Beaufort's Economic Developer uses invalid and unreliable data to justify "job creaton" | Eastern North Carolina Now

    Publisher's Note: This article was originally published in the Beaufort Observer.

What have the taxpayers gotten for their six million dollars that they would not have gotten anyway?

    Recently the Director of the Beaufort County Economic Development Commission (EDC) presented an "annual report" to the County Commissioners. The presentation was apparently intended to justify the Commissioners appropriations to the EDC. Oversimplified, the report contended that the EDC's efforts have resulted in hundreds of jobs in Beaufort County.

    We asked Tom Thompson, the Executive Director, how he derived the job counts he presented in his reports. He stated that they come from the Employment Security Commission (ESC) data that is compiled from businesses across the state.

    So we check with the ESC and were told that the only such data they compile is from the "NCUI 101" form. This form is filed quarterly by all employers to report the employees they have upon which they pay unemployment insurance. You can review a blank form by clicking here.

    Now here's the problem. If indeed Mr. Thompson and the EDC are using data from the ESC's NCUI 101 reporting process then their numbers for "jobs" is bogus. Badly incorrect.

    The reason this is true is because the NCUI 101 does not report "jobs." It reports employees. It makes no difference if the employee is employed for just one day, is part time, has worked temporarily and then returned to work again or if the jobs are permanent, full-time jobs.

    For example, if a convenience store has a staff of 10 people, 8 of whom are part-time then they report 10 "jobs." Another store across the street can have 5 people, all of whom are full-time and even some of whom make overtime every week yet that store reports only 5 "jobs." The same is true for a large manufacturing plant. If a person works one day and is paid they are counted on the NCUI 101. If they work one week in a quarter and then another week in each of the next three quarters that equates to not one, but four "jobs." But mainly the differences between "jobs" and what is reported on the NCUI 101 is that part-time workers are counted the same as fulltime workers, thereby inflating the number of "jobs" reported.

    In recent years more and more businesses have turned to using less than fulltime employees to hold down benefit costs. To the extent these businesses the EDC reports do just that, the number of jobs is inflated accordingly.

    The ESC does not convert nor collect information on the number of full-time equivalent positions, just the number of names that are reported. You can see this by reviewing the NCUI 101 form.

    So the numbers in the EDC report are bogus. We don't know how many actual jobs these companies had.

    Mr. Thompson was asked to explain this. He promised to do so the following week but we never heard from him.

    The jobs numbers in the EDC are also bogus for another reason. The way the data are compiled by the EDC is that if the EDC ever provided services to a particular company, such as procuring a grant to "create" jobs, they continue to report the jobs that company shows year after year. They continue to count the same jobs no matter whether they had anything to do with those jobs or not.

    An even more specious justification Mr. Thompson gave for his data was that "we use what the state furnishes us." Yet the Carolina Journal recently documented that the way the states computes "jobs" is just as bogus as the use of the NCUI 101. Click here to read that story. But fortunately (for the state) and unfortunately (for Beaufort's EDC) both the Federal government and the state have stopped using the bogus data method. We could not confirm with Mr. Thompson why he continues to use the flawed methodology.

    Moreover, because of the use of flawed methodology, the "multiplier" Mr. Thompson uses is also invalid, but he still continues to use it to claim "indirect" benefit from the bogus jobs.

    The crux of this matter is that the EDC "jobs" data are simply wrong. But worse than that, the EDC is trying to take credit for something they had nothing to do with. Their continuing to count the jobs year after year even though nothing the EDC did impacted many of those jobs is not only bogus, it is simply dishonest.

    The way Mr. Thompson takes credit for "jobs" is like a real estate agent who sells a piece of property then wants a commission every time the property is resold in the following years, even though the agent had nothing to do with the later sales.

    Moreover, the EDC's method of counting "jobs" is based on another fundamentally false premise. That is, "if the job gets created, the EDC takes credit for it." Any reasonable person knows that is simply not true. Obviously some jobs are created by a business that have nothing to do with anything the EDC does or does not do.

    But if the EDC is actually trying to justify the $6 million the Beaufort County taxpayers have spent on it by proffering macro economic data, the picture is even worse. Warren Smith, Jim Bispo and Betty Murphy have more than amply documented that, whether one wishes to use unemployment data, sales taxes, payrolls, property tax base, poverty, household income or per capita income, building permits or whatever Beaufort County is not much better off since the EDC has spent over six million taxpayer dollars. The bottom line is simply that Beaufort was a Tier 1 county when the EDC started and it is still a Tier 1 county after spending over $6 million dollars. The EDC cannot sustain the burden of showing that Beaufort County has done any better than most of the similar counties in the state that do not have a six-figure economic developer.

    And if you account for economic conditions, what you find is that the EDC has had virtually no demonstrable impact on the economy of Beaufort County.