S.C. Gov. Nikki Haley has been taking victory laps around the state recently touting her economic record – hoping to use the Palmetto State’s “improving economy” as a foundation for her 2014 reelection campaign.
“With over 39,000 jobs created and over $9.6 billion in new investment it’s clear that our economic development efforts are building momentum,” Haley said earlier this month. “South Carolina’s unemployment rate is now at a five year low but we want it even lower and will continue doing everything possible to make that happen.”
Ah, yes … “it’s a great day in South Carolina.” And getting “greater,” if you believe Haley.
Of course the governor fails to mention the number of jobs lost over that same period (her administration doesn’t track that figure). Nor does she mention the billions of dollars spent on taxpayer-funded “economic development” subsidies which often fail to produce a return on investment.
As if government should be picking winners and losers in the first place …
But what’s the dirtiest little secret of the Nikki Haley “recovery?” That’s easy: It’s the fact that South Carolina’s unemployment rate reduction is due almost exclusively to a shrinking labor pool. In other words are unemployment rate is dropping because people are leaving the workforce.
It’s the same dynamic at play at nationally – only in South Carolina the numbers are much starker.
You can observe this workforce “shrinkage” by following the Palmetto State’s labor participation rate – which tracks the percentage of South Carolina’s working age population that is either employed or actively searching for a job.
Labor participation in South Carolina under Haley peaked at 60.9 percent in June 2011 but has been falling precipitously ever since. Last month it plunged to 58.2 percent – a new all-time record low.
By comparison, the national rate last month stood at 62.8 percent.
SC LABOR PARTICIPATION RATES
October – 58.2 percent
September – 58.4 percent
August – 58.4 percent
July – 58.5 percent
June – 58.7 percent
May – 58.8 percent
April – 58.9 percent
(For historical labor participation rate data, click here).
A shrinking workforce isn’t the only less-than-stellar economic indicator Haley is staring down.
One recent report ranked the Palmetto State No. 45 out of 50 in terms of the best states to “make a living.” Another recent report ranked Haley 34th out of 45 governors in terms of private sector job creation (five governors were not ranked because they entered office in 2013). Other recent reports showed the Palmetto State as having a terrible business tax climate as well as zero upward mobility for its citizens.
Just last month another report indicated South Carolina’s already weak overall business climate was slipping further under Haley.
Then there’s the issue of income growth in South Carolina … which continues to lag behind the rest of the nation.
Oh … and things are about to get worse because North Carolina just enacted broad-based income tax relief – which puts our already non-competitive state at further economic disadvantage.
And while Haley has been throwing hundreds of millions of dollars to crony capitalist companies, she’s offered virtually nothing in the way of tax relief for the rest of us.
Where does all of this point?
You guessed it … a “recovery in name only.”