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Home Publications Blogs Beat the Press North Carolina's Pro-Business Climate Reduced the Unemployment Rate by Driving People Out of the Labor Force

North Carolina's Pro-Business Climate Reduced the Unemployment Rate by Driving People Out of the Labor Force

Saturday, 26 July 2014 07:47

A New York Times article on the senate race in North Carolina referred to cuts in the state's unemployment benefits and tax breaks for businesses. It then told readers:

"The resulting business climate, Mr. Jordan said, has played a role in an unemployment rate drop from 10.4 percent, when Mr. Tillis was elected speaker in January 2011, to 6.2 percent today."

The reason that unemployment dropped more rapidly in North Carolina than in most other states was that people gave up looking for work and left the labor force. North Carolina's labor force increased by just 0.9 percent over this period, from 4,647,000 in January of 2011 to 4,688,000 in June of 2014. By comparison, the South Atlantic region as a whole had an increase in its labor force of 4.4 percent, from 29,062,000 in January of 2011 to 30,319,000 in June of 2014. If North Carolina's labor force had increased in step with rest of the region, its unemployment rate would still be far higher than the rate for the rest of the country.

Comments (3)Add Comment
written by Last Mover, July 26, 2014 10:21

Imagine that. North Carolina closes its share of the trillion dollar output gap on its own.

Cut the labor force. Next destroy all that idle physical capital laying around. Then take credit for an innovative efficiency move from the supply side that led to full employment without more spending.
NYT sees ideology (not money or power), in North Carolina
written by jaaaaayceeeee, July 26, 2014 10:36

This article attributes very low voter approval of the N.C. legislature to liberal outrage, and credits conservatism for slashing business taxes, regulation, and unemployment.
Knew you would catch that one
written by CambridgeChuck, July 26, 2014 1:41
Read the article and thought, "crap reporting, Dean Baker will notice and point out the labor force losses." Frustrating that stenographers/reporters don't dig underneath seemingly rosy figures for NC, and don't try to compare them with, say, Kansas, where similar slash-and-burn policies have produced dismal results. Why would supply-side policies work in NC but not Kansas, Mr. Reporter?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.