Wednesday, January 15, 2014

Obama, McCrory and the N.C. economy

[Updated, 2:08 p.m., with Chuck Todd interview and other editing.]

The president is in the state today talking about the economy and announcing that N.C. State University will be home to a $140 million consortium of companies and universities that will develop the next generation of energy-efficient electronic chips and devices.

The feds will be joined by the state and businesses in covering the cost. This is part of President Obama's push to help the manufacturing sector.

That's good news for North Carolina which has felt the pain of manufaturing job losses. It gives Obama, a Democrat, and Gov. Pat McCrory, a Republican, something that they agree on.

Of course, the gov and the prez are worlds apart on most issues. Two big ones separating them are the Affordable Care Act including Medicaid expansion, and unemployment benefits.

On the former, McCrory and the Republican-controlled legislature rejected expanding Medicaid to more eligible low-income people, a move economists say could have boosted jobs in the state, and would not set up a state exchange.

But refusing to set up a state exchange didn't stop North Carolinians from signing up. The state has the 5th highest number of sign-ups in the nation at almost 108,000. Only California, Florida, New York and Texas have higher. More than half in N.C. went to Americans 45 and older, and 90 percent of the N.C. policy buyers qualified for government subsidies. With only Blue Cross and Blue Shield and a subsidiary of Aetna selling policies in North Carolina, the options are more limited here than in many other states.

On unemployment, McCrory and Obama part company on the need for continuing to help those who have been long-term unemployed. Obama has urged Congress to reinstate long-term benefits though the Senate on Tuesday failed to get enough votes to pass an extension. Federal benefits to North Carolina were cut off last year when the state changed its state jobless benefits policy. McCrory has been touting the end as a key reason the state unemployment rate declined by two percentage points. He defended the cut in an interview with Chuck Todd of MSNBC today (while also calling the Observer's editorial board, which endorsed McCrory in both his gubernatorial campaigns, "very liberal").

That theory is getting national rebuttals. Paul Krugman in the New York Times weighed in recently with "The Raleigh Experiment" noting that:

"The unemployment rate did fall — but this was due to a large drop in the labor force, as the number of people looking for work fell. Why? Well, a likely explanation is that some of the unemployed continued to search for work, and were therefore counted in the labor force, despite low prospects of finding a job in a depressed economy, because such search is a requirement for those collecting benefits. Take away the benefits, and they drop out."

Brad Plumer of the Washington Post added in a column Wednesday:

"There's scant evidence that the long-term unemployed will find it easier to get jobs if their benefits are cut off. For starters, there still aren't enough jobs to go around: There are currently about 2.9 unemployed workers for every job opening. That's worse than the ratio at any point during the 2001 recession.

Recently, JP Morgan's Michael Feroli surveyed the evidence and found that the long-term unemployed don't typically find jobs en masse when their benefits expire. Some workers who get cut off may take lower-paying jobs than they otherwise would. But many seem to give up looking and drop out of the labor force entirely. Indeed, there are some signs that this is happening in North Carolina, which recently slashed its state unemployment program.

Michael Strain of the American Enterprise Institute argues that this makes intuitive sense. "If you look at the long-term unemployed, a good chunk of them have children. A good chunk are married. A good chunk are college-educated or have had some college and in their prime earning years," he told Plumer. "It strikes me as implausible that this person is engaged in a half-hearted job search."

During Obama's brief visit to North Carolina maybe some of those issues will get further attention.

3 comments:

alwaystomorroww said...

>> The feds will be joined by the state and businesses in covering the cost. This is part of President Obama's push to help the manufacturing sector.

More central planning. Ughh boy. What could possibly go wrong.

Garth Vader said...

Fannie,

As was pointed out by numerous commenters to one of your previous posts, the NATIONAL labor force participation rate is at a THIRTY-SIX YEAR LOW. Yet you still pick out NC rather than focusing on the big picture.

Please explain your repeated and intentional deception.

Garth Vader said...

Fannie,

Still waiting on the explanation for your steady stream of BS.