Press Release

Complicated, far-reaching government mandates slow N.C. job growth

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Click here to view and here to listen to Joseph Coletti discussing North Carolina’s latest unemployment data.

RALEIGH — Business owners trying to navigate the maze of new government mandates and restrictions are not racing to add new jobs in North Carolina. The John Locke Foundation’s top budget expert offers that assessment as the state releases its latest unemployment data.

“From ObamaCare to financial regulation reform to the various stimulus bills oozing out of Washington, D.C., Congress has created new sets of rules and regulations that will have a major impact on businesses’ bottom line,” said Joseph Coletti, JLF Director of Health and Fiscal Policy Studies. “And that’s not all. These new laws allow bureaucrats to write even more rules and regulations — hundreds of them.”

“Like a driver who pulls onto a highway and isn’t sure of the speed limit, most business owners will proceed with some extra caution until they get a good sense of the rules of the road,” Coletti added. “That means bad news for efforts to boost the number of new jobs in North Carolina.”

The N.C. Employment Security Commission’s latest report lists the state’s unemployment rate at 9.7 percent for August, down one-tenth of a percentage point from July’s rate of 9.8 percent.

North Carolina’s unemployment remained slightly below 10 percent for a second straight month, after 16 consecutive months in double-digit territory. North Carolina’s unemployment rate is still one-tenth of a percentage point higher than the national average of 9.6 percent. The state rate has exceeded the national unemployment rate since February 2008.

Month-to-month changes in the unemployment data cannot hide the fact that government policy choices are prompting many business owners and entrepreneurs to sit back and wait for answers, Coletti said. Federal health care reform offers the highest-profile example.

“During this month’s meeting of North Carolina’s legislative health care oversight committee, legislators peppered the head of the N.C. Institute of Medicine with questions about how ObamaCare will impact North Carolinians,” Coletti explained. “One senator asked whether the government would force a small business with 25 or 50 employees to offer and pay for health insurance. Rather than offer a simple ‘yes’ or ‘no’ response, the two-minute answer involved percentages of salaries, multiples of the poverty level, new health insurance exchanges, and $3,000 penalties.”

It’s no wonder prudent business owners and entrepreneurs are thinking twice before hiring new workers, Coletti said. “We have to remember that business owners weigh the benefits and costs of hiring new workers,” he said. “That’s an impossible task when the costs are unclear. Some businesses know for certain that they need new workers. Others aren’t so sure. Rather than risk hiring someone who will be too costly to keep on board because of new government mandates, many business are making due with the staffing levels they have now.”

Seasonally adjusted employment decreased in August by 14,743 workers to a total of 4.05 million, according to the ESC. Unemployment also decreased by about 5,000 workers, with more than 437,000 workers now listed as unemployed. The state rate in August 2009 was 10.9 percent.

Health care reform is not the only source of concern for businesses trying to plan ahead, Coletti said. “Federal financial-sector legislation is creating a new half-billion-dollar federal agency with regulators conducting 67 studies and writing 243 new rules, according to a report last month in Money magazine,” he said. “That’s another sign to businesses that now is a good time to hold off on adding jobs.”

Elected officials who worry about jobs should consider changing course, Coletti said. “If state and federal lawmakers are unclear about the impact of the legislation they pass, they should realize that the business owners and entrepreneurs who create wealth need more clarity, too,” he said. “The best way to provide that clarity is by reducing the regulatory burden and setting clear, simple rules of the road.”

For more information, please contact Joseph Coletti at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].

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We are North Carolina’s Most Trusted and Influential Source of Common Sense. The John Locke Foundation was created in 1990 as an independent, nonprofit think tank that would work “for truth, for freedom, and for the future of North Carolina.” The Foundation is named for John Locke (1632-1704), an English philosopher whose writings inspired Thomas Jefferson and the other Founders.

The John Locke Foundation is a 501(c)(3) research institute and is funded solely from voluntary contributions from individuals, corporations, and charitable foundations.