Some simple truths about North Carolina’s economy

Some simple truths about North Carolina’s economy

- in Weekly Briefing

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The current situation remains fragile and requires more than more marketing and trickledown policies to repair

It’s been said that “success has a thousand fathers, but failure is an orphan” and nowhere is the truth of this adage more frequently confirmed than in debates over jobs and economic policy. For politicians seeking votes, it’s simply a given that all growth in jobs and prosperity are the result of their own brilliant policies and that all losses and downturns are attributable to their opponents.

This pattern is also applicable quite frequently to advocates and analysts – many of whom take it to absurd and even laughable extremes. Take the folks over on Right Wing Avenue here in North Carolina, for instance. For years now the employees of the groups funded by Art Pope have been attempting to attribute every lost job and flaw in the state’s economy to a combination of President Obama and former Governor Perdue – even though both took office during the depths of the Great Recession and presided over gradual, if imperfect and painful, recoveries.

Meanwhile, every positive economic report that has followed in the last six years has had nothing to do with either Obama or Perdue and, instead, is somehow attributable to the current conservative state leadership. Over at the Pope think tanks, scarcely a week goes by in which the denizens don’t generate some kind of rosy slant on North Carolina’s mixed and lagging economic performance under Pat McCrory and the GOP legislature even as they blast Obama’s supposedly terrible failures.

A little honesty for a change

The truth, of course, is nowhere near that clear or simple. The fact of the matter is that shaping and guiding something as enormous and complex as the American economy is in many ways beyond any individual politician or group thereof (much less turning it around on a dime). Except in times of profound crisis when extraordinary powers may occasionally be conferred, it is extremely rare that a political leader can do much more than make gradual tweaks and adjustments that will bear fruit (or not, as the case may be) somewhere down the road.

Meanwhile, the trends so busily tracked and catalogued by analysts each month – jobs, unemployment, incomes, retail sales, corporate profits and the like – are just as likely to be the byproduct of decades-long patterns (e.g. the exportation of jobs overseas and the evolution of the Internet) or recent unforeseen events (e.g. bad weather, a failed crop or a new invention) as they are of comparatively recent public policies like a new tax cut or a business incentive.

That said, there are some things that the facts tell us about the current state of North Carolina’s economy, the performance of our politicians and, even more importantly, the 10 million or so people who live here.

Here are a few that are worth considering as we look forward to the installation of a new General Assembly next month:

#1 – North Carolina’s economic recovery is nothing to get very excited about Make no mistake: North Carolina’s economy certainly has rebounded from the near-collapse it was experiencing in late 2008 and that’s certainly good news. As is the case at the national level, growth has returned, profits are strong and some people are finding jobs. This is good news – or at least much better than some that we might imagine.

The flipside to this situation, however, is that the recovery continues to bypass large swaths of the population – both here and in many other states. Despite advances for households of higher income, middle and lower income families continue to struggle. Overall median income remains depressed below pre-Great Recession levels and poverty and hunger remain at scandalous levels. As Tazra Mitchell of the N.C. Budget and Tax Center reported last week:

Food insecurity levels rose sharply during the Great Recession but have not improved since then. Approximately 17 percent of North Carolinians struggle with food insecurity, according to the USDA. On this measure, the average North Carolinian fares worse than the average American and as a state North Carolina has the 5th highest level in the nation, behind only Arkansas, Mississippi, Texas, and Tennessee. Three of North Carolina’s four neighboring states have lower levels of food hardship.” 

Meanwhile the cause of this problem is not hard to find. As the BTC reported this past summer:

It’s getting harder and harder to make ends meet in North Carolina—one in five North Carolina families earn too little to afford life’s essentials and move up the economic ladder, thanks to the long-term erosion of good-paying manufacturing jobs and their replacement with much-lower-paying jobs in service  industries like hospitality and tourism.”  

#2 – Despite a drop in the official unemployment rate, the jobs picture is weak – Late last month, it was reported that North Carolina had finally – after seven long years – replaced all the jobs lost in the Great Recession. Again, while this is certainly good news, it’s hardly cause for celebration. Here’s the BTC:

In today’s labor market, the unemployment rate drastically understates the weakness of job opportunities. This is due to the existence of a large pool of ‘missing workers’—potential workers who, because of weak job opportunities, are neither employed nor actively seeking a job. In other words, these are people who would be either working or looking for work if job opportunities were significantly stronger. Because jobless workers are only counted as unemployed if they are actively seeking work, these ‘missing workers’ are not reflected in the unemployment rate.

The BTC calculates that there are nearly 290,000 workers missing from North Carolina’s labor market and that, if these workers were included in the unemployment rate, it would be 12.5 percent, nearly twice the official unemployment rate.

Meanwhile, BTC analysts report that many of the new jobs being created and snatched up pay very low wages.

More than 57 percent of North Carolina’s job creation [between 2009 and 2013] occurred in industries that paid on average less than the $23,580 per year families need to lift themselves out of poverty. Another 26 percent occurred in industries that paid enough to keep these workers above the poverty line but not enough to meet the Living Income Standard. Taken together, more than 80 percent of all jobs created since the end of the recession occurred in industries that on average don’t pay workers enough to make ends meet despite full-time work.”

#3 – Quick fixes will not repair such damage – Given such a profoundly sobering backdrop, it ought to go without saying that it will take much more than a few doses of laissez faire, “trickledown” economics and some cheerful marketing to turn North Carolina’s economy around. This has certainly been the lesson at the national level where, if there was ever any hope of doing more than ending the recession and bringing about a true middle class economic renaissance, it is now clear the half measures fashioned by the President and a mostly stubbornly resistant Congress have failed to deliver it.

Unfortunately, for some time now, it’s been clear that North Carolina leaders are unwilling even to advance a state-level version of the President’s quarter-of-a-loaf recovery plan. Instead trickledown tax cuts, privatized/crony-ized business recruitment efforts and an unending stream of positive spin from the McCrory administration and its cheerleaders appear to be the extent of the conservative economic plan.

If this remains the case throughout the coming General Assembly, one has to believe that such a failure will not be an “orphan” in the eyes of North Carolina voters in 2016.