LEGISLATIVE BULLETIN: North Carolina needs the Local Jobs For America Act

By ALEXANDRA FORTER SIROTA
April 29, 2010

See a summary of where in North Carolina jobs would be created in the PDF file.


EXECUTIVE SUMMARY:

  • THE UNITED STATES GOVERNMENT has successfully employed direct job creation strategies in the past—for
    example, during the Great Depression and in the 1970s. Their legacy can be found in national parks, highways and
    long-term improvements to workers' earnings and community infrastructure.
  • UNDER THE LOCAL JOBS FOR AMERICA ACT, federal dollars would provide state and local governments with the resources to meet rising community needs at a time when budget shortfalls would have required
    not only reductions in services but also layoffs of government workers.
     
  • A CONGRESSIONAL REPORT ESTIMATES that the funds could create or save more than 18,000 jobs
    in North Carolina in the first year. In addition, an estimated 7,419 jobs could be created or saved in education.
  • THE TARGETED GRANT FORMULA, which takes into account both the unemployment and poverty rates in a
    community, ensures that communities hardest hit today as well as those that are historically disadvantaged will benefit from employment opportunities.
  • DIRECT JOB CREATION has been demonstrated to add to the net supply of jobs in disadvantaged areas, improve the lifelong earnings of workers, and meet urgent community needs.

 

INTRODUCTION
As of January 2010, there were more than five unemployed workers per job opening nationally. In order to get Americans back to work, Rep. George Miller (D-CA) has introduced the Local Jobs for America Act, which would authorize $100 billion over three years to preserve jobs in state and local government and create jobs in the public and nonprofit sectors to meet essential community needs.

THE JOBS CRISIS IN NORTH CAROLINA Unemployment remains at an all-time high, continuing to hover around 11 percent. Estimates by economists suggest that it will take anywhere from three to five years to return to pre-recession
employment levels. And pre-recession employment levels were already depressed in North Carolina owing to the lagging recovery from the previous recession and the persistence of structural unemployment

Jobs are not being created at a level that can provide the unemployed in North Carolina with work. Indeed, analysis finds that from 2001 to 2007, North Carolina failed to add enough jobs to employ the growth in the number of prime-age workers over the same period. In the period from March 2009 to 2010, North Carolina saw its non-farm employment contract by 1.6 percent. The state budget crisis threatens the stability of the public sector’s key role in employment. Indeed, in Governor Perdue’s proposed budget, the elimination of public sector jobs is an essential part of cutting
costs. To date, public sector jobs have provided some measure of employment stability in the state, according to recent data released by the Employment Security Commission. From March 2009 to March 2010, governments in North Carolina
added the most jobs of any employment sector: 17,400, a significant share of which were posts in local government.

JUMPSTARTING JOB CREATION
The Local Jobs for America Act (HR 4812) would deliver critical funding to states, local governments, and community-based organizations to save and create nearly one- million jobs. North Carolina communities would benefit as these federal funds stimulate job creation and economic activity.

The legislation targets funding based on a formula that takes into account unemployment and poverty rates as well as population. Analysis by the Economic Policy Institute finds that this funding formula will be effective at addressing the disparity in unemployment between white and African-American workers given that African-Americans are more likely to live in poverty, more likely to be unemployed and more likely to work in government.

North Carolina could benefit from more than 18,000 jobs created or saved in the first year, according to a report on the
Local Jobs for America Act from the U.S. House Committee on Education and Labor. In addition, funding kept separate
for education in the same bill will create or save an additional 7,419 jobs in North Carolina classrooms. Given that North
Carolina’s unemployment and poverty rate are higher than the nation’s, it is estimated that the state would receive almost 3
percent of the total $37.5 billion in funds to be distributed in the first year.

These federal dollars would meet crucial community needs. Ensuring that police, firefighters, teachers and other public
servants are retained is essential in light of the tough budget climate. In addition, expanding the capacity of community-based organizations will ensure they can continue to serve the growing needs of their clients. Analysis of past direct job creation efforts found that the services and products delivered by those employed were valuable enough to compensate for wages paid and administrative costs.

While focused on job creation in the public and non-profit sectors, the private sector will also benefit. Reducing unemployment and getting workers back on the payroll can lead to improved consumer spending. Local businesses would benefit from the increased commercial activity and would be better positioned to add jobs and expand operations in the long term. In addition, the skills gained by workers in these newly created employment opportunities will better position them for private-sector employment down the line.

CONCLUSION
The Local Jobs for America Act is a bold proposal that can jumpstart North Carolina’s recovery from the current economic crisis and put North Carolinians back to work immediately. A direct investment in public and non-profit sector job creation will save and create employment opportunities and meet critical community needs.

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