 1.7 points over the past two years, from 10.4 percent in August 2011 to 8.7 percent in August 2013. However, unemployment nationally dropped 1.8 points over the same period, to a low of 7.3 percent in August 2013—meaning that North Carolina is performing worse than the nation in terms of reducing unemployment.
While the number of unemployed people has officially dropped since August 2011, this is only because thousands of jobless workers gave up on their job search and dropped out of the labor force, not because they actually found jobs, the report said. These discouraged workers are no longer counted among the unemployed even though they aren’t working.
Any marginal job growth in the state is largely due to steady growth in the national economy as opposed to decisions made by state policymakers. Since August 2011, North Carolina experienced 3.4 percent growth in total non-farm jobs—identical to the growth rate experienced by the nation as a whole—but the state still needs to create another 471,000 jobs just to replace those jobs lost during the recession and keep up with population growth. There doesn’t seem to be anything special happening in terms of job creation in North Carolina when compared to the rest of the nation, the report said.
“This is just more evidence that cutting government jobs doesn’t reduce unemployment,” Freyer said. “If the workforce continues to shrink, it is unlikely that the state will be able to completely replace the jobs lost during the Great Recession or meet the needs of a growing population. And it certainly undermines the notion that the state’s economic policies have promoted a boom in job creation since 2011.”