Coming up Short in North Carolina

Dean Baker and John Quinterno
News and Observer (NC), May 2, 2008

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With North Carolina now occupying center stage in the Democratic presidential contest, working Tar Heels have an opportunity to push their economic concerns into the national spotlight. Though the state has not yet fully experienced the economic problems buffeting the country, troubles are mounting. This year North Carolina has posted a net loss of 9,000 jobs, and the number of unemployed individuals has grown. With little good news on the horizon, job losses likely will continue over the coming months.

Regardless of whether the nation technically is in a recession, working families most definitely are. Since the 2001 recession, North Carolina has lost, on balance, more than 200,000 manufacturing jobs, a traditional source of living-wage employment for individuals without post-secondary degrees.

This has occurred alongside rapid growth in the low-wage labor market. Less than one out of every four jobs in North Carolina pays more than $17 an hour and offers both employer-provided health and retirement benefits, according to an analysis by the Center for Economic and Policy Research.

The loss of good jobs means that many workers in North Carolina are paid too little to make ends meet. A recent study by the Center for Economic and Policy Research and the N.C. Budget & Tax Center found that 24 percent of North Carolinians in working families earned too little to afford the market prices of a bundle of basic goods and services. Although public programs designed to help workers in low-paid jobs, such as subsidized child-care, helped close the gap for about one-sixth of the people in this group, most low-wage workers still came up short.

Our next president will have to address both the immediate problems stemming from the recession and the longer-term problems associated with the loss of good jobs. Ideally, the policies that combat the recession in the short term could also help counteract the larger problem of low-wage work.

The key short-term measure is to increase immediately the overall demand for goods and services. The federal government can do this by putting more money in the hands of consumers, as it is doing with the $600 tax rebate checks that are being mailed out this month. The rebate is a useful measure, but given the severity of the problems, more effective steps are needed. Promising tools include extending unemployment insurance benefits and increasing food stamp benefits.

In the long-term, significant measures will be needed to improve the situation of workers in low-paying jobs. Perhaps the most important item on this list is health-care reform. Not only do 1.3 million North Carolinians -- many of whom hold low-wage jobs -- lack coverage, but escalating costs also have limited real pay increases for insured workers.

Moreover, the decline in the value of the dollar will be an important factor in improving the competitiveness of North Carolina industry. The dollar's deliberate, prolonged over-valuation was an enormous handicap for U.S. manufacturers, and as the value of the dollar falls, manufacturing employment should improve.

A revitalized union movement also can help to improve the quality of many low-paying jobs. Over the last few decades the incomes of the typical American worker have has not risen even though the average worker has become more productive. Unions play a powerful role in ensuring that workers, particularly low-wage ones, benefit from the wealth they create. North Carolina consequently would do well to shed its status as the nation's least-unionized state.

Finally, the federal government must reverse its decades-long disinvestment in the education and skills of working adults. After the 2001 recession, the demand for services provided through the state community college system, the JobLink Career Centers and Employment Security Commission soared. Subsequent federal neglect has prevented these agencies from rebuilding their capacities, meaning that they will be less able to help the people harmed by the current recession.

The next president will enter office facing the most difficult economic situation in a generation. Yet difficult problems present opportunities for changes. If he or she pursues wise short- and long-term policies, workers in North Carolina can look forward to a more prosperous future.

Dean Baker is co-director of Center for Economic and Policy Research in Washington, DC. John Quinterno is a research associate at the N.C. Budget & Tax Center, a private group in Raleigh.