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Ten hard truths about North Carolina’s struggling economy

10-ncThere’s been a great deal of back and forth in various media outlets in recent weeks about the true state of the North Carolina economy. In a powerful op-ed that appeared in Raleigh’s News & Observer last week, N.C. Budget and Tax Center Director Alexandra Sirota detailed why the so-called “Carolina Comeback” is only a rumor for millions of average people and how the state’s obsession with tax cuts has produced precious little in the way of measurable benefits.

As she observed:

“The overwhelming evidence shows that the economy is not delivering security and opportunity for many in North Carolina. A persistent lack of jobs is driving high unemployment and sluggish wage growth, as well as the failure of any economic and job growth to equally reach every community of the state, according to independent assessments by economists, researchers and the media.

Everyday North Carolinians, the real experts on this issue, agree. Three out of four North Carolina voters don’t believe that things are getting better. A recent News & Observer article by Craig Jarvis contained the crux of the issue: Policymakers and business leaders thought that cutting taxes would deliver a stronger economy. Not only has that not happened, they now lament that they don’t have the tools to invest in proven strategies like education and infrastructure….

…it turns out the wealthy and profitable corporations don’t create more jobs when they don’t pay taxes. They create jobs when people buy their stuff or they see an opportunity to create or pursue a new market. In the case of wealthy millionaires, the chance that they will be job creators at a large scale is even smaller. And the average tax cut of $14,000 received by millionaires recently isn’t likely to prompt wealthy North Carolinians to hire on its own.”

Not surprisingly, Sirota’s column touched a nerve with the conservative powers that be. Right-wing think tanks sprang into action and state budget director Andrew Heath penned a spirited, if not terribly compelling, letter to the editor in which he tried to respond. According to Heath, falling unemployment rates and a recent bump in median incomes (two phenomena that largely mirror national trends) along with tax cuts and replenishment of the state “rainy day fund” all constitute evidence that his boss, Governor Pat McCrory, has the economy well in hand.

Today, however, Sirota’s colleague Patrick McHugh is out with a response detailing ten hard truths that Heath and other apologists for the administration and the General Assembly simply ought not to be allowed to ignore. Here’s McHugh:

“North Carolina’s economy is certainly better than during the Great Recession, but that shouldn’t be mistaken for success. The Carolina Comeback narrative might be excused as simple political rhetoric, if it didn’t distract from the real barriers that still undermine far too many North Carolinians’ livelihoods today, and upend their quest for a better future.

Here are just 10 facts that shouldn’t be ignored:

  1. North Carolina has 411,100 fewer jobs than pre-Recession employment levels.
  2. Since the Recession began, North Carolina’s job growth has been 4.1 percent, compared to the nation’s 4.6 percent change.
  3. There has been a growth in the number of North Carolinians working part-time jobs who would prefer to work fulltime but take what they can find.
  4. North Carolina’s median household income is $3,200 less than it was in 2007 and has grown at one of the slowest rates in the country in recent years.
  5. Tax changes since 2013 mean that North Carolina will bring in at least $1.4 billion less than would have been available under the old tax code. $1.4 billion would have allowed the state to do all of the following combined:
    – Eliminate the NC Pre-K Waiting List;
    – Restore funding for public education to pre-recession levels on a per-student basis;
    – Fund an additional 960 nursing positions to achieve the ratio of one nurse to every 750 students, as recommended by the National Association of School Nurses;
    – Restore literacy coaches in middle schools;
    – Support the implementation of nutrition standards in the Child Nutrition Program, per the suggestion of the NC Department of Public Instruction; and
    – Invest $500 million in affordable housing programs, job training programs for adults facing barriers to work, and other ECE initiatives.
  6. North Carolina’s State Economist notes that while revenue has come in over projections, sales tax collections are below what was anticipated and the economy appears unlikely to accelerate.
  7. The tax changes since 2013 have delivered a nearly $15,000 tax cut annually for millionaires in NC, while average taxpayers with incomes averaging $11,000 are paying even more.
  8. Job growth has not occurred in middle-wage industries.
  9. Poverty remains 15 percent above 2007 levels.
  10. There are 120,000 North Carolinians earning at or below the minimum wage, two and a half times more than several years ago.

The bottom line

Nine years since the onset of the Great Recession, North Carolina has made some limited headway in repairing the damage that it suffered. Unfortunately, conservative policies that have emphasized tax cuts for the wealthy and profitable corporations over investments in people have made the recovery vastly slower than it should have been. What’s more, as Sirota and McHugh argue convincingly, we will continue to pay a similar price so long as elected officials adhere to their regressive brand of trickledown economics.

The post Ten hard truths about North Carolina’s struggling economy appeared first on NC Policy Watch.

Category: Political News

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