Why recent conservative claims about state income growth are flat out wrong

It’s understandable (and perhaps even a little poignant) that some on the right have been trying so hard of late to put a positive spin on the state of the North Carolina economy. If there’s even the tiniest snippet of encouraging economic news out there these days – anywhere – you can rest assured that conservative politicians and “think tankers” will seize upon it, gather round it and hold it aloft like ancient cavepeople celebrating the discovery of a shiny ingot.

Never mind what our eyes and ears tells us when we open them and examine the communities not fortunate enough to be located in prosperous pockets of the Raleigh-to-Charlotte corridor. Never mind the grinding and shockingly persistent poverty that affects millions – especially children. Never mind that the positive economic trends that are out there (and there are certainly some) are almost all in line with the national economic recovery.

No, with seven weeks to Election Day 2016, North Carolina conservatives are like stubborn parents of a spoiled and incorrigible child whom, they’re convinced, is actually a perfect, if misunderstood, little prince. You know the rap: Things in North Carolina are just great and it’s all thanks to the brilliant series of tax and budget cuts enacted by conservative lawmakers and Governor McCrory. All that stuff about poverty and a shrinking middle class? That’s just liberal propaganda. Break out the party hats and noisemakers!

Misreading, misrepresenting census data

A classic example of this brand of willfully blind and ideologically and politically-driven spin has been on display in recent days on the subject of an important indicator of middle class wellbeing: median income. Last week, a number of well-known conservative voices latched onto some new Census data in order to make the claim that North Carolina was supposedly leaving the rest of the country in its dust when it came to income growth.

According to Becki Gray of the John Locke Foundation, John Hood of the Pope Foundation, Brian Balfour of the Pope-Civitas Institute and Senate President Pro Tem Phil Berger, North Carolina median income soared over the last three years and achieved the highest rate of growth in the nation.

This is from a blogpost by Gray:

“If this is what transformational reforms in lower taxes, fewer regulations, restrained spending and smart investments does for our economy – Yes, more please.”

And this is from a post by Balfour:

“Now we have significant positive data for both per capita income and median household income, with marked improvements beginning once the 2013 state tax reforms were implemented.”

The only problem with these posts and the retelling of them by Berger (on Facebook) and Hood (on the TV show NC SPIN) is that they’re wrong. Indeed, they’re way, way, off. The truth of the matter is that the newest Census data paint a picture that is almost the diametric opposite of Gray’s, Hood’s Balfour’s and Berger’s claims.

But don’t just take my word for it. See what conservative North Carolina State University economist and longtime Locke Foundation contributor, Dr. Michael Walden, told WUNC radio last Thursday in a story on the latest Census data entitled “North Carolina Income Growth Lags Behind The Nation”:

“North Carolina had a slower gain in income and a slightly larger increase in income inequality. These latter findings likely reflect the deep geographic divide in the North Carolina economy,” says Mike Walden, a North Carolina State University economist. “Big metro areas are booming and small towns and rural areas are struggling. It will take a major revitalization of rural North Carolina to change this.”

These are the opening paragraphs of the WUNC story:

“As a whole, median household incomes in North Carolina increased at a pace slower than the national average and middle of the pack compared to southern neighbors. The overall median household income in North Carolina rose to $47,830 in 2015, a 2.7 percent increase from 2014, according to state-by-state data in the American Community Survey, released by the U.S. Census Bureau on Thursday. In a related data point, the percentage of North Carolinians living in poverty decreased to 16.4 percent, a decrease of 0.8 percentage points. While the year-over-year increase in median household income is statistically significant, it is still lower than the national average. More than anything, this shows the continued disparity between North Carolina’s rural and urban economies.”

In other words, things in North Carolina are anything but rosy and certainly not, as the conservative voices claimed, much better than the rest of the country.

Looking at the data with the hearts instead of their heads

So how did this happen? How could such a group of supposedly serious professionals get such a basic finding so wrong?

It appears the conservative claimants were guilty of falling prey to their own desperate (if understandable) desire to provide positive spin for policies they support. As N.C. Budget and Tax Center Director Alexandra Sirota explained in a Friday post, Gray, Hood, Balfour and Berger failed to look at the proper (and much more accurate and reliable) Census data for assessing median income performance.

Rather than using the American Community Survey – which is based on vastly larger amounts of data and provides a much more accurate assessment, the conservatives seized on numbers from the Current Population Survey, which is based on much less robust data and is not designed for the kinds of comparisons that Gray, Hood and company used them. Indeed, the Census Bureau website includes a specific directive not to use the data for the purpose for which the conservatives attempted to use them – especially considering the Census’ redesigned income questions that began in 2013. Here’s Sirota:

“The data from the U.S. Census best suited to the question at hand actually shows that North Carolina’s median household income grew at the third slowest rate over the period cited by the Locke Foundation. That rate 2.4 percent for NC was half the rate of the national average (4.9 percent). Those data are more in keeping with the experience of the many North Carolinians who everyday still aren’t feeling the benefits of the national recovery…. Looking at the period since 2012, North Carolina’s median household income has grown by 2.6 percent, half the national growth rate—a pattern that continues if you move the year forward to 2013 as noted above. In fact, North Carolina had the slowest meaningful growth in median household income over the period 2012 to 2015 and third slowest since 2013 when the national economic expansion appears to have taken hold.”

Tazra Mitchell of the Budget and Tax Center has more details and a useful graph in an NC Justice Center’s “Prosperity Watch” post yesterday. Her conclusion: the 2015 uptick in state median income was certainly welcome, but nothing to write home about and nowhere close to what is needed.

The bottom line

Even if, for some reason, one decided to accept the rose-colored spin on economic wellbeing advanced by conservative observers and politicians, it would take another giant and illogical leap to conclude that the state’s anti-government tax and spending policies of recent years were somehow responsible for any positive news. If anything, the opposite is true. Here’s Sirota again:

“The same Census data release demonstrated many of the very tools—EITCs, unemployment insurance, food assistance—eliminated or reduced by elected leaders have effectively lifted millions out of poverty across the country.” As many a schoolteacher has informed (or wanted to inform) countless delusional parents about their offspring: “Number One: Your little angel isn’t what you think he is and, Number Two, you need to start being part of the solution, instead of part of the problem.”

Unfortunately, in this case, one gets the sense it will take several more large doses of hard truth before conservative leaders stop seeing what they want to see.