North Carolina Leaders Are Governing by Illusion
In a recent column in the News and Observer, Ned Barnett slams lawmakers in Raleigh for promoting the myth of the "Carolina Comeback" while the reality for working families is much different. He cites labor participation statistics that show that North Carolina is 400,000 jobs away from actually recovering from the recession, while the tax giveaways are blowing a giant hole in the budget.
The political contest in North Carolina is no longer between Democrats and Republicans. The Democrats have been vanquished, undone by their disorganization and lack of conviction and gerrymandered into irrelevance.
Now the contest is between Republicans and reality. And, for now, reality is losing.
That doesn’t mean reality will be overcome. It means an illusion is prevailing while the state’s true condition deteriorates.
The central illusion is that cutting taxes and state government spending will spur the economy and improve the lives of North Carolinians of all incomes. GOP leaders trumpet the state’s job growth and shrinking unemployment rate as indicators of how their policies are having an effect.
The economy is improving, yes, but it is being lifted by a national recovery, not by cutting off unemployment benefits or lowering taxes on the wealthy and profitable corporations.
And the unemployment rate is going down. But there’s more to it than one number. The reality is that the percentage of working-age North Carolinians who are participating in the labor force (59.8 percent) is at its lowest since January 1976. In 2014, the labor force actually contracted by 42,245 workers and is now smaller than it was in any month since January 2010.
It’s true that jobs have come back since the onset of the recession. The state had 1.2 percent more jobs at the end of 2014 than it did when the recession began in December 2007. But that job growth has not kept up with the state’s population increase. John Quinterno, whose Chapel Hill group South by North Strategies analyzes labor trends, reports that, “Depending on the assumptions used, North Carolina is anywhere from 200,000 to 400,000 payroll jobs short of the number it should have added since late 2007 to accommodate population growth.”
The main effect of Republican tax cuts has been to starve a state budget already lean from years of recession-induced austerity. State revenues are expected to be at least $200 million below projections this fiscal year and possibly more than $1 billion below what the state would have collected had taxes not been “reformed.” Republicans argue that $200 million isn’t much given the state’s $21 billion budget. But it’s a lot when the budget is shrinking and the state is growing.
Tightening government spending while the economy is trying to come back has stymied the recovery in North Carolina. Last year, public sector payrolls shrank, led by a 3.8 percent drop in the state government workforce. How can the state’s government be shedding jobs as its population is growing? It does so by ignoring the state’s needs.