March 9, 2010

RALEIGH — Now that North Carolina has registered nearly a full year of double-digit unemployment, state leaders should examine the obstacles that block creation of new jobs in this state. That’s the recommendation from the John Locke Foundation’s chief budget analyst.

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

“The solution to high unemployment is more jobs, and the way to get more jobs is to make it easier for business owners and entrepreneurs to create them,” said Joseph Coletti, JLF Director of Health Care and Fiscal Policy Studies. “It’s unfortunate that North Carolina’s elected leaders don’t seem to grasp this concept. They seem to think the state can thrive with a business climate featuring high tax rates, heavy regulation, and government mandates that raise the cost of doing business.”

“Especially troubling in recent months have been growing energy costs,” Coletti added. “One of the state’s largest newspapers recently featured a headline that suggested many customers believe their higher-than-expected energy costs are ‘outrageous.’ That’s not the type of news that will entice a business owner to set up shop in North Carolina.”

The N.C. Employment Security Commission’s latest report lists the state’s unemployment rate at 11.1 percent for January, up two-tenths of a percentage point from December’s revised rate of 10.9 percent. January marks the 11th straight month of unemployment in excess of 10 percent. North Carolina now ranks No. 9 in the nation in unemployment.

Thanks to revisions in the state’s data, the January rate of 11.1 percent represents a new high for the current economic slump. North Carolina reached its previous high mark of 11 percent unemployment last June and July.

A key factor in North Carolina’s economic sluggishness is government action that raises the cost of doing business in this state, including energy costs, Coletti said. “North Carolina ranks No. 2 in the Southeast in energy prices, trailing only Florida, according to the latest data available from the U.S. Energy Information Administration.”

“Even more telling is a comparison of North Carolina to its neighboring states, the states most likely to compete for new business,” Coletti explained. “While North Carolina ranks No. 17 nationally in energy prices, all of our neighbors rank among the bottom half of the states. Georgia and South Carolina sit in the bottom third of the states in terms of energy prices.”

State government has helped raise North Carolina energy prices with costly regulations, Coletti said. “Whether it’s the 2002 Clean Smokestacks Bill that’s projected to cost electric customers more than $3 billion, or a 2007 government mandate that’s prompting major utilities to seek expensive renewable energy options, government is going out of its way to raise the cost of doing business in North Carolina.”

“What’s especially troubling about these two examples is that neither one of them promises much in terms of benefits,” Coletti added. “There’s no proof that North Carolina has cleaner air because of the Clean Smokestacks Bill’s requirements. There’s also no evidence that a renewable-energy mandate will do anything to fight global warming.”

Seasonally adjusted employment increased in January by more than 6,900 workers to a total of 4.03 million, according to the ESC. Unemployment increased by 8,300 workers, with more than 502,000 workers now listed as unemployed. Unemployment has increased by more than 82,000 people in the past year. The state rate in January 2009 was 9.2 percent.

Environmental mandates represent just one area in which government action leads to unintended consequences for job creation, Coletti said. “I don’t think any lawmaker said, ‘Let’s go out and kill some jobs today,’ or ‘Let’s scare away some entrepreneurs today,'” he said. “But that’s what happens when government takes steps that raise the cost of doing business.”

North Carolina government can take steps to make the state more competitive, Coletti said. “Lower tax rates, less burdensome regulation, and fewer costly mandates should top the list of changes,” he said. “Lawmakers need to realize that business owners and entrepreneurs will respond to these real incentives. Set up fewer barriers to job creation, and this state will see more new jobs. It’s that simple.”

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].