Across the nation and here in North Carolina, the unemployment rate has been in decline, a fact that has many cautiously optimistic about the economy.
But U.S. Congressman David Price (D) of Chapel Hill says not so fast.
“Has the number of jobs, and people filling jobs, actually increased?” he says. “The answer is no.”
And he says that means federal and state government still has to be active in aiding both the economy and those individuals struggling to find a job.
“We’re still stalled here in this economy – you still have three people seeking (work) for every job that’s available – and so people still need this support system to go after these jobs,” he told WCHL last week, shortly after attending a pair of roundtables on unemployment at Wake Technical Community College in Raleigh.
“These folks are really, really wanting to work…(and) I’m hopeful that eventually they’ll succeed, but the notion that you help them by pulling the safety net out from under them is just preposterous.”
At those roundtables, Price met with instructors and students in the school’s Human Resources Development program, which provides career advice and job skills training for students who need it.
“This is a group of people who have good training (and) good job backgrounds,” he says. “The group that I talked to was remarkable in that respect – but yet also remarkable in just not being able to penetrate this job market.”
Price says that’s why he’s currently urging both the federal government and the state government to extend unemployment benefits for those out of work. North Carolina legislators cut unemployment benefits last year, a move that also disqualified the state from receiving federal Emergency Unemployment Compensation as well. And at the federal level, Congress too is currently debating whether to extend unemployment benefits.
Price, along with a majority of Democrats, says it should be done.
“I don’t think there’s any question (about that),” he says. “Never – never – in a period of unemployment this severe have benefits been yanked at this point.”
Republicans in North Carolina point to the state’s declining unemployment rate as evidence that cutting benefits has motivated people to get back to work. But Price says the attendees at last week’s forum said otherwise—and he says the numbers seem to indicate that if anything, cutting benefits has actually motivated people to drop out of the job market altogether.
“The unemployment program requires you to seek work and keeps you plugged in to the employment security system,” he says. “One economist (at the roundtable) who has studied the trends said that the number of people seeking work actually went down when the unemployment benefits were discontinued…
“In other words, far from making people go out and look for a job more diligently, it seemed to have the opposite effect: it just discouraged people and caused them to drop out.”
North Carolina’s labor force shrank in 2013 by about 111,000 workers; about half of that came after the benefit cuts took effect in June. The state only added about 13,000 new jobs in 2013, but it did add more than 41,000 in the second half of the year after a drop from January to June.
ORANGE COUNTY – Chapel Hill is adding a new parking lot downtown: on Monday, February 3, the town is opening the Courtyard parking lot, located at 115 South Roberson Street near the west end of Franklin. Town staff say there will be 53 spaces available at the new lot. (There are about 1200 available parking spaces in all in downtown Chapel Hill.)
Earth Policy Institute founder and president Lester Brown will be on campus Tuesday, February 4, lecturing on the future of agriculture in a world of dwindling water.
The lecture is entitled “Peak Water: What Happens to Our Food Supply When the Wells Go Dry?” It begins at 5:30 p.m. in the Nelson Mandela Auditorium at the FedEx Global Education Center. It’s free and open to the public.
Starting in April, ARCA will begin assembling CM18 cash recyclers at its manufacturing facility in Mebane, transfering operations from Italy. The move will make the Mebane facility the only one in the U.S. to produce cash recyclers, used by banks and credit unions to speed its balancing and inventory functions.
Twelve Chapel Hill-Carrboro City School teachers have recently earned National Board Certification: Melissa Nicholson-Clark and Samantha Howard of Morris Grove Elementary; Susan Azzu, Agnes Bernasconi, and Ashley Laver of Rashkis Elementary; Christine Cohn of Estes Hills Elementary; Jennifer Pedersen of Northside Elementary; Lisa Myles of McDougle Elementary; Miles Chappell of Phillips Middle; Beth Kinney of McDougle Middle; Holly Loranger of Chapel Hill High; and Jenny Marie Smith of East Chapel Hill High. Congratulations to all twelve!
North Carolina leads the nation in the number of teachers certified by the National Board. XXX
Another recognition for UNC: the Princeton Review has ranked UNC-Chapel Hill as the number-one public university in the nation on its 2014 list of America’s “Best Value Colleges.”
UNC has long been recognized as a national leader in preserving affordability and accessibility while simultaneously providing a high-quality education and maintaining high graduation rates.
NC State also made the Princeton Review’s list, as the number-four public university in the nation. Williams College in Massachusetts ranked first among private universities.
Chapel Hill-Carrboro City Schools are participating in North Carolina’s first official pilot test with school buses filled with propane autogas, an alternative fuel designed to lower gas costs while also reducing toxic emissions.
The North Carolina Propane Gas Association is promoting the new technology in conjunction with Triangle Clean Cities Coalition and Triangle Air Awareness. They say propane autogas can reduce emissions by 80 percent compared to diesel fuel.
Other districts participating in the pilot program include Union, Brunswick, and Nash-Rocky Mount.
Carolina Brewery is celebrating its 19th birthday with events beginning on Wednesday, February 5 and running through Saturday the 8th–including the debut of a new “Anniversary Ale” and a pint glass giveaway on Friday the 7th.
CHAPEL HILL – About 400 political and business leaders gathered at the Friday Center on Thursday for the Chapel Hill-Carrboro Chamber of Commerce’s annual meeting, to honor outstanding local businesses, nonprofits, and individuals.
Meg McGurk of the Chapel Hill Downtown Partnership set the tone in her keynote address. “Downtown has reached a tipping point,” she told the attendees. “The private sector is investing in downtown on unprecedented levels, the public sector has taken a new pride in engaging in our downtown…(and) you are the ones that are making that change happen.”
The highlight of the annual meeting was the awarding of the Chamber’s annual Business of the Year honors:
• The Micro-Enterprise Business of the Year award went to Sweeps, a company that matches UNC students with locals in need of moving, cleaning, tutoring, and other odd jobs.
And the Chamber also recognized three individuals as well. Longtime volunteer Irene Briggaman won the Ambassador of the Year award; UNC Executive Director of Real Estate Gordon Merklein won the Duke Energy Citizenship and Service award for his work not only with UNC, but also with various local service organizations. And outgoing Chamber board chair Paige Zinn recognized former Carrboro Mayor Mark Chilton with the Chamber’s award for Leadership in Public-Private Partnership.
“Mark has demonstrated that you can support economic and community development without forswearing your interest in the environment and social justice,” Zinn said of Chilton.
Attendees at the meeting included state government officials, the three mayors of Chapel Hill, Carrboro and Hillsborough, and all but one member of the Orange County Board of Commissioners.
President Obama Introduces Innovation Institute At N.C. State
RALEIGH - Your local economy is already one of the best in the state, but President Barack Obama traveled to N.C. State University Wednesday afternoon to announce the future of American jobs.
“I’m pleased to announce America’s newest high-tech manufacturing hub, which is going to be focused on the next generation of power electronics, is going to be based right here in Raleigh, North Carolina,” President Obama said.
That announcement received a standing ovation in N.C. State’s J.W. Isenhour Tennis Center.
***Listen to President Obama’s Remarks at N.C. State***
The Next Generation Power Electronics Innovation Institute is the second of its kind. The first was started more than a year ago in Youngstown, Ohio and focuses on developing 3D printing technology.
President Obama said Raleigh-Durham’s innovation institute will focus on energy efficiency through this partnership of universities and businesses.
“Bringing together leading companies, universities, and federal research all together under one roof,” President Obama said. “Folks at this hub are going to develop what are called wide band gap semiconductors.”
The President likely addressed many engineers as he pointed out that he was on the campus of a university with one of the largest undergraduate engineering programs in the country.
He said the wide band gap semiconductors will revolutionize energy conservation.
“They’re special because they lose up to 90 percent less power,” President Obama said. “They can operate at higher temperatures than normal semiconductors. So that means they can make everything from cell phones to industrial motors to electric cars smaller, faster, and cheaper. There are going to (still be) applications for the traditional semiconductors, but these can be focused on certain areas that will vastly improve energy efficiency (and) vastly improve the quality of our lives.”
President Obama said this is just the start of where he wants to see the United States go with these partnerships. A year ago in his State of the Union address, he told congress he wanted to see bills passed to allow for 15 institutes in the U.S. Now he says he wants congress to approve the funding for 45.
“Republicans and Democrats in the House and the Senate introduced bills that would get this going,” President Obama said. “That’s good. But they haven’t passed the bills yet. So, I want to encourage them to continue to pass the bills that would create 45 of these manufacturing hubs. In the meantime, I’m directing my administration to move forward where we can on our own.”
While the Triangle has the best unemployment rate in North Carolina, the state itself if still struggling. It currently ranks 35th in the U.S. at 7.4 percent as of November.
However, President Obama says this will institute will create job opportunities and provide a major boost to the state’s economy, and he says he hopes that it will spread nationwide.
“This can be a breakthrough year for America,” President Obama said. “The pieces are all there to start bringing back more of the jobs that we’ve lost over the past decade.”
And he says he’s seeing signs of other countries sending jobs back to American and that he doesn’t want to miss the opportunity.
“A lot of companies around the world are starting to talk about bringing jobs back to the United States, brining jobs back to places like North Carolina—partly because we’ve got cheap energy costs; we’ve got the best workers in the world; we’ve got the best university systems in the world; and we’ve got the largest market in the world,” President Obama said. “So, the pieces are there to restore some of the ground that the middle class has lost in recent decades.”
President Obama kept his focus on the economy, job creation, and the new innovation institute. He did not mention Democratic Senator Kay Hagan during his time at N.C. State. She’s running for re-election this year and has distanced herself from the President in recent months.
***Correction: President Obama mentioned Senator Hagan at the beginning of his speech by thanking her for the hard work she’s doing in Washington and that he was sorry she couldn’t make the trip.
She told the media that she felt it was important to stay in Washington while the Senate was in session. However, the Replublican party has criticized her for her support of President Obama, especially during the struggling times of Obamacare and its website troubles.
However, Sen. Hagan has tried to show that she wants to keep the president honest when she asked the Obama Administration for a full investigation of HealthCare.gov. She also asked the administration to extend the filing period for Americans since there were many problems.
(Being Part 2 in a two-part series about University Mall.)
So it turned out to be a movie theater after all. Good.
In case you missed it: University Mall announced Tuesday that Dillard’s will be leaving—ooh, sorry, hope you were sitting down for that one—and they’ll be replacing it with Silverspot Cinemas, a 13-screen luxury multiplex that comes with leather seats, a well-stocked bar, a fine restaurant (here’s their menu), and selections ranging from “Bad Grandpa” to the Bolshoi Ballet. (Here’s hoping that selection also includes Rifftrax Live.)
Everybody’s excited about it—the mayor, the business community, U-Mall staff, Chapel Hillians in general. (Heck, they even brought Rameses and four UNC cheerleaders to the press conference, so you know this is something something.) Personally I try not to get too excited about anything in advance, before we know exactly what it’s going to entail. This will have consequences. The Chelsea Theater in Timberlyne might be in real trouble, for one thing. Less worry for Deep Dish, but that bears watching too. (Movie theaters and live theaters aren’t really competitors, even if they’re right next door, but that may change if said movie theater starts putting live performances up on screen.) And Silverspot’s ticket prices are higher—sixteen bucks each—so it remains to be seen whether Chapel Hillians will go for that anyway. (Though it apparently works in Naples, Florida.)
So let’s get all that on the table too. But even so, I still say this is a good move—for Chapel Hill, sure, but also for University Mall. Especially for University Mall.
This is where they ought to be heading. In many ways, this is what they already are.
I don’t know about you, but all my happy memories of University Mall seem to be arts-related. I remember the first time I walked in the place, how surprised I was at all the galleries. I remember walking through the mall during Scrapel Hill, admiring all those ingenious pieces. I remember the first time I saw “Baltimore Waltz” at Deep Dish last year—and the second, when I dragged my friend a week later. I remember stopping by U-Mall as a reporter to cover any one of the number of times they stepped in to provide space for some displaced business or agency—the library, Orange County Gymnastics, the Red Hen, the post-flood assistance center, now Kidzu. (Plus half of University Square.) I remember many a night on that center stage back in 2010-2011, playing moderator for WCHL’s Quiz Bowls. (Highlight: stumping eight Town employees in 2011 by asking them to name two of the three people running for mayor.)
What are they calling it? “Reimagine University Mall”?
There’s no “reimagine” about it. This is University Mall becoming what we were already imagining it to be.
One non-arts-related memory I can’t not mention: I also remember showing U-Mall off to my parents when they came down from Michigan to visit—and we couldn’t find parking downtown. (This was during 140 West construction, so yes, yes, the parking situation has gotten better since then.) It worked out okay—my parents loved Southern Season. And Spice Street, as it happened.
And a good thing too. The history of malls in America is pretty simple: the first wave of indoor malls opened in the 1950s, 60s, and early 70s; later came a second wave of larger, multi-floor, more upscale megamalls that ran the first wave largely out of business. (Nowadays even those second-wave malls are struggling; the really successful ones tend to be the most upscale. Score one for income disparity.) We’ve seen this play out in Durham/Chapel Hill: Northgate opened in 1960 and put up a roof in 1973, University Mall opened in 1973 and South Square opened in 1975—then along came Southpoint in 2002. Bye-bye South Square. Northgate hung on okay, but there’s not much vibrancy in it anymore. And University Mall’s in that same group. By all rights, according to all the trends, it really should be struggling too. (Heck, how many times have we heard the line about U-Mall, that it’s a nice place but nobody buys anything there?)
I walk into University Mall and I sense vibrancy. I sense a place that’s bucking the trend. What’s different about U-Mall? What does U-Mall have that South Square didn’t and Northgate doesn’t? It’s the arts. It’s culture. It’s that commitment to remaking itself as a cultural center rather than merely a shopping center. That line, “nobody buys anything there,” doesn’t refer to U-Mall, not really. It refers to Dillard’s. And Dillard’s—we love you, but you’re not the U-Mall. Scrapel Hill is the U-Mall. Deep Dish is the U-Mall. The Farmer’s Market is the U-Mall. Southern Season’s cooking school is the U-Mall. That’s where U-Mall gets its lifeblood. Even Try Sports, big and cool as it is, feels like the icing rather than the cake.
A cautionary tale. Earlier this summer, I was at a family reunion in Houghton, Michigan, way way up in the Upper Peninsula. In Houghton is the Copper Country Mall, opened 1981, about the size of U-Mall. It used to do great. It had two department stores, a K-Mart, a sporting goods store and a 5-screen movie theater all in one. Then Walmart opened just down the road, and that was that. I went in there this year—first time in a decade—to find JC Penney still hanging on and the movie theater and the sporting goods store still open, and that was literally about it. There were two craft shops, a consignment store, a GNC, and a recruitment center for the local community college. Everything else, everything else, was empty storefronts. (You can read all about it on a website called DeadMalls.com.)
I recognized it instantly.
“God,” I said to a friend afterwards. “This is what University Mall would be if you took all the arts and culture away.”
But—they’re not taking the arts and culture away.
Instead, with this latest move, they’re doubling down on it. Good. Yes.
Will Silverspot succeed? Will it thrive? Will it find a place in Chapel Hill’s entertainment community without threatening its potential competitors? The Chelsea? The Lumina?
I don’t know yet. We’ll find out in 2015 or so.
But it’s the right move, absolutely the right move, for University Mall—a destination for culture as well as commerce…a shopping center I remember not for what I buy there but for what I experience…a special and unique place that just got specialer and uniquer.
So bring it on, Silverspot. Let’s see those sixteen-dollar seats.
The Rise and Fall of U.S. Infrastructure Part II: The Fall
In Part I of this series I reviewed the rise of infrastructure in the United States. This week we will explore the fall and how it came to be that the American Society of Civil Engineers (ASCE) has given the current condition of our infrastructure a D+ grade due to crumbling roads and bridges, leaking water mains, and many other deteriorating systems.
There is no particular mystery in determining why our critical infrastructure systems are falling into a state of decay. According to data from the Congressional Budget Office, the spending on transportation and water systems as a percentage of gross domestic product (GDP) has fallen from 5% in 1960 to less than 3% today. Given that current U.S. GDP is approximately 15 trillion dollars, this two percent reduction corresponds to a $300 billion “shortfall” in infrastructure investment.
If this was an ordinary news article on infrastructure spending, we would be finished now. But here in Common Science, we delve a bit further into matters and try to find the root causes. Below I propose three contributing factors to why I think we have stopped investing adequately in our infrastructure, one psychological, one political, and one thermodynamic.
Building new things is a lot more fun and interesting than maintaining old ones. Let’s consider some local examples. When we decided that we needed an upgraded library in town we passed bonds, held fund raisers, and poured champagne at the grand opening. (Please note, this is not a criticism of the new library which I think was a great investment.) In contrast, just up Estes Drive from our beautiful new library are two aging schools, Phillips Middle and Estes Hills Elementary, which struggle each year to scrape together sufficient funds to fix leaking roofs and repair broken sidewalks. At the church my family attends, the parish has raised and borrowed millions of dollars to build a brand new fellowship hall, yet the historic original chapel is in desperate need of a paint job. This same dynamic is operative at the national level, where our legislators are much more inclined to allocate funds to splashy new construction projects rather than spend money on mundane things like repairing storm water systems.
For the past five years President Obama has recommend a broad array of infrastructure investments to grow our economy and secure our economic future. During most of our history as a nation these would have been considered non-controversial suggestions and enjoyed broad partisan support. Consider that the three major pieces of national infrastructure legislation that I discussed in Part I were all signed into law by Republican presidents, the US Highway Act of 1924 by Coolidge, the Interstate Highway Act of 1956 by Eisenhower, and the Clean Water Act of 1972 by Nixon.
Unfortunately, the political climate in the U.S. has turned against infrastructure projects with Republicans decrying them as socialism and Democrats shying away from supporting them for fear of being labeled “tax and spend” liberals. As a result, President Obama’s recommendations for infrastructure investment have mostly foundered in Congress. If our current infrastructure is to be repaired and the infrastructure we need for the future is to be built, this political climate will need to change.
During most of the 20th century when the U.S. was pouring money into infrastructure systems, a substantial portion of the funding came from fees and taxes collected from the oil industry. The oil industry experienced tremendous growth from its infancy around the year 1900 until its peak year of production in 1972, with an output of 9.5 million barrels a day. Profits and taxes from the oil companies in the 1950s and 1960s helped to build our highways, fund the space program, finance the construction of suburbia and pay for the Vietnam War. It was easy money.
From 1972 to 2006, U.S. oil production fell steadily to only 5 million barrels a day, a 48% reduction from its peak. Around 2006, oil companies in the U.S. started to utilize horizontal drilling and hydraulic fracturing (“fracking”) to aggressively exploit low-purity oil deposits which are contained in shale rock formations. These operations have increased U.S. oil production to its current level of 6.2 million barrels a day, leading to splashy headlines stating that U.S. oil production is up by 20% over the last few years.
So if U.S. oil production is up by 20% since 2006 why aren’t we back to the days of easy money and fixing our roads and bridges? The answer is a thermodynamic one. Back in the 1960s when you could drill into easy-to-reach, easy-to-pump, high purity oil deposits, we could expect a thermodynamic return of twenty units of oil energy for every unit of energy expended during extraction. This ratio is called energy returned over energy invested, or EROEI. Due to the difficulties in extracting and processing it, shale oil production has an EROEI of only five making it a far less profitable enterprise than exploiting traditional oil deposits.
Whatever the psychological, political, and thermodynamic challenges may be, we will eventually need to address the issues arising from our crumbling infrastructure. However, there is an important question to ask first. Do we have the correct infrastructure for the 21st century? If so, then we should get busy repairing it. If not, we should consider making some changes going forward. I will address those issues next week in Part III, the conclusion of this series.
The Rise and Fall of U.S. Infrastructure Part I: The Rise
Infrastructure in the United States has fallen into a state of decay. Bridges are collapsing, roads are deteriorating, and aging sewer lines are leaking. The 2013 report card from the American Society of Civil Engineers gave U.S. infrastructure a grade of D+ and called for $3.6 trillion in infrastructure by 2020. The story of the rise and fall of U.S infrastructure is an interesting one, especially if you are an engineer. So much so, that I am preparing a three part series. Part I covers the history and impact of infrastructure investment in the U.S. Part II will address how and why we have neglected the upkeep of our infrastructure, and I will conclude in Part III with some thoughts on whether we have invested our infrastructure money wisely these last several hundred years.
The rise of civilizations and economies are strongly dependent upon infrastructure investments which employ large numbers of people and lay the groundwork for further economic development. The rise of the United States from a country of only modest importance in 1850 to a superpower in the late 20th century can be tracked by our massive infrastructure investments in sewers, railroads, highways and many other important systems.
If you want to build a civilization you need cities which can efficiently share important resources like ports, universities, electrical grids, hospitals and bagel shops. In order for people to live together in cities, you need a sewer system or the population will start to die of cholera, typhoid and dysentery. The installation of sewer systems in American cities began in the 1850s in Brooklyn and Chicago and continued rapidly from there to nearly every city and town in the country. Early sewer systems, while keeping waste out of the city streets, disgorged their untreated contents into local waterways, much to the chagrin and disadvantage of people downstream.
In order to stop polluting the water of downstream communities, treatment of sewage prior to discharge began in the late 1800s, with the first system installed in Worchester, MA. These treatment systems only removed solid materials from the sewage, which is known as primary treatment. While this was helpful in preventing disease in downstream communities, it does not remove dissolved chemicals which continued to negatively impact fish and other wildlife. (1)
Sewage systems limited to primary treatment were the norm for most U.S. cities until President Nixon signed the Clean Water Act in 1972. The Clean Water Act required sewer systems to add secondary treatment which removes chemicals from the sewage and also uses chlorine to kill residual bacteria. By 1980, over a century’s worth of public investments and improvements in governmental regulation provided the U.S. with arguably the best sewer system in the world, supporting large, prosperous and healthy cites.
Once the investment in sewers had facilitated the growth of cities, we needed to find ways to connect them, which spurred remarkable growth in railroads. Between the time that the B&O Railroad was formed in 1820, and 1916, the year in which railroad mileage in the U.S. hit its peak, 254,251 miles of rail were laid in the U.S., including the completion of the transcontinental railroad in 1869. The benefit of this massive effort persists today, with U.S freight trains transporting more that two billion tons of goods per year.
The next massive investment in transportation infrastructure was the construction of our highways under the directive of two federal legislative actions. The first major effort began with the U.S. Highway Act of 1925, the origin of such famous roads as Route 66 from Chicago to Los Angeles and Route 1 along the eastern seaboard from Maine to Key West. The roads built under this legislation are given significant credit for the efficient mobilization of soldiers and materials for U.S. military efforts in World War II. Perhaps due to this observation, former General and then President Eisenhower authorized the Interstate Highway Act in 1956, which over the next 35 years produced our national superhighways, including our own Route 40 right here in North Carolina.
As an engineer, I am quite tempted to tell you the story of other U.S. infrastructure efforts, including the pipeline network, dams, airports and many others. However, with these several examples, I hope I have laid out for you that national infrastructure investments from 1850 to 1980 drove the rise of the United States as a global superpower and were essential to the creation of our prosperous middle class.
Then something changed. National infrastructure projects fell out of favor and monies to maintain the existing infrastructure, as a percentage of gross national product, were reduced. Next week in Part II, I’ll lay out thoughts on how this sad circumstance arose.
(1) Lest we look back smugly at our 19th century ancestors, let’s confront the fact that we continue to struggle with this issue today. One of the key problems with effluent from a sewer system limited to primary treatment is that is has high levels of dissolved organic chemicals which contain nitrogen and phosphorous. When released into waterways, the nitrogen and phosphorus spur rapid growth of algae. The algae have short life spans and when they die they sink to the bottom of the water and form sludge. (2) The sludge on the bottom represents a sort of Golden Corral® buffet for bacteria. As they chow down on the algae sludge, the bacteria also use up the dissolved oxygen in the water, causing fish and other creatures in the water to suffocate and wildlife dependent on these species for food to starve.
With secondary treatment included in our treatment plants, we prevent our sewage effluent from causing these algae blooms. Where we still run into trouble is with storm water runoff, particularly from our housing developments where lawn fertilizers can wash into our water ways to feed the algae. The legislation designed to protect Jordan and Falls Lakes from fertilizer-infused storm water runoff was recently overturned by our Republican-controlled legislature in Raleigh. So the battle for clean water continues.
(2) OK, I realize that I have now fallen into Inception of the footnotes, but as they are footnotes, I figure I have free reign to ramble on a bit. When algae sludge falls to the bottom of the water and there is sufficient oxygen it is consumed by bacteria as food. If the sludge gets buried in mud, keeping oxygen and, thus, bacteria away, the algae corpses slowly breakdown into hydrocarbons. Over a period of several hundred million years, this is the process which gave us petroleum.
Wednesday, the House and Senate needed one more vote on the Tax Simplification and Reduction Act before it was sent to Governor McCrory for a signature. Last Monday, North Carolina’s legislature unveiled the act. On Tuesday, the House and Senate tentatively voted on the bill, with strong GOP approval and little liberal support.
When the tax code was written in 1930, North Carolina was based on a manufacturing economy, but as the state has progressed, it has evolved into a service economy. North Carolina only taxes about 30 services, which is low compared to most states.
North Carolina Senator Ellie Kinnaird says the tax code contains so many loopholes and exemptions that she compares it to Swiss cheese. She says she thinks that expanding the sales tax would be more effective than lowering corporate and individual income taxes.
“They should have, and they didn’t, completely rewrite the tax code to extend the sales tax to many, many services, but then lower the sales tax rate way down,” said Kinnaird. “That would’ve given us a more accurate reflection of revenue based on what our economy is than what they did instead. They decided to lower the other two taxes, that are the main sources of revenue, which is the individual income tax and the corporate income tax.”
The legislature removed the estate tax and Earned Income Tax Credit, which Senator Kinnaird says kept about half a million working poor from falling into a deeper financial struggle.
“Instead of doing tax reform, they’ve put us into a position where we have greatly disadvantaged the middle and lower classes to the advantage of people who are at the top,” said Kinnaird.
Instead of a three-tier personal income tax system, the legislature is instituting a flat tax of 5.8 percent by 2014. With the three-tier personal income tax system, the wealthier people pay a higher percentage than the middle and lower class. With the 5.8-percent flat tax, everyone will pay the same percentage, which Senator Kinnaird says will impact the lower and middle classes much more than the wealthy.
“Now, we’ve taken away the graduated income tax. We have a flat tax, which will be 5.8% and finally 5.75%,” said Kinnaird. “Well this means that the same rate is charged to a person making $30,000, $300,000, and $3,000,000. That’s just not fair.”
Also starting in 2014, tax-free holidays for back-to-school shopping and Energy Star appliances no longer exist. Senator Kinnaird says this change discourages the middle and lower classes from buying school supplies. Buying less items leads to less tax revenue, which she says hurts the economy overall.
The legislation raised the tax on mobile and manufactured homes by thirty percent, which Senator Kinnaird says also hurts the lower class that often lives in these homes.
She says small business will take a toll from the income tax hike, as well.
“Small businesses are the backbone of our economy; they drive our economy,” said Kinnaird. “300,000 businesses are now going to be taxed more. A small business owner pays taxes as though they were his individual tax, like his income, and that means that he’s going to have a huge tax bill because that’s not going to be changed.”
With the tax cuts, the government will raise 500 million less dollars, adding up to 2.5 billion dollars over the next five years. Republican legislature members are assuming that the business boom will fill the loss, but Senator Kinnaird says she thinks this will create a devastating hole in the economy.
“It’s not going to balance,” said Kinnaird. “The governor said he had to have a neutral, revenue neutral, which means that it doesn’t bring in anymore or lose anymore than the present system, but that isn’t what’s going to happen. We’re going to have a big hole.
Corporate tax rates are lowering to from the current 6.9 percent to five percent by 2014. Eventually, Senator Kinnaird says, the Republican representatives and senators are claiming that a reduction in taxes will encourage businesses to hire more people, relieving the high unemployment rate. Senator Kinnaird discredits this claim. She says small businesses cannot afford to hire any more employees under the tax reform, but larger corporations will continue to employ people, as normal.
“They’re counting on the economy,” said Kinnaird. “They call them the job creators, the wealthy are called the job creators. In 2008 when the Bush tax credit was started, they didn’t create new jobs. Here we are, no jobs created. When they talk about job creators, that’s just false. Unfortunately, all of the middle class and lower class people are going to pay for it.”
After the many tax cuts, Senator Kinnaird says the bill will unfairly benefit the wealthy, while hurting the lower class. She says the holes the tax reform creates in the economy cannot even out; and she compares it to a reverse Robin Hood, take from the working poor and give to the wealthy.
Economist: Rosy Picture For NC, US In Next Five Years
CHAPEL HILL – The unemployment rate is still high and the recovery is still slow, but one prominent Triangle economist says the outlook for the next five years is very, very good.
“Despite everything that’s going on Washington (and) everything that’s yet to go on…the underlying fundamentals of the economy are dramatically improved,” says Michael Walden, professor of economics at NC State. Walden delivered the keynote address Wednesday at the Chapel Hill-Carrboro Chamber of Commerce’s annual Economic Outlook Briefing.
The U.S. economy lost nine million jobs and six percent of its GDP during the “great recession” of 2008-09, but Walden says things have turned around on both fronts. The national gross domestic product is now above pre-recession levels—and the country has regained about six million new jobs, a trend Walden says is likely to continue.
“We had a very good jobs report last week, and I think that’s going to be more the standard rather than the exception,” he says.
In fact, Walden says he expects the country to add about 250,000 new jobs each month for the rest of the year—three million new jobs in the next 12 months, enough to bring the number of jobs in the U.S. back to where it was in January of 2008.
The recession hit especially hard here in North Carolina, where the unemployment rate spiked into double digits for nearly three years. Walden says given the history of past economic slumps, that was actually to be expected.
“We have a bumpier economic ride,” he says. “We tend to have deeper recessions (because) we’re still more of a manufacturing state…and manufacturers always take it on the chin during recessions, because people can postpone buying manufacturing products…
“But the upside of our bumpy ride is (that) we tend to have better recoveries.”
North Carolina hasn’t seen that better recovery yet, Walden says—we’ve added jobs at about the same rate as the nation as a whole—but Walden says that’s going to change, beginning this year.
“We’re going to see a big boost to North Carolina’s economy, starting this year,” he says. “In the next five years, (we’ll see) at least 400,000 net new jobs coming to North Carolina…(with the) unemployment rate at the end of five years down near six percent.”
Walden says he projects North Carolina to add 90,000 new jobs in 2013 alone, up from 65,000 last year. That would drop the state’s unemployment rate to 8.2 percent by year’s end.
Walden’s predictions are optimistic, but even he says the employment picture isn’t entirely rosy: the state and the country are gaining jobs, but many of those are low-paying jobs in the service sector—a sign of what Walden calls a “dumbbell economy.”
“(That means) fast job growth on the high end, in terms of high skills (and) high pay, but also fast growth on the low end–low skills (and) low pay,” he says. “A lot of those middle income jobs have been replaced by technology.”
Still, Walden says the overall economic outlook is strong, locally as well as nationally—and he says the Triangle is poised to be one of the fastest-growing regions in the state in the next five years.
If that prediction holds, it can’t come too soon for local businesses. Chamber president Aaron Nelson says in the last year, with the economy still sluggish and money still tight, more local business owners have reported feeling the pressure of the recession—in spite of the recovery on paper.
The year-end results for Orange County show taxable retail sales rose seven percent between 2011 and 2012. County Manager Frank Clifton says trends are starting to return to where they were before the economic crisis.
“Where people were not spending or holding back on certain expenditures in 2011, they’ve started to move forward in 2012,” Clifton says.
Clifton also says opening smaller shops in the Carrboro, Chapel Hill, and Hillsborough areas have led to growth. He says some of those businesses have grown out of plans for the future.
“The Edge Project in Chapel Hill, and then the hotel project down in Carrboro, that I think are stimulating activity in those areas, and you know, you may have some small businesses that are doing better as a result of some of those activities,” Clifton says.
In addition to projects around town, Clifton says there’s an opportunity for economic expansion across the interstates that crisscross Orange County. He says with the addition of utilities in these areas, opportunities for retail and even small-scale manufacturing will become available.
Despite the economic growth, Orange County still finished behind Durham County last year. Durham experienced an 8.1 percent jump in retail sales between 2011 and 2012. Because Orange County prides itself on homegrown, local businesses, many of the big box stores tend to set-up just across the county-line…Like the Wal-Mart off of 15-501 in Durham. Clifton says the county may have to make some changes.
“The reality is, is that those types of businesses do contribute to the local economy, and if they’re in the adjacent counties, they subtract from the local economy in our county,” he says.
Chapel Hill Economic Development Officer Dwight Bassett agrees with Clifton.
Bassett says, “I hate to see us lose any additional opportunity because once those opportunities are lost, unless our residential market were to grow dramatically, we have limited future opportunity.”
Bassett says developing some large retailers alongside smaller stores will help to benefit local businesses by drawing in more customers. He says redevelopment is important as well.
“I think it’s important that we facilitate that conversation, that we figure out what role the town can play in making sure that we, excuse the pun, pave the road to make sure that they can move forward and we can capture market share in a timely way,” Bassett says.
Talks of a facelift for the Holiday Inn and Park Apartments around Ephesus Church and Elliott Road will begin Thursday at the Ephesus Church-Fordham Future Focus Public Information from 7:00 to 9:00 p.m. at Extraordinary Ventures on South Elliott Road. Basset says the new owners of Village Plaza are also hoping to improve on their three acre development. In total, he says eight to ten million dollars worth of improvements could be made in that district.
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