McCrory makes rosy, but questionable claims on jobs front

February 1, 2014 

Gov. Pat McCrory claims Republican-driven tax cuts and cuts in unemployment benefits are reviving the state’s economy. As proof, he points to the state’s falling unemployment rate and the increasing number of jobs. These numbers are misleading when its comes to the real job market faced by North Carolinians. The governor should admit as much and take action to help the unemployed and underemployed. Instead, he’s glossing over the hardships they face.

In December, for instance, the governor issued an end-of-year video in which he declared, “This Christmas season, 80,000 more North Carolinians are collecting a paycheck.”

That claim is based on job growth, but it doesn’t mean another formerly unemployed person is “collecting a paycheck.” The job count shows jobs, not people and, unfortunately, many people are working two and three jobs in this economy.

Second, if we talk about actual people based on a survey of households and over the time frame cited by McCrory, the seasonally adjusted number of people employed in November 2013 was only 5,978 higher than in November of 2012. (The unadjusted number was 21,762 higher.)

Finally, the growth in jobs slowed in 2013. North Carolina added fewer jobs last year than it did in 2012, and that was a weak year for job growth.

Then there is the matter of the unemployment rate. North Carolina’s unemployment rate dropped to 6.9 percent in December, a significant fall from 8.9 percent in July when sharp cuts in unemployment benefits took effect. For the year, the rate dropped 2.5 percent in North Carolina and fell to a lesser extent nationally to 6.7 percent.

Though governors and state policies can’t do a lot to offset a weak national economy, North Carolina Republicans now claim credit for the state’s drop in the unemployment rate. They cite their tax cuts and other policies. They also say they drove down unemployment by ending extended federal unemployment benefits and shortening the amount and duration of state unemployment benefits.

It’s insulting to suggest that North Carolinians who lost their jobs through no fault of their own were choosing not to work because they were getting a few hundred dollars a week in unemployment benefits. Nonetheless, McCrory repeated this canard to The New York Times when the newspaper reported on the effects of North Carolina’s cuts in benefits.

“Employers were telling me they had vacant jobs, but people would say, ‘Hold that job until my unemployment benefits end,’ ” McCrory said, “I heard that time and time again. Now, employers are telling us that people are coming in and filling out applications to accept jobs, not to meet the requirements of unemployment.”

A closer look at the numbers shows that punishing the jobless and reducing taxes on the wealthy are not creating what McCrory is calling the “Carolina Comeback.” What the state is experiencing is a “Carolina Dropout.”

As the first chart above makes clear, the state’s labor force is shrinking dramatically. Some of the loss is because of baby boomers retiring and younger people staying in school or going back to school. But most economists say the shrinkage largely reflects unemployed workers giving up the job hunt after months of rejection in a labor market where job seekers far outnumber job openings.

When the labor force shrinks, the unemployment rate tends to go down. Some of the rate’s decline does result from a slightly improving economy, but much of it reflects the difficulty of finding adequate employment or any employment.

As President Obama said in his State of the Union address. “The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by, let alone get ahead. And too many still aren’t working at all.”

The president has called for an extension of unemployment benefits, an increase in the minimum wage and tax incentives to encourage the hiring of the long-term unemployed. The governor should acknowledge the distress, too, and offer people in the jobs desert real help, not a mirage.

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