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World
Primaries in Northeast Set the Stage for the Fall
Gina M. Raimondo, the Democratic treasurer of Rhode Island, won a convincing victory to become her party’s nominee for governor — just one of several primaries taking place across New England on Tuesday.The Raleigh Experiment
North
Carolina is an interesting place these days, and I mean that in the
worst possible way. It’s a southern state, but one with a major
technology complex, growing foreign investment, and what seemed until
recently to be a moderating, increasingly sophisticated political
culture. But then came the Republican wave of 2010, and NC was taken
over by right-wing radicals, who have — among other things — taken the
nation’s of 2010, and NC was taken
over by right-wing radicals, who have — among other things — taken the
nation’s of 2010, and NC was taken
over by right-wing radicals, who have — among other things — taken the
nation’s hardest line in cutting benefits to the unemployed.
So how’s it going? Not well. Others have taken this issue on before me, notably Evan Soltas here and here, but I wanted to put up my own version for future reference.
The idea behind
cutting benefits is that we are “paying people to be unemployed”, and
that tough love will force them to go out and create jobs. It’s never
explained exactly how greater desperation on the part of the unemployed
will, in fact, lead to higher overall employment. Still, you could
imagine that an individual state might gain some competitive advantage
against other states by cutting wages. What you actually see in North
Carolina, however, is nothing — employment growth tracked the national
average both before and after the benefit cuts:
The unemployment rate
did fall — but this was due to a large drop in the labor force, as the
number of people looking for work fell. Why? Well, a likely explanation
is that some of the unemployed continued to search for work, and were
therefore counted in the labor force, despite low prospects of finding a
job in a depressed economy, because such search is a requirement for
those collecting benefits. Take away the benefits, and they drop out.
Now, labor force participation has fallen nationally as well as in North
Carolina, and the state’s labor force began dropping before the benefit
cuts, so that the case for claiming that reduced benefits actually
reduced job search isn’t ironclad. Still, it’s worth emphasizing just
how extraordinary the changes have been. North Carolina’s labor force
drop has been much larger than the national change:
And it has also been
unprecedented in historical terms. There’s been nothing like the recent
North Carolina decline — taking place at a time of modest recovery, not
recession — in the state’s previous history:
Again, if there were
anything to the theory that cutting unemployment benefits encourages job
search and somehow translates into higher employment even in a slump,
harsh policies should work better at the state than at the national
level. But there is no sign at all that North Carolina’s harshness has
done anything except make the lives of the unemployed even more
miserable.
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