John Hood, of the John Locke Foundation headquartered in North Carolina, wrote an important column over the weekend published in the Wall St. Journal.
Hood has long advocated that government-funded unemployment insurance actually INCREASES unemployed workers and keeps them out of work longer. Hood gets to run a winning lap based on the latest stats from the Tarheel State.A year ago, North Carolina became the first state in the nation to exit the federal government’s extended-benefits program for the unemployed. Facing the prospect of job-killing hikes in payroll taxes to pay back Washington, Gov. Pat McCrory and the state legislature instead reduced the amount and duration of unemployment-insurance benefits, which had been higher in North Carolina than in most states. As a result the state lost its eligibility to participate in the extended-benefits program on July 1, 2013.
National media and liberal activists pounced. Citing the decision and several other “outrages” by the state’s first Republican-led government since Reconstruction—such as adopting a pro-growth flat tax, clearing out the state’s regulatory thicket, and rejecting ObamaCare’s Medicaid expansion—left-wing critics subjected the Tar Heel State to months of invective and ridicule.
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But North Carolina didn’t become the “Detroit of the South.” The opposite has occurred.
North Carolina didn’t descend into the Dickensian nightmare critics predicted. For the last six months of 2013, it was the only state where jobless recipients weren’t eligible for extended benefits. Yet during that period North Carolina had one of the nation’s largest improvements in labor-market performance and overall economic growth.
According to the U.S. Bureau of Labor Statistics, the number of payroll jobs in North Carolina rose by 1.5% in the second half of 2013, compared with a 0.8% rise for the nation as a whole. Total unemployment in the state dropped by 17%, compared with the national average drop of 12%. The state’s official unemployment rate fell to 6.9% in December 2013 from 8.3% in June, while the nationwide rate fell by eight-tenths of a point to 6.7%.
In the meantime, the Democrats in Washington, DC were wailing in the Fall of 2013 for Republicans to cave and to extend Federal unemployment insurance to historically lengthy levels. A funny thing happened in the last six months, though. Charles Krauthammer addressed it on FOX News’ Special Report on Friday.
These six months, which Obama heralds as the largest — the fastest growth in jobs since 1999, have coincided with the six months of which we have no longer extended emergency unemployment, long-term unemployment insurance. Remember at the end of last year, the furious debate the Democrats [had], the president saying if you end this, the sky is going to fall, people won’t go starving, it’s going to increase unemployment? It’s had precisely the opposite effect.
In these six months, where you ended the extended unemployment, and the conservative argument was if you subsidize something, you’ll get more of it, if you stop the subsidy, you’ll lessen it. So, these six months coincide with a decrease in the median length of unemployment from 17 weeks to 13 weeks. The largest six-month decline in the length of unemployment ever measured. Which means the real problem of long-term unemployment was a function of this anomaly, emergency extended unemployment, which should never have happened, and whose end has created this — has contributed to this excellent result. The debate on that extension is over and the conservatives were right.
It turns out the #RenewUI folks were whistling Dixie while North Carolina was showing the way to real job growth — putting people back into the private sector and off of the government dole.