RALEIGH — North Carolina’s 10th straight month of double-digit unemployment should raise doubts about the president’s latest promise of economic stimulus. That’s the reaction from the John Locke Foundation’s top budget analyst as the state releases its latest unemployment figures.
“The Obama administration told us a federal economic stimulus package would help cap unemployment at 8 percent,” said Joseph Coletti, JLF Fiscal Policy Analyst. “So much for that promise. Now that national unemployment has reached double digits — and North Carolina’s rate has topped 10 percent for almost the entire year — the president is pushing for another round of government spending. President Obama and his advisers don’t seem to know the first rule of holes: when you find yourself in one, stop digging.”
“A front-page headline this month in one of the state’s largest newspapers paraphrased the president: ‘Spend more, create jobs,'” Coletti added. “The problem is the president’s plan calls for the government to spend more. The government can spend more only if it takes resources out of the private sector. That means money used to create government-endorsed jobs would not be available for entrepreneurs who create the private-sector jobs that help the economy grow.”
The N.C. Employment Security Commission’s latest report lists the state’s unemployment rate at 10.8 percent for November, down one-tenth of a percentage point from the adjusted October rate of 10.9 percent. North Carolina now ranks No. 10 in the nation in unemployment.
North Carolina has reported an unemployment rate of at least 10 percent every month since February. The rate peaked at 11.1 percent in May, according to the ESC.
Those numbers should help prompt a change in government policy, Coletti said. “Media reports have suggested the president considers our current national unemployment statistics ‘staggering,'” he said. “Unfortunately, the numbers have yet to prompt him to re-examine his remedy for a sluggish economy.”
Increased government spending is the wrong prescription, Coletti said. “Our economy will rebound when private-sector innovators and entrepreneurs make the investments that create jobs and meet consumers’ demands. Government spending cannot substitute for this private-sector process. Government can do no more than divert resources from one part of the economy to another.”
Taxpayers should discount claims about jobs “created or saved” because of stimulus spending, Coletti said. “A recent media report suggested Cumberland County used $118 million in stimulus funds to create or save 105 jobs,” he said. “At first glance, that sounds like a pretty expensive deal for taxpayers — more than $1 million per job. But the real story is even worse.”
“There’s no way to verify those numbers,” Coletti added. “Did new jobs really depend on stimulus money? How about the jobs supposedly saved? And here’s the most important question: how many jobs will be lost or never created because entrepreneurs and business owners are not allowed to keep enough of their own money to make crucial investments?”
Seasonally adjusted employment increased in November by more than 12,400 workers to a total of 4.04 million, according to the ESC. Unemployment decreased by 6,800 workers, with more than 487,000 workers now listed as unemployed. Unemployment has increased by more than 143,000 people in the past year. The state rate in November 2008 was 7.5 percent.
Lawmakers at the state and federal level can take steps to speed an economic recovery, Coletti said. “While continued double-digit unemployment should be enough to convince us that government stimulus plans do not stimulate the economy, government can take active steps that would help place us on the right path,” he said. “Lower tax rates and decrease the burdensome regulations that keep investors and entrepreneurs from playing their role in reviving the economy.”
Now is the time to switch gears in government policy, Coletti said. “With 10 straight months of double-digit unemployment in North Carolina, voters are hoping for change. Scrapping poorly conceived stimulus plans and adopting policies that encourage entrepreneurs are two changes that would turn the economy in the right direction.”