JOHN HOOD: What the New Economic Stats Tell Us
Responding to new data from the U.S. Census Bureau on income, poverty, and health insurance, some politicians and commentators noted that North Carolina posted improvements but still had far to go to reach the national average.
That's mostly true, and worth chewing on a moment, but later I'll suggest that there's an even more important message in the new statistics.
A troubling characteristic of North Carolina's political culture is what I like to call the "Blarney Tradition." Over the past century, our leaders have shown themselves to be excellent marketers. But they haven't been as skilled at delivering the goods. There's been a gap between the talk and the walk.
Here's a fact you won't see trumpeted in press releases and political speeches: Since the mid-1990s, North Carolina's economic performance has been lackluster. In some measures and time periods, we've lagged the national average. On others, we've matched or slightly exceeded the average but been outpaced by regional rivals such as Virginia and Florida.
Take income. While the new Census report studies median household income, that measure is affected not just by earnings but also by changes in household composition. On the purer measure of income growth, average income per resident, only six states had a worse showing from 2000 to 2007 than North Carolina did. As for unemployment, since July 2000 there's been only one month -- January 2005 -- when North Carolina's jobless rate was not higher than the average for Southern states. During most of these months, our jobless rate also exceeded the national average, as it did in July 2008 (6.6 percent for NC vs. the 5.7 percent national rate and the 5.5 percent Southern rate).
Now, there's plenty of room for public-policy debate about causes and solutions. Advocates of cutting taxes and shrinking government budgets can point to states such as Florida and Texas that outperform North Carolina and have substantially lower tax burdens and marginal tax rates. Advocates of more spending on education and social services can point to the better-than-average growth experienced by big-government states such as New York and Maryland.
In my view, the best-available research offers more support for the limited-government hypothesis than for the big-spending hypothesis, but that topic is best explored another day.
What I'd like to call your attention to now is that the new Census data tell us not so much about relative state performance but about how much work, education, and family structure explain one's risk of being poor.
The data show that poverty is highly correlated with three variables: education, family structure, and work. Those who drop out of high school, have children out of wedlock, and fail to place at least one family member into full-time, year-round employment have a high risk of being poor. About two-thirds of families headed by single parents who don't work full-time are poor. High-school dropouts are twice as likely as high-school graduates to be poor.
On the other hand, parents who graduate, marry, and work full-time have a low incidence of poverty. Among married families with at least one full-time worker, the poverty rate is 3.8 percent. If both parents work full-time, the rate is less than 1 percent. If both are high-school graduates, the rate is tinier still.
This is not to say that public policy has no role in affecting individual decisions about education, marriage, and work. For example, our public schools fail to impart basic skills to many youngsters, placing them years behind their peers, and then fail to provide good options to high-school students who don't see themselves as college-bound. Too many drop out.
But before political partisans get carried away blaming specific policies or politicians for broad economic trends, they should take seriously the idea that government's ability to determine social outcomes is limited.
Many fateful decisions are made by individuals when they are young, inexperienced, and uninformed. The goal should be to help them make better decisions. That's a difficult enough task without expecting government to plan our way to economic utopia.
Hood is president of the John Locke Foundation and publisher of CarolinaJournal.com.
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