Another exploration of N.C.’s economic performance since the end of extended federal unemployment benefits

If for no other reason than to be reminded of Keynesian Kool-Aid connoisseur Paul Krugman‘s willful ignorance of fact, you’re likely to enjoy Scott Lincicome’s detailed dissection for The Federalist website of North Carolina’s economic performance in the wake of last summer’s end of extended federal unemployment benefits.

Between December and June, the Tarheel state gained only 13,100 jobs (0.13% of its population) – basically all of them in January, after which jobs stagnated. By contrast, the state gained 51,400 jobs (0.53% of population) after UI benefits were cut – the second-best expansion over the period and, as already noted, the biggest improvement between the first and second-half of 2013. In short, North Carolina’s job creation was stuck in neutral before the UI cuts and then shifted into drive thereafter.

The best second-half job growth was in South Carolina (25,400 new jobs or 0.54% of population) – a state which actually cut unemployment benefits a couple years ago – but that growth was a more modest improvement from the first part of the year (11,400 new jobs or 0.24% of the state’s population). Virginia, on the other hand, saw its job growth decelerate between periods, as did the nation as a whole. Thus, the reduction of UI benefits doesn’t appear to have hurt job creation in North Carolina and may have just helped it. This is particularly apparent when you consider the difference between the job gains in the UI-cutting Carolinas and the job stagnation in Virginia, which maintained more ample UI benefits.

The population survey data show an even more radical job improvement in North Carolina, again not mirrored by neighboring states or the country as a whole and again showing much better employment growth for the “UI-cutters”.

In reality, North Carolina was the only one to actually lose jobs in the first half of 2013 and then gain jobs from July to December. And the state didn’t just gain a few jobs after unemployment benefits were cut – it experienced the best job growth of the group (0.42% of its population or 41,364 jobs). Only South Carolina can (again) touch this second-half performance, but – unlike its UI-cutting neighbor to the North – the state was already doing pretty well job-wise from December to June. And (also again) Virginia and the nation actually saw 2013 job growth decelerate between the two periods.

In sum, both the population survey and the establishment survey show that North Carolina saw a significant improvement in jobs during the periods immediately preceding and following the state’s cuts to unemployment benefits – changes that are not only unique to North Carolina among its neighbors and the country as a whole, but also – and more importantly – much better. Thus, although it’s impossible to be totally sure that North Carolina’s jobless benefit changes led to more jobs being created in the state (aka “employment effects”), these data do support that view.

2 comments

  1. To stress that your phrase choice was correct when you spoke of Krugman’s “willful ignorance of fact,” let me point to something that Lincicome didn’t include, but that I reminded Locker Room readers of back when Krugman wrote his initial, willfully ignorant blast of North Carolina’s UI reform.

    That is that Krugman’s own economics textbook discussed how overly generous unemployment benefits encourage jobless workers to stay unemployed, rather than taking available jobs.

    Comment by Jon Sanders on February 12, 2014 at 9:06 pm

  2. D’oh!

    Comment by Mitch Kokai on February 12, 2014 at 9:12 pm

    Mitch Kokai

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