Five myth-busting truths about the North Carolina economy

Five myth-busting truths about the North Carolina economy

Conservative happy talk doesn’t change several important basics

The mantra from conservative North Carolina politicians and pundits these days is that North Carolina’s hard right policy turn of recent years somehow provides “a model for the nation.” If you spend any time on policy-oriented social media, you can hardly refresh your browser without being pummeled by the claim that North Carolina’s economic outlook is amazingly bright and that it’s all the result of conservative decisions to slash taxes and “get the state’s fiscal house in order.”

Never mind that the North Carolina’s post-Great Recession economic recovery – such as it has been – basically mirrors the national trends. Never mind that the recovery has left vast swaths of the state behind. Never mind that conservative disinvestment in essential public services and structures leaves the state increasingly ill-prepared to compete in the long run, much less lift up struggling regions and socioeconomic groups.

According to the defenders of the state’s status quo, things in North Carolina right now are almost uniformly fabulous and where they aren’t, pretty much all that’s needed to fix things is another round of tax cuts targeting “job creators” who are just chomping at the bit to employ North Carolinians.

Sadly, as with so many other right-wing talking points to which Americans have been subjected down through the decades, big bucks and constant repetition can have an impact. Despite the demonstrable fact that the conservative spin is just plain wrong in several damning ways, the P.R. onslaught continues and to a not insignificant effect. Indeed, it’s clear that North Carolina’s experiment played at least some role in boosting the disastrous new tax law signed by President Trump last month.

Busting the myth

Tempting as it is in such an environment to want to allow market fundamentalist conservatives to hoist themselves by their own policy petards (as happened during the end days of George W. Bush’s disastrous embrace of casino capitalism), the specter of economic stagnation and human suffering that would result dictates that we must fight back now and speak truth to conservative mythmaking.

Yesterday, happily, at an event dubbed the “Economy for All Forum,” economic and fiscal experts at the North Carolina Budget and Tax Center did just that. In a little under 90 minutes, the team of Alexandra Sirota, Patrick McHugh, William Munn and Brian Kennedy explained how and why conservative myths about the North Carolina economy are just that and why the situation in our state is much better explained and understood through a very different lens – namely that the current economy is one that works for “some, not all.”

Here are five key takeaways from yesterday’s presentation:

#1 – The current economic recovery is the slowest in a generation. As McHugh explained in a December special report, employment in North Carolina decreased by 7.8 percent during the Great Recession, nearly double the decline we experienced during the 2001 recession and almost four times worse than the job losses of the previous two recessions in 1981 and 1990.

What’s more, after the 1981 and 1990 recessions, the total number of jobs in the economy was back to where it had been within less than two years. In contrast, the crash was so massive during the Great Recession, that total employment didn’t get back to where it had been until 2014 – seven years later.

#2 – The percentage of North Carolinians employed has still not recovered. This is one of the most striking and important facts about North Carolina’s economy. While the total number of jobs finally returned to pre-recession levels in 2014, the state’s fast-growing population means that there is still a higher percentage of the population that is unemployed than there was in 2007. McHugh’s report put it this way:

This combination of rapid population growth and slow improvements in the job market mean that North Carolina is still well below the level of employment that existed before the Great Recession. Had job offerings in North Carolina kept pace with the pace of population growth over the past ten years, we would have roughly 375,000 more jobs today than currently exist.”

What’s more, the numbers are actually worse in North Carolina than for the nation as a whole. While job growth has been essentially the same, North Carolina’s population has grown much faster. As a result, employment here has remained stuck below 60% of the population for nine years – a depth to which it fell for only one 12-month period in the prior 40 years.

#3 – Huge racial barriers to prosperity remain in place. Despite the state’s modest recovery, North Carolina is making no progress in combating its pernicious and persistent wage gap that keeps Black, Latinx and Native American workers way behind. At yesterday’s event it was explained this way:

Right now, Black workers earn $3.25 per hour less than White workers. That’s roughly enough to buy a cup of coffee after an hour, a restaurant meal ($26) after a day, a month’s worth of cell phone   service ($130) after a week, a goodly chunk of rent or a house payment ($585) after a month, and a decent used car or perhaps make a college tuition payment ($6,700) after a year. Black workers have to work 12 years for every decade their White counterparts work. For Latinx workers, it’s 14.1 years.

#4 – Almost all growth in income and wealth is heavily tilted toward the top. This disturbing fact can be seen clearly in two important ways. First, is the distinction between investors and wage earners. Since 2008, the Dow Jones average and the S&P Index have risen sharply (69% and 77%, respectively, above pre-recession levels). By comparison, weekly wages in North Carolina are only up 14.5% — barely keeping up with inflation. But also consider this second point: Even within wage growth, most has been tilted toward the top. Over the past decade, the wages for the top 10% of wage earners have risen by $5 per hour. Meanwhile, those in the middle saw their wages rise by only 30 cents per hour and wages for those at the bottom actually fell.

#5 – A handful of metro areas are the big winners. The BTC experts reported that fully 75% of job growth in North Carolina is taking place in prosperous sections of five large metro areas. Meanwhile, half of the state’s counties actually have fewer actual jobs than they had prior to the Great Recession.

What’s going on here?

The BTC experts explained that none of this is a big shock – especially when one looks at other places that have done a better job of building something closer to shared prosperity. As BTC Director Alexandra Sirota explained, North Carolina has slashed taxes so that overall public spending is at a 45 year low. This, in turn, has undermined the state’s ability to connect would-be workers to good jobs through job training, education and infrastructure.

In other words, North Carolina has bungled the golden opportunity that was presented to it by a recovering national economy. Rather than capitalizing on its natural advantages and investing in its people, North Carolina has retreated into the destructive shell of trickledown tax cuts that have overwhelmingly benefited the same people already faring well in the economy and led to destructive cuts in the social safety net. The new tax bill in Washington offers only more of the same.

The bottom line: In 2018, things are great for a small number of North Carolinians and okay for another group near the top. But for many, if not most North Carolinians, the economic recovery of the past several years has only been a rumor and no amount of conservative spin can change that hard fact.