State of Working North Carolina

Across the country and here in North Carolina, concern is rising that our collective negligence in the face of eroding public infrastructure will have ripple effects through our economy — keeping us from reaching our full economic potential and hurting the health and well-being of people and communities. Indeed, across a range of public infrastructure projects that seek to deliver a public good to the broad community, the receding role of government is acute. It is also not an accident. 
For decades, the federal government has reduced its commitment to funding public infrastructure projects, such as transportation, water systems, and schools, such that today investments by broad and narrow measures are below 1979 levels. And while state and local spending on infrastructure has increased as a share of total commitment to public works, it too is in decline, most notably in the post-recovery period. In April 2018, total construction spending on public infrastructure by state and local governments was $282 billion, down from a peak of $344 billion in April 2009. In North Carolina from 2002 to 2014, the state’s spending on capital projects declined by half a percentage point, the 24th highest decline among states.

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The declining investment of public dollars in projects for the public good has quickened as prioritization of tax cuts and austerity have superseded the reality of community needs and a more viable path to sustainable and equitable economic growth. As Josh Bivens with Economic Policy Institute notes:
“Infrastructure investment is routinely estimated to be a more efficient fiscal stimulus than almost any form of a tax cut, and it is significantly more efficient than those tax cuts whose benefits fall mostly on high income households.”
And yet, across the nation and North Carolina, even as communities lift up the need for public works, policymakers have prioritized tax cuts for the wealthy few ahead of these foundational investments for all. Indeed, at the federal level, the recently passed federal tax plan will reduce annual revenue by trillions, while North Carolina will lose an estimated $3.5 billion annually under the tax code that will go into effect in January 2019, compared to what was in place in 2013.
The lack of revenue and failure to invest in public works is resulting in erosion in many of the quality of life measures in North Carolina. Children are being educated in classrooms and school buildings with leaking roofs and mold. Roads and bridges are deteriorating, making it more difficult to connect goods to market and workers to jobs, and transportation networks aren’t extending beyond existing roads to reach more places. Energy grids are failing to keep up with the emerging efficiencies and clean energy technologies that can facilitate cost-effective and sustainable energy use. Too many households still lack the basic utilities of clean water and wastewater management. Many more can’t connect to the global marketplace through reliable, affordable internet connections.
Moreover, North Carolina—and the country—is missing out on an opportunity to increase work opportunities for those looking for jobs. A federal jobs guarantee, much in the spotlight now, is one way in which researchers have noted public policies can specifically connect workers to the benefits of public projects to double the return for communities. Just as the Works Progress Administration and New Deal projects built the Blue Ridge Parkway and funded many arts, cultural and public health projects in North Carolina, a federal jobs guarantee today could match workers to the known need for infrastructure and public works.
A public commitment is needed
Current trends point to the need for public sector engagement in infrastructure investments. The reality is that the private markets have not responded to the needs, and, in the meantime, many North Carolinians are not able to connect to key opportunities to enhance their well-being. Many infrastructure investments deliver what is considered a basic right or need, such as access to clean drinking water. This contribution to well-being is significant even as it is most often ignored due to a focus on maximizing profits. As well, a public commitment to fund infrastructure is critical in instances where it is difficult to assign a price to a service because the benefits are broadly distributed. In this instance, the role of public funds to ensure the delivery of a service is important to a broader community goal that benefits many, such as access to water for farms, household consumption and commerce, and which otherwise would be difficult to price for different users in the marketplace. 
The importance of a public commitment to building out the connections across communities is particularly important for rural places. With more robust infrastructure and capital projects, the opportunities for workers expands in rural communities, additional resources can be attracted to move to rural places, and greater productivity in rural places can be achieved. By both ensuring that connections between goods and markets and workers and employers are made more quickly, and by providing a foundation from which private capital can invest in productivity-enhancing technologies, public infrastructure serves a role in forging the connections that are fundamental to maximizing the potential of the economy. Across a range of studies, analysts have found that public investments boost private-sector output and employment.
Public infrastructure also, again, delivers core services, like education and health care, that boost opportunities for people and the broader economy, enhancing well-being and improving quality of life.
For workers, and for workers in rural places, public works can be a direct point of connection to the labor market and can indirectly improve the quality and availability of jobs over the long-run. When investments are made in infrastructure, the research consistently points to an overall boost to employment through the creation of jobs and stabilization of the labor market. In research on the impact of American Recovery and Reinvestment Act of 2009 highway funds, researchers have found that employment fell less and began growing more quickly where federal investments in building highways was greater. Overall public infrastructure spending in states is correlated with higher employment across a range of studies. In the long-run, public infrastructure can increase the number of firms operating or expanding in a community, improve the quality of jobs both in terms of wages and career progression, and deter the out-migration of workers from rural areas.
As North Carolina grapples with the best way to build stronger regional economies, policymakers should consider the central and positive role that public infrastructure can play in deepening the connections for the state’s workforce to jobs, the state’s businesses to markets and the state’s residents to well-being. 
This year’s State of Working North Carolina report presents the ways in which public infrastructure and local assets — specifically, anchor institutions — can help connect workers in rural areas to jobs, boost rural communities, and contribute to more equitable growth of the state’s economy. 

State of Working North Carolina 2015

State of Working North Carolina 2014 

State of Working North Carolina 2013

State of Working North Carolina 2012

State of Working North Carolina 2011