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.”
"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.