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Defenders of Justice
Justice Circle May 2010
EXECUTIVE SUMMARY
- The current recession has pushed more than half a million members of the state’s labor force out of work and paralyzed the expansion of business and growth in job opportunities.
- Certain communities and sub-populations have been disproportionately impacted by this economic slowdown. Young adults, people of color and those with only high school degrees or less are most likely to be unemployed. In addition, those living in the north east, west, and metro areas have experienced high unemployment.
- The recovery shows every sign of being jobless for an extended period, due to the reduction in hours worked, the permanent loss of jobs, and the size of the discouraged worker pool — all of which will delay improvements to the unemployment numbers in the short-to-medium term. This situation is further compounded by the lackluster growth in jobs North Carolina experienced in the early 2000s, when the state added jobs at an annual rate of 1 percent and workers at a rate of 1.6 percent.
- As a foundation for addressing the jobs crisis, North Carolina must ensure that policymakers take a balanced approach to the budget and strengthen the safety net in order to ensure that families make it through this economic downturn without suffering financial crises from which they cannot recover.
- Two job creation strategies that can deliver immediate results, are lowcost, and promise benefits for workers, employers and the economy as a whole are a Small Business Job Creation Grant program and a Short-Time Compensation Program.
- The Small Business Job Creation Grant would provide a subsidy to small businesses and non-profits to cover part of the wages and benefits associated with hiring an unemployed worker for a new post. At an estimated cost of little more than $3,000 per position, it is possible that such a program could create nearly 5,000 permanent jobs and 10,000 temporary ones.
- A Short-Time Compensation Program works by encouraging employers to reduce hours rather than lay off workers by using unemployment insurance funds to pay a portion of the wages that an employee would lose due to the reduction in hours. Employers retain trained employees and therefore are ready to quickly ramp up when the economy turns around, while employees maintain their earnings and thus continue to engage in consumer spending to drive a recovery. Nearly 25,000
workers could benefit from such a program in North Carolina. - Without bold action, North Carolina’s economy will be stuck in the economic doldrums for some time to come. Federal, state and local governments have important roles to play in turning the economy around and enabling the growth of a vibrant and diverse middle class. Creating jobs and getting North Carolinians into quality jobs will not only stimulate the economy now but for years to come.