Recession’s gloom might be lifting for some private-sector workers, but the downturn’s doldrums likely will linger at least another year for state employees. In March, Gov. Beverly Perdue told a reporter there’s no money for raises in the fiscal year that will begin in July. The nearly 200,000 government employees didn’t get one this year, either. In fact, they effectively took a ˝% pay cut due to unpaid furloughs they were forced to take.
In a typical year, state employees can expect at least a 2% increase, closely tied to the federal consumer price index, says Dana Cope, executive director of the State Employees Association of North Carolina. That translates to about $1 billion in economic impact. With the CPI rising 2.6% in 2009, state workers lost purchasing power. “That means there’s less goods and services in demand by these employees,” Cope says.
Nowhere will the impact be felt more keenly than in the Triangle, which accounts for nearly 40% of all state-government workers. They make up 8.8% of the workforce in the Raleigh-Cary metro area and 11.8% in the Durham-Chapel Hill metro. By comparison, 8.5% of workforce in the Charlotte metro is engaged in financial jobs.
The General Assembly often tacks on money for employee pay as the budget moves through the legislative process. State workers got a 4% raise in fiscal 2007-08 after Gov. Mike Easley proposed 2.5%. In 2008-09, lawmakers bumped the increase from 1.5% to 2.75%. They didn’t come to the rescue last year, and Cope doesn’t expect them to this time. The state needs to modernize its tax structure, including taxing services instead of just goods, to reflect changes in the North Carolina economy and stabilize its revenue base, he says. “This is an election year. It’s an important election year because of redistricting, and I don’t think the legislature is willing to tackle any of the difficult decisions.”
The impact of no raises will be even greater — in the Triangle and across North Carolina — because it also affects about 130,000 public-school teachers, administrators and staff. Though stagnant state wages affect the Triangle disproportionately, there are two reasons the region will fare better than most places, says Mike Walden, economics professor at N.C. State University. “One, employment here has not been as adversely affected by the recession due to the preponderance of state employees here. We have not had the kind of layoffs in the public sector that you’ve had in the private sector. Secondly, even with the prospects for slow economic growth, the Triangle, because of its economic fundamentals, will still be one of the fastest-growing metropolitan areas in the country.”
Slim Jim snaps ties To Garner
For about 40 years, Slim Jim meat snacks have been made in Garner. But ConAgra Foods Inc. plans to close the plant by the end of next year, laying off 450. An explosion caused by a natural-gas leak damaged the factory last summer, killing four workers and injuring dozens more. Since then, Omaha, Neb.-based ConAgra has been considering whether to pump more money into repairing the plant or move production. Garner officials tried to put together a package of state and local incentives to keep the plant, but Wake County declined, saying the circumstances didn’t fit the requirements of its incentives policy (Regional Report, March). Production will shift to a ConAgra plant in Troy, Ohio. The company plans to give Garner the 106-acre Slim Jim site, which is near an Interstate 40 interchange.