Policy Points

22.07.2013 Policy Points No Comments

Legal Status And Poverty

An opinion piece in The New York Times explains why having legal immigration status “doesn’t end poverty.”

“We see employers in a number of industries act as if there is a third-class labor market that is paid below the minimum wage and are made to suffer all manner of violations of labor law,” said Nik Theodore, an associate professor in urban planning and policy at the University of Illinois, Chicago. “For many employers it is a calculated risk that they are willing to take. They trust that their employees aren’t going to report them and that nobody from the government is actually going to come check. When you have workers in desperate need of work, they are going to be willing to do a lot of things.”

Over all, unreported income amounts to roughly $2 trillion annually, but cash wages make up only a portion of that estimate, according to Edgar L. Feige, an emeritus professor of economics at the University of Wisconsin, Madison, who has spent decades examining underground and cash economies, in part by using information on how much cash is in circulation at any given time. There is no way of knowing how many workers are earning their salaries in cash, Professor Feige said.

19.07.2013 News Releases, Policy Points No Comments

June Marks End To A Disappointing Six Months

CHAPEL HILL, NC (July 19, 2013) – June marked the end to a disappointing six months for North Carolina’s labor market. Over the first half of 2013, employers added just 16,100 more jobs than they cut (+0.4 percent). That change was the worst first-half figure posted so far during the economic recovery. Moreover, the size of the state’s labor force has fallen steadily throughout the year, as has the number of employed persons.

These findings come from new data from the Labor and Economic Analysis Division of the NC Department of Commerce.

“The first half of 2013 was the most disappointing one for job growth in North Carolina since the onset of the recovery,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “While 2013 began on a positive note due to hiring in the private sector, virtually no net job growth occurred during the year’s second quarter. Since March, the state has lost 100 more jobs than it has gained.”

In June, North Carolina employers added 5,700 more jobs than they cut (+0.1 percent). That monthly change was the first positive one logged since February. Last month, private-sector payrolls netted 6,300 positions (+ 0.2 percent), while public-sector payrolls shed 600 jobs (- 0.1 percent). Within the private sector, the professional and business services sector netted the most jobs (+3,700, +0.7 percent), with 97.3 percent of the gain originating in the administrative and waste management services subsector. The construction industry added, on net, 1,800 positions (+1.1 percent), followed by the trade, transportation, and utilities sector (+1,600, +0.2 percent), with all of the gains occurring in the retail trade subsector. Meanwhile, the other services sector shed the most positions (-1,600, -1.1 percent), followed by the education and health services sector (-600, -0.1 percent) and the leisure and hospitality and manufacturing sectors (both -300, -0.1 percent).

A revision to the May payroll data found that the state lost somewhat fewer jobs than first estimated (-5,100 versus -5,900). With that revision, North Carolina now has, on net, 119,600 fewer payroll positions (-2.9 percent) than it did in December 2007. Since bottoming out in February 2010, the state has netted an average of 5,200 payroll jobs per month, resulting in a cumulative gain of 208,200 positions (+5.4 percent).

“North Carolina experienced very little net payroll growth during the first half of 2013,” noted Quinterno. “The net gain of 16,100 jobs equaled just 35.6 percent of the gain recorded during the first half of 2012. For North Carolina to net as many jobs in 2013 as it did in 2012, the state would need to net an average of 12,300 jobs per month for the rest of the year. The last time the state averaged comparable growth during the second half of a year was in 2006.”

The household data for May also pointed to the existence of a sputtering labor market. Since the start of 2013, North Carolina has experienced a steady decline in the size of the labor force, as well as the number of employed persons. The size of the labor force has returned to a level last seen in April 2012, and the number of employed persons is at the lowest level posted since October 2012. While both the number of unemployed North Carolinians and the statewide unemployment rate have fallen throughout 2013, the improvements are largely attributable to people leaving the labor market rather than finding new positions.

Another alarming development experienced during the first half of 2013 was a steadily slide in two major measures of labor utilization. The labor force participation rate has fallen by 1.1 percentage points since last December, while the employment to population ratio has dropped by 0.7 percentage points. Both indicators are trending back toward their recessionary lows.

“The first half of 2013 proved disappointing for North Carolina’s labor market,” observed Quinterno. “Job growth ground to a halt, especially in the second quarter, and sizable numbers of people left the labor market altogether. If the current pace of job growth continues during the year’s second half, 2013 could prove to be the worst year of job growth in North Carolina since the onset of the economic recovery.”

18.07.2013 Policy Points No Comments

NC Unemployment Claims: Week Of 6/29/13

For the benefit week ending on June 29, 2013, some 7,334 North Carolinians filed initial claims for state unemployment insurance benefits and 84,699 individuals applied for state-funded continuing benefits. Compared to the prior week, there were fewer initial claims and more continuing claims. These figures come from data released by the US Department of Labor.

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 9,712 initial claims were filed over the previous four weeks, along with an average of 85,006 continuing claims. Compared to the previous four-week period, the average number of initial claims was lower, and the average number of continuing claims was lower.

One year ago, the four-week average for initial claims stood at 11,003, and the four-week average of continuing claims equaled 99,553.

In recent months covered employment has increased and now exceeds the level recorded a year ago (3.82 million versus 3.76 million). Nevertheless, there are still fewer covered workers than there were in January 2008, which means that payrolls are smaller today than they were slightly more than 5.5 years ago.

The graph shows the changes in unemployment insurance claims measured as a share of covered employment in North Carolina since the recession’s start in December 2007. untitled

Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably.  In fact, the four-week average of initial claims, when measured as a share of covered employment, is now at the lowest level recorded since the end of 2007.  The four-week average of continuing claims also has fallen sharply over the course of 2013 and is at the lowest level recorded since early 2008.

17.07.2013 Policy Points No Comments

A Record Of Policy Success

Over at Off the Charts, Arloc Sherman explains the “impressive record of achievement” of anti-poverty programs in the United States.

 A number of anti-poverty programs — including some key efforts that have their origins in the War on Poverty and some that came later, often the product of bipartisan agreement — have an impressive record of achievement.  Together, programs such as food stamps (now known as the Supplemental Nutrition Assistance Program, or SNAP), the Earned Income Tax Credit (EITC), Medicaid, college financial assistance and broader based programs such as Medicare, have reduced poverty and malnutrition, expanded access to health care, and opened doors of opportunity for millions of people.  To be sure, poverty remains a serious problem in the United States and remains higher here than in many western industrialized countries.  And, not every program begun in the 1960s or more recently has been effective.  But, a bumper sticker analysis of the War on Poverty and today’s safety net that implies that “poverty won” misses the mark.

Take SNAP.  Chairman Ryan’s budget would cut the program by $135 billion over the next ten years.  Yet, the program is a prime example of a major national accomplishment.  Before food stamps and other nutrition programs were widely available, it was not hard to find large numbers of children in very poor areas of America with distended bellies or other indications of malnutrition.  That’s no longer the case.

16.07.2013 Policy Points No Comments

The Sequester And America’s Poor

In a blog post at The Atlantic, Nancy Cook describes “the sequester’s devastating impact on America’s poor.”

This was not the way sequestration was meant to go. The reductions were designed to be so painful — to both defense and nondefense discretionary programs — that Republicans and Democrats would flock to the negotiating table to find a compromise. Instead, the effects of sequestration have been uneven, with small pockets of intense upheaval rather than widespread but mild disruptions. Now, many Republicans openly profess their love of the cuts, especially since the fiscal-cliff deal did not seriously slash government spending or tweak entitlement programs, as the GOP had hoped it would. In their view, sequestration turned into the next best option for shrinking the federal government.

Democrats did manage to safeguard programs for the absolute neediest Americans. The sequester exempts a long list of safety-net programs such as food stamps, Medicaid, Medicare benefits, and Social Security. But Democrats have not been able to protect cornerstone social programs such as Meals on Wheels or Head Start, nor have they been able to prod Republicans to undo the cuts — especially now that the White House’s many dire projections have yet to come true. Border Patrol agents did not get furloughed, airplanes were not grounded, and the mass layoff of teachers did not occur.