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Daily Journal

Job Creation Rises in Carolina

Jul. 12th, 2013
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RALEIGH — Where are the jobs?

Since Barack Obama took office in 2009 promising to end and reverse the effects of the Great Recession, Republican politicians and conservative critics have relentlessly pointed out how weak the economic recovery has been by historical standards. One popular rhetorical tactic has been to use a line graph to compare unemployment rates predicted by the Obama administration in 2009 with the actual, higher figures.

Here in North Carolina, Democratic politicians and liberal critics have subjected the new GOP majority to a similar line of attack. Having achieved control of the General Assembly in 2010 and the governor’s office in 2012 in large part by running against Democratic stewardship of the North Carolina economy, Republicans should now be judged not by what they say about the economy but what is actually happening in the economy, according to the critics.

By early in the 2011 legislative session, these critics were complaining not just that Republicans weren’t spending enough time on economic issues but also that the policies Republicans did enact — such as a fiscally conservative budget passed over former Gov. Bev Perdue’s veto — would be harmful rather than helpful to the economy. They argued that accepting Perdue’s tax-hike extensions to balance the state’s budget would be better for the job market than cutting state spending, including public employment, in order to keep taxes lower. They offered similar criticisms of other GOP priorities such as tort reform and regulatory relief.

Here’s an inconvenient truth, however: since the adoption of the Republican budget and other conservative policies, North Carolina’s economic performance vs. the rest of the country has not deteriorated as liberals predicted. By some measures, it has improved. For example, while the state still posts a high unemployment rate, our rate of job creation has exceeded the national average since July 2011.

Let’s organize the data around North Carolina’s biennial budget cycle, which includes two July-to-June fiscal years at a time. According to the employer survey from the U.S. Bureau of Labor Statistics, total employment in North Carolina grew only 0.5 percent from June 2009 to June 2011, somewhat lower than the national average of 0.7 percent for the same period. That followed a devastating two-year cycle from 2007 to 2009, when North Carolina employment went down 6.2 percent, a full percentage point worse than the national average.

We are now almost through the 2011-2013 fiscal cycle, however, and the situation is markedly better. From June 2011 to the latest month for which final data are available, April 2013, North Carolina employment rose by 3.4 percent, somewhat higher than the national average of 3.1 percent.

If you want the raw numbers, here they are: North Carolina lost about 257,000 jobs during the 2007-09 biennium, then gained 18,000 in 2009-11 and 135,000 so far in 2011-13.

I’ve cautioned both sides about jumping to conclusions before, and I’ll do so again: Economic policies are best judged by several years of data, and even then establishing causal relationships can be challenging. There is a multitude of factors that affect job creation and other measures of economic growth. Many of them are entirely outside the control of state policymakers, and some are even outside the control of Washington policymakers such as Congress, the president, and the Federal Reserve. Furthermore, newly released labor-market data have a tendency to get revised later. The preliminary North Carolina employment numbers for May 2013 were relatively weak. If not revised, and if June proves to be equally unimpressive, North Carolina’s rate of job creation during the first biennium of Republican legislative control might end up equaling rather than exceeding the national average.

Still, unless there are major downward revisions or a disastrous June jobs report, North Carolina’s performance in job creation over the past two fiscal years will clearly be an improvement over the 2007-11 era, when the state lagged behind the nation. If the critics wish to continue their attacks on the Republican legislature’s economic policies, they would be well advised to pick a statistic other than job creation.

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Hood is president of the John Locke Foundation and author of Our Best Foot Forward: An Investment Strategy for North Carolina’s Economic Recovery, published by JLF in 2012.