State of the Union

North Carolina’s Lessons for Unemployment and the GOP

Despite the recent words of Paul Ryan, Marco Rubio, and Mike Lee, the GOP currently has little credibility when it comes to improving the lot of the poor and downtrodden. In the last election, Mitt Romney lost four to one among voters whose most important perceived candidate quality was who “cares about people like me.” This represented a fifth of the electorate, a share that may only increase as our economy limps through a tepid recovery. By transforming “limited government” from the means to an end to an end itself, Republicans lost the vocabulary of human flourishing—and what stale budget talk and appeals to principles remain won’t rebuild conservatives’ appeal to the economically anxious.

The recent debate over extending unemployment benefits is a case in point. Republicans mostly dropped the argument about the potential trade-offs between helping individuals and serving the long-term health of our economy—a welcome development given the depressing statistics economists like AEI scholar Michael Strain have compiled: of all unemployed workers, over a third have been unemployed for more than 27 weeks, double the share we saw during the recession of the early 2000s. Today there are approximately three unemployed workers for every available job opening. No wonder more than 350,000 workers opted to leave the workforce, making today’s labor force participation rate the lowest since April of 1978.

Then the debate moved to the cost—$18 billion, or approximately one-half of one percent of overall federal spending in 2013, then to procedural objections and the perfidy of Harry Reid. Yet at no point has a substantial majority of Republicans rallied behind a set of policies that would address the plight of the long-term unemployed.

Admittedly, part of the problem is the inherent challenge for a party out of power to rally around a substantially new, coherent agenda. Ryan and company are helping to fill that vacuum with their own policy solutions, and one can imagine that with a Republican in the White House, a similar agenda could get passed.

But the experience of my home state of North Carolina should give one pause. With control of both houses in the General Assembly and the Governor’s Mansion, the GOP passed many far-reaching reforms ranging from the tax code to education, none of which grappled with the structural problems facing the state’s economy. Rhetorically, GOP leaders and their surrogates stuck to abstract financing issues and small government talk. They rarely defended policies by appealing to a vision of the good life for North Carolinians that resonated with anyone outside the conservative fold.

Their strategy hasn’t panned out. The unemployment benefits reform was already controversial, since state leaders could have continued the benefits for the current long-term unemployed even as they reaped the same fiscal benefits had they just been willing to seek a mere six-month delay and a waiver from the Department of Labor. The unemployment rate has decreased six months later, but the drop appears to stem more from marginally-attached workers leaving the workforce than from unemployed workers finding jobs. Voters aren’t pleased. Governor McCrory hasn’t recovered in the polls, and likely GOP Senate nominee Thom Tillis is trailing Senator Kay Hagan even as President Obama’s unfavorability rating sits at a solid 55 percent.

Fiscal responsibility is important, but small government talk alone won’t cut it. Like it or not, the federal and state governments can target some of the root causes of poverty and economic hardship. Republicans need to start taking cues from Ryan, Rubio, and Lee to thoughtfully confront the challenges our society faces today: the decline of institutions like the family and local communities and the continuing struggles of segments of the workforce still grappling with our post-manufacturing age. Addressing the needs of the long-term unemployed would be a good place to start—lest some Congressional Republicans find themselves out of a job this November.

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How Raleigh’s Republicans Forgot the Working Class

At the beginning of North Carolina’s latest General Assembly, Republican lawmakers began pushing a legislative agenda that sparked months of “Moral Monday” demonstrations and heated attacks. The protests’ leader Reverend William Barber wrote to the Wall Street Journal to call GOP policies “cruel, morally indefensible and economically insane.” Republicans have countered with incessant appeals to “fiscal responsibility” and “small government.”

Elected with a super-majority, Republicans have decisively lost that advantage in public opinion after implementing their agenda. The latest Civitas Institute and Public Policy Polling (conservative and Democratic pollsters, respectively) surveys show North Carolinians losing confidence in newly-elected Governor Pat McCrory and his GOP. This fall from grace was inevitable given policy choices that hurt working-class families combined with an inability to defend their reforms without relying on stale conservative rhetoric. To get back on track, the North Carolina GOP, and the national party, should recalibrate policy and rhetoric to focus on the needs of working-class families through the reform conservative framework.

Given the state’s bipartisan tradition of striking a balance between economic growth and maintaining a social safety net, North Carolina is simply not well suited for libertarian governance. Education is a prime example: the right to a K-12 education is enshrined in the state constitution, and public education is broadly seen as a public good. After a century of almost uninterrupted Democratic governance, however, the state government became sclerotic with the worst tax burden in the Southeast, a growing divide between rural and urban counties, and deteriorating schools. Republicans were given an opportunity to govern conservatively and solidify their electoral gains for a generation. Instead, they squandered it.

Consider the GOP’s deeply unpopular refusal to postpone reforms to the state’s unemployment benefits by six months. Six months may not sound like much, but because they chose to implement the reforms on July 1st instead of January 1, 2014, 70,000 unemployed North Carolinians were stripped of their federal unemployment benefits in July, with another 100,000 set to lose their benefits by the end of the year. Proponents correctly argued that this move will save employers money, but they ignored the deeper problem: many communities are still grappling with the housing bust and the departure of manufacturing. North Carolina’s unemployment is largely structural, not cyclical; there are simply no jobs to be found. On net, the slight per-worker savings that employers will enjoy probably were not worth the trade-off—especially when the cuts to community colleges in this year’s budget will make retraining opportunities less accessible to the very people hurt by cutting unemployment benefits.

Cuts to public education were another missed opportunity for the GOP. McCrory and the General Assembly were right to phase out teacher tenure and incentives for obtaining graduate degrees, as well as to introduce merit pay, even if their proposed $500 merit incentive is inadequate. Instead of framing this decision as a cost-saving, however, Republicans could have articulated a positive vision for teacher pay by pushing a plan by Duke economist Jacob Vigdor. He proposes front-loading teacher pay to compensate early gains in expertise and expedite the amount of time it takes for teachers to reach their “peak pay” (which currently lags one to two decades behind doctors and lawyers). Higher pay today would mean less pay tomorrow (i.e., the end of defined-benefit pensions), but moving to defined-contribution plans and lowering the opportunity cost of teaching in the early years would both make the profession more flexible and expand the pool of prospective teachers. Improved education and better pay for teachers would affirm the role that education plays in social mobility for working-class families. Instead, public school teachers felt disrespected, and Republicans were tagged as the anti-education party.

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The Cleveland Plan

“Location, location, location” refers to real estate…and income mobility? The Times reports that the industrial Midwest and South are home to metro areas with the least income mobility—this economic geography matters. The sad thing is Congress can’t even pass a watered-down immigration reform bill, so the prospects of legislation that might actually grapple with this issue are slim to none.

But there is one thing that could unite Democrats and Republicans and begin to address the problem: let’s move strategically unimportant federal departments and agencies to economically impoverished cities and towns across America. Republicans would support it because, well, they hate DC and favor “real” America. Democrats would support it because their cities and states would benefit disproportionately (think Atlanta, Michigan, or Illinois).

Call it the Cleveland Plan after the city that exemplifies America’s decline. Not only does Cleveland routinely rank as one of America’s fastest-dying cities, but Clevelanders also had the indignity of watching the man who spurned them turn around and win the 2012 (and 2013) NBA Finals (not to mention they still claim Dennis Kucinich as a favorite son). Plop the Department of Energy HQ in Public Square and you suddenly have thousands of jobs that aren’t going anywhere.

Why is the Department of Agriculture on the National Mall when it could be in Kansas, which devotes 90.1 percent of its land to agriculture (compared to DC’s 0)? Shouldn’t government be close to the people it serves? In the same vein, perhaps one of the many blighted urban areas across the country could welcome the Department of Housing and Urban Development (hello, Detroit!). The Department of Education could even set up a roving headquarters in one of the nation’s worst performing school systems (scratch that—it’s already been done—ahem, DC).

Let’s face it: DC has been doing really well lately. From 2007 to 2012, DC expanded 14 percent (the rest of the nation grew by a measly three percent). Seems like the city could afford to, shall we say, spread the wealth around. Especially when you consider a city like Flint, Michigan, where less than a third of citizens are under 18 and a full tenth of residents up and left in the last decade (unemployment: 9.8 percent). Opportunities are evaporating in these communities which are rapidly graying and getting poorer. As economist Enrico Moretti explained in The New Geography of Jobs, people—especially non-college graduates—just aren’t as mobile as they used to be. Given this “stickiness” for the poorest among us, the solution might just be to bring the jobs to them.

If this strikes you as populist, you’re right. Just think: good, high-paying jobs would leave DC’s Super Zips—home to America’s new meritocratic elite—and return to the people. Look at the economic impact military bases have on local communities. When Fort Bragg announced a massive influx of new personnel after the most recent base realignment, my hometown newspaper in Lumberton, North Carolina (pop: 21,000) could not contain its glee.

And consider how much harder things would be for lobbyists! Instead of walking from K St to Constitution Ave (sorry, I mean Ubering from K to Constitution), they would have to fly halfway across the country to pressure regulators into making the “right” decision.

A few more salutary consequences: Traffic and congestion would disappear. Matt Yglesias could breathe a sigh of relief as rents start to fall. We could sell off the office buildings currently occupying prime real estate in downtown DC to start paying down our national debt. And don’t forget that the federal employee’s dollar would go a lot further in Casper, Wyoming than DC.

Our nation’s capital is on the Potomac because it was at the center of the country in 1790. Maybe it’s time to acknowledge that it’s 2013 and the geographic center isn’t Maryland, but Belle Fourche, South Dakota.

Surely that deserves at least a Cabinet department.

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