Wednesday, January 8, 2014

Gov. McCrory, keep cork on champagne


The "Great Carolina Comeback" has a nice ring but facts are already getting in the way of Gov. Pat MccCrory's glowing assessment on Monday of policies he and the GOP controlled state legislature approved last year.

McCrory used that slogan in a speech at the 12th annual Economic Forecast Forum, sponsored by the N.C. Bankers Association and the N.C. Chamber at a luncheon.

McCrory cited the 2 percentage point drop in the state's unemployment rate since he took office last January as evidence of the success of his administration's agenda.

He also touted his decisions last year to eliminate financial assistance to the long-term unemployed and the refusal to expand Medicaid coverage to hundreds of thousands of low-income workers under the federal Affordable Care Act. He said: "In our first several months in office we knew we had to take some urgent action to help turn around the North Carolina economy.... We had to make some very, very difficult decisions, some very controversial decisions. But we knew had to move quickly if we were going to keep up not only with the rest of the nation, but our neighboring states."

But many economic and health policy experts see things differently. They say the loss of billions in federal spending in the state has slowed, not aided, North Carolina's economic recovery.

On Tuesday, Bloomberg News used North Carolina's results from cutting off jobless benefits as an example of what not to do:

In discussing the U.S. Senate vote to restore long-term jobless benefits that Congress dropped last year, Bloomberg's Joshua Green noted:

"We have an example of what might happen if benefits aren’t renewed: North Carolina. Last July, Republican Governor Pat McCrory signed a bill cutting state benefits, which disqualified North Carolina from the federal program. A couple things happened after that. First, North Carolina’s unemployment rate fell pretty dramatically (from 9.4 percent a year ago to 7.4 percent).

"Great news, right? Actually, no. The number of employed people barely budged. How could the unemployment rate fall so fast if people weren’t getting jobs? Because most of them appear to have quit looking for work altogether and fallen out of the labor force. People who aren’t actively looking for work aren’t counted as “unemployed.” ... North Carolina’s labor-force participation rate... hit a 37-year-low (!) in October.

"That’s bad for a number of reasons. While the families of these people are going to suffer mightily, it’s bad for everybody else, too. Able-bodied people who want to work but can’t find jobs are wasted resources. They represent lost U.S. economic potential. Cutting them off doesn’t necessarily save taxpayers money, either, since many wind up on disability, food stamps, or collecting Social Security earlier than they would like to. Historically, disability claims move in tandem with the unemployment rate, and once workers go on disability they almost never return to the workforce. Sure enough, disability claims have skyrocketed since the start of the recession."

Chimed in economist John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy, though "many communities now are seeing some of the lowest unemployment rates recorded since the onset of the ‘Great Recession’ in late 2007, local unemployment rates nevertheless remain elevated, with 99 counties and 14 metro areas posting unemployment rates greater than those logged at the end of 2007.”

Non-metro areas are particularly hurting, he said. “In November, 7.8 percent of the non-metro labor force was unemployed, compared to 6.6 percent of the metro labor force. Compared to December 2007, the non-metro labor force now has 5 percent fewer employed persons, while the number of unemployed individuals is 37.2 percent larger...  Labor market conditions remain weak across much of North Carolina... The declines in local unemployment rates actually are obscuring a number of alarming developments - developments that are consistent with an under-performing economy.”

Dr. Patrick Conway, professor of economics at UNC Chapel Hill, in a piece in N.C. Policy Watch expressed similar concerns. Said Conway: "This sounds quite like an impressive victory for North Carolina economic policy, but is in fact just a warning that the state is postponing its unemployment problems. Consider the following figures drawn from the US Department of Labor database. During 2010, North Carolina created 80,000 jobs on net and reduced its unemployment by 0.6 percentage points. During 2011, North Carolina created 70,000 jobs on net and reduced its unemployment rate by 0.7 percentage points and in 2012, North Carolina created 100,000 jobs on net and the unemployment rate fell by 0.4 percentage points. In 2013, there were 6,000 jobs LOST on net and the unemployment rate fell by two percentage points...

"Six thousand fewer people employed, and yet the unemployment rate fell by two percentage points? How can this be? The answer is found in the definition of unemployment... If a survey respondent indicates that (a) she does not have a job and (b) she is actively searching for work, then she is classified as unemployed. If she responds that she does not have a job and is not actively searching for work, then she is not considered 'unemployed'; she is treated as outside the labor force. The precipitous fall in those unemployed in 2013 even though fewer residents were employed indicates that these residents are no longer actively seeking work. This shows up in the reported size of the measured labor force in North Carolina: it declined by 2.5 percent in the first 11 months of 2013, after many years of growth at an average of 1 percent per year...

"We can’t simply sit back and take credit for a recovery; we need to recognize that the current fall in unemployment rate simply means that many more of our residents have left the labor force at least temporarily. Once our recovery begins, many of these will once again actively search for jobs."

In other words, governor, hold the champagne.

9 comments:

Wiley Coyote said...

As usual, FAnnie Flono still hasn't learned where "federal dollars" come from.

There isn't some magic tree that the feds can use hocus pocus and conjure up billions of dollars.

Those funds come from those of us who actually pay into the federal coffers.

By the way. When will you use the same tone and guidelines on the current occupant of the White House? He's touted all these jobs created and that the economy is doing great, yet wants to put more people on federal crack so they don't have to look for a job.

Exit 0 said...

Can McCrory even feed himself.

MarkB said...

Fascinating that Fannie will give Obama credit for the lowering unemployment rate as being great, but criticize McCrory for the same thing? Nationally, we have the lowest labor participation rate in decades, disability claims at an all time record, food stamps up, and poverty way up.

Remember that the state chose not to go into further debt by accepting federal unemployment dollars. The state wanted to reduce some of the unemployment benefits, very generous ones compared to some other states, and the feds said no.

Obamanomics has been an abject failure for 5 years now. We are still running greater deficits than Bush did which means Fannie, we're broke!

James said...

The slogan assistant Patty McCrory should have used: THE GREAT CAROLINA DISASTER. KING Pope and his servant, Patty McCrory, have taken N.C. back 100 years. Can this administration do nothing right???? Patty McCrory needs to read LUKE 16:18. The senior McCrory is probably rolling over in his grave at the way his son, Patty, is destroying NC.

kantstanzya said...

Nice analysis Observer. Editorial staff meeting: "Now how can we turn positive economic news under Pat McCrory into a negative?"

OK. Then I guess for consistency sake you won't mind us noting that under Barack Obama the population of the U.S. has grown by 13 million and the economy has only created 1.2 million net jobs (most of them part time and low paying) giving us the lowest job participation rate in over 40 years and a real unemployment rate of 11.5%? It is only 7% because so many people have given up looking.

Some real progress in North Carolina if it occurs under a Republican administration is bad. And yet really phony baloney employment numbers under Democrat Barack Obama that he touts and takes credit for in every speech and that disguise a very weak real job picture in the country as a whole are just wonderful results and not to be scrutinized or questioned.

Economic genius B. Obama just told us yesterday that increasing unemployment benefits actually creates jobs! "Economists agree" he said.:) And Nancy Pelosi says there is a 3:1 multiplier effect on the economy with each dollar unemployment benefits. Wow.In that case why not just give all the unemployed an income of $100,000 per year forever and just sit back and watch the jobs grow!

Things are so simple in the imaginary world Democrats live in.

Garth Vader said...

1. Creative Loafing picked up this story a week ago. Nice of you to catch up to the rest of the world, Fannie.

2. As other commenters have pointed out, the Labor Force Participation Rate is at historical lows at a NATIONAL level. But you ignore that because you refuse to turn away from your Lord And Savior King Barack Hussein Obama.

Archiguy said...

The larger point of the article is that NC is creating an environment unfriendly to business, which won't help the unemployment rate.

People want to move to states with good public schools so their children will have a chance at a top-flight education. McCrory and his cronies in the legislature have gutted school budgets and slashed teacher pay, with NC falling to 46th in the country in that regard. Read the editorial in today's paper detailing the despair and evacuation of so many of our most qualified teachers, and how so many of them who choose to stay have to work second jobs just to make ends meet. It's disgraceful.

In every way possible, McCrory and the GOP legislature have hung out a "NOT WELCOME" sign on NC with regard to young, creative people moving here to start businesses and begin their lives. From raising taxes on the middle class (while lowering them in the rich) to instituting well-documented voting restrictions to rejecting federal Medicaid assistance that would have provided health care to half a million NC residents, they have failed to position this state in a favorable manner to succeed in a 21st century economy.

But the GOP leadership, cemented in place with a scorched-earth gerrymandered redistricting effort, is quite happy with this headlong rush backward, so there's that.

samwise55freedom said...

What is happening to us

samwise55freedom said...

Are jobs being created? Is that y the unemployment rate went down? Are the policy's workings? I don't know? I do know that unemployment can't last forever. If government gives to Peter, look for Paul beat up lying in a ditch somewhere.
Conservatives against Tillis