So far in 2017, North Carolina is adding jobs at a slower pace than the national and regional averages. That’s a noticeable change from recent trends — but it’s a reason only for concern, not for panic or pontification.
Through July, the state’s economy has added about 32,000 net new jobs this year, with total employment growing by .7 percent. That’s a rate of increase lower than the national average (.9 percent) and the average of the 12 Southeastern states (1.1 percent). During 2016, by contrast, North Carolina’s rate of job growth exceeded both averages. The same is true for the longer-term trend, measured from 2012 to 2016.
Republicans might like to pin our job-creation slowdown on Democratic Gov. Roy Cooper, who took office in January. But that would be premature. Regardless of whether you like Cooper’s picks or policies, it’s too soon for them to have affected significantly a state economy estimated at $530 billion in goods and services.
Democrats might like to blame the Republican legislature’s conservative fiscal and regulatory policies, which began in 2011 and then dramatically expanded in 2013. But that would be logically incoherent. Did these policies first boost North Carolina’s job-creation rate above the national and regional averages, and then suddenly pull it down in 2017?
Moreover, it would be odd to attempt to disprove the economic benefits of smaller government, lower taxes, and less-burdensome regulation by pointing to the higher employment growth being enjoyed by regional competitors such as Florida, Georgia, and Tennessee, as these states rank even higher than North Carolina does on measures of economic freedom.
So trying to turn the state’s relatively weak performance in job growth since the beginning of the year into a political bludgeon is unjustified and unhelpful.
I would similarly urge North Carolinians against panic. The future of the state, and the prosperity of its residents, can be neither measured nor determined in seven-month increments of time. We face significant challenges, due primarily to structural changes in the national and international economy. Some jobs and industries that were viable in the past are no longer viable — and politicians who tell you otherwise are fooling you, themselves, or both.
What we should focus on is a comprehensive, long-term strategy for encouraging sustained economic growth. Governors and legislatures don’t control the money supply, set trade policy, or run fiscal deficits. They affect economic growth by influencing the creation and deployment of valuable capital assets that make it much easier and less expensive to produce goods and services, make those goods and services much higher in quality, or some combination of the two.
Some of these assets are physical ones. Others are forms of human capital, such as the education and skills of workers and entrepreneurs or the social trust that allows households and businesses to make plans and strike deals with confidence.
Governments clearly have a role to play in building and maintaining physical assets such as highways. Governments also have a role to play in human capital, such as funding schools and establishing a fair and consistent system for enforcing contracts and adjudicating disputes.
But most capital assets are privately created, privately owned, and privately managed. The private sector is the lead actor in the story of economic growth and job creation, with the public sector playing an important but supporting role. Fiscal conservatives never forget that when governments collect taxes to spend on a public program, that removes dollars from the pockets of their original owners, at least partially supplanting an investment that would otherwise be made voluntarily and skillfully.
North Carolina’s future rests on wise investment by both the public and private sector, with a strong emphasis on the latter and on innovators hatching new ideas and turning them into new industries.
State leaders have prudently built up the government’s cash reserves, just in case the current slowdown in job-creation rates leads to something worse. More importantly, however, they have enacted policies to welcome and foster private investment in North Carolina over time.
John Hood is chairman of the John Locke Foundation and appears on the talk show “NC SPIN.” You can follow him @JohnHoodNC.