Tuesday, December 20, 2011

Big fat nothing-burger in state job growth

Another month, another state employment report, another month of waiting for significant job growth in the Tar Heel state.

The U.S. Department of Labor reported today that the number of non-farm jobs in North Carolina grew last month on a seasonally-adjusted basis by only 3,800. Despite modest increases last month and the month before, the total number of non-farm jobs in November remains below the numbers recorded in February through May.

The Republican plan of cutting taxes and getting the government out of the way was supposed to lead to a jobs renaissance. Instead, state employment is struggling to get to recover to the point where it was when Republicans took over the legislature.

3 comments:

W.E. Heasley said...

Your politico post is based on a debate stratagem known as: denying opponents legitimacy. Yawn.


There is no economic insight in this particular post, merely your particular vision. How very nice.


[North Carolina] Since November 2010, private sector jobs have increased by 30,800. Over-the-year, the government sector had the largest job losses with 11,200.

North Carolina Department of Commerce - Labor and Economic Analysis Division 12/20/2011 (1)

NC tax rates have decreased at the margin, yet tax revenue has increased and the budget has improved. This would indicate more taxable transactions. (2) This would indicate a movement along the Laffer Curve. (3)

Your post also makes an implicit assumption, regarding taxes, that capital and human capital are not mobile. All capital and all human capital is mobile. All capital and all human capital, over time, will seek the lowest environment of tax and regulation [regulation being an alternate form of tax as it’s an intervention/distortion regarding property rights]. Hence national, as well as regional [local] tax rates, do in point of fact, matter as regions compete (micro to macro).

Further, your post is that lower taxes [more money in people’s hands] is associated with higher unemployment. Conversely, a higher tax, more money in politicos hands, is implicitly associated with lower unemployment.

More exactly: government produces nothing that the private sector would not have produced had government not existed.

(1) http://www.ncesc1.com/PMI/Rates/PressReleases/State/NR_Nov_2011_StRate_M.pdf

(2) Cash Watch for Week Ended Friday, December 16, 2011,

http://www.osc.nc.gov/cash_watch/cash_watch_archive.html

(3) Laffer Curve. http://www.investopedia.com/terms/l/laffercurve.asp#axzz1hE6Ey2tJ

Dave Ribar said...

...And jobs were higher still in February through April.

Yes, non-farm employment in North Carolina is up from last Nov. The increase in the state has been 0.51% The seasonally-adjusted numbers were 3,857,200 in Nov. 2010 and 3,876,800 in Nov. 2011.

Nationally, non-farm employment has increased over the same period by 1.23% (from 130.1 million to 131.7 million)--nearly two and a half times the rate of growth in North Carolina.

North Carolina's gain in jobs was far, far less than its population growth. The state added 121,000 people between April 2010 and July 2011, or about 97,000 on a year-over-year basis.

Nominal tax revenues for July and August of this fiscal year ran ahead of last year's revenue totals. Revenues for the last quarter (Sept.-Nov.) have run behind last year's totals.

For the year (through Nov.), the state comptroller reports that tax revenue is $81.3 million ahead of the same period last year. Sales and use tax revenues are down nearly 11 percent so far this year, as are corporate taxes (two areas where marginal rates were cut). The overall gain in revenues comes mainly from a surge in individual income tax withholding. However, this may not be sustainable, because the increase has not been matched by wage and salary gains (i.e., a lot of that money may be going back in refunds).

If you adjust the revenue numbers for population growth (express them in per capita terms) and adjust them for inflation (average prices are about 2-3% higher than they were a year ago), real per-capita revenues are down.

So to sum up, in the context of a slowly growing national economy
- the number of jobs in NC is below where it was in the spring,
- job growth in NC has lagged job growth nationally over the last year,
- sales/use and corporate tax revenues are down so far this fiscal year on a NOMINAL basis,
- total tax revenues so far this year are down this year on a real, per capita basis.

Put them all together and you get no supply side miracle.

Dave Ribar said...

Just took another look at the sales tax numbers, and they are even worse than they first appeared. There was a big downward spike in sales tax revenues in June followed by a big upward spike in July.

It looks like about $50 million of the "extra" nominal revenue that NC has received this year simply reflects people shifting purchases from late June to early July to take advantage of the lower tax rates. Put another way, the $50 million were cannibalized from revenues that would have been collected last year.