Hoosier bound

by | Aug 7, 2013 | Economy, Editor's Blog, NC Politics, NCGOP | 2 comments

Remember all that talk about creating jobs during the 2012 campaign? What happened? We barely heard the word “jobs” during the entire, painful legislative session. We heard plenty about motorcycle abortions, Sharia Law, state religions and guns, but nothing about jobs. On the economic front, we heard about tax cuts for the rich euphemistically referred to as “tax reform.” We heard about cutting regulations and improving the state’s “business climate.”

So, what about jobs? Well, it turns out that in Republican-speak, “profits” means “jobs.” You see, Republicans believe that as long as companies and investors are making a profit, then people will have jobs. While there may be some truth in that theory, it doesn’t mean the jobs are in North Carolina or even in the United States.

To help businesses and investors increase their profits, Republicans cut their taxes which in turn reduces the money available to government. Republicans argue that it’s necessary to get our economy moving again. We don’t have to look too far to see how this strategy works.

In the upper Midwest, manufacturing began leaving before the trade treaties of the 1990s came into effect. Many of those jobs actually came South where low-wages, low taxes and no unions were the draw. However, when they got a better deal, those companies just moved again to places like Mexico, Honduras, Vietnam and China.

But in an effort to lure them back home, Indiana latched on to the low-tax, small government strategy that we’re embarking on now. So how did that work out? Well, according to the Tax Foundation, great. Indiana has 11th best business climate in the country. Unfortunately, it’s per capita income is in the bottom 20% of the country, almost one third of households are low-income and it’s unemployment rate is stuck at about 8.5%. And it’s been that way for awhile. Average income actually fell in Indiana between 2001 and 2011.

Those manufacturing jobs just didn’t come back to Indiana and they are not going to come back here, either. However, manufacturing is making a slight come back in the country. So where are they going? Places like Minnesota, high tax states, with strong unions. Why? Because those states invested in education and training, believing that the future was a knowledge-based economy. Today’s manufacturing is part of the knowledge-based economy. Companies are looking for a highly-skilled workforce and the infrastructure to train and educate their workers to keep up with rapidly changing technology.

Republicans in North Carolina have us on a race to the bottom. They’re in search of a “business climate” that has little correlation to economic success and their focus on profits instead of jobs is a misguided economic strategy. Instead of looking to states that have recovered from the Great Recession, we’re looking to those who were suffering before it even started.


  1. John Hood

    Thomas, I’m not sure what period you are referring to. But if what you meant to say is that manufacturing has come back stronger in Minnesota than in Indiana in recent years, I’m not seeing that in the data at all.

    I pulled seasonally adjusted employment counts from the BLS. The most recent month of data is June 2013 and the jobs trough was 2009. If we look at June 2009-June 2013, total employment grew by 6.4% in Indiana and 4.6% in Minnesota. For manufacturing alone, employment grew by 15.4% in Indiana and just 2.8% in Minnesota.

    If we go back two more years, to June 2007 (before the Recession),the trend in total employment does look better in Minnesota (0.04% decline) than in Indiana (1.6% decline) but not for manufacturing (11.2% decline in MN and 10.8% decline in IN).

    • Thomas Mills

      John, I didn’t mean to say that manufacturing has come back stronger in Minnesota. In fact, I didn’t mean to get off on the manufacturing in MN v. IN tangent at all. This was not one of better blogs but it is part of one I’ve been writing for awhile.

      What I meant to say is that using a low-tax, small government strategy to attract manufacturing is a short-sighted approach to chasing jobs in a shrinking employment sector. Instead, we should be focused on knowledge-based industries and figuring out how to get them into rural areas that have been in recession for over a decade. In the upper Midwest, Indiana and Minnesota have taken two different economic development strategies. By virtually any measure of quality of life, Minnesota is the more successful state. They invested heavily in education and infrastructure as well as the arts and entertainment. They are a destination state for Fortune 500 companies. Courting low-skilled manufacturing industries with declining wages and who will bolt for the country or state who can offer them lower taxes and lower wage workers is a dead-end strategy. It seems to me like we’re pursuing an Indiana strategy instead of a Minnesota one.

Related Posts


Get the latest posts from PoliticsNC delivered right to your inbox!

You have Successfully Subscribed!