The State - A Closer Look at Haley's Economic "Magic' Claims

News Article

By Andrew Shain

Watch her campaign ads and listen to her stump speeches.

In her re-election bid, Gov. Nikki Haley wants S.C. voters to credit her economic policies with pulling South Carolina out of the recession. But some of the data the Lexington Republican cites is misleading and some of her claims are outdated, an analysis by The State newspaper found.

Haley has worked to create a business-friendly environment, announcing almost 57,000 of jobs while the state's jobless rate has dropped. The S.C. Chamber of Commerce has been so pleased that it reversed itself this year, endorsing Haley after backing her Democratic opponent, state Sen. Vincent Sheheen of Camden, in 2010.

But not everyone is buying Haley's role as key to making South Carolina's economy rosier.

"This is more politics than anything else," said Joe Taylor, a Columbia-area businessman who was Commerce Department secretary under Republican Gov. Mark Sanford from 2006-11. "People are aware the nation as a whole is coming out of a recession."

Some of Haley's economic claims and numbers are inflated, The State newspaper found in an analysis of jobs announcements and federal data:

* While political scientists say most voters think the 57,000 jobs that Haley mentions in speeches have been filled, only a little more than half of the jobs announced in 2011 and 2012 exist, according to a survey by the newspaper of major economic development announcements made during Haley's first two years in office.

* Haley's 57,000 announced-job figure also includes businesses that never opened, or opened and then closed, based on a list provided by the S.C. Department of Commerce this summer. Her tally also includes 4,350 jobs -- nearly 8 percent of the total -- for stores planned by Wal-Mart. Low-paying retail jobs typically are not part of economic development tallies.

* And contrary to a Haley claim, South Carolina has not had the East Coast's fastest-growing economy since 2011, according to revised federal data.

"I don't think lying is OK for the governor," said Sheheen.

After inquiries by The State, the Commerce Department removed three projects that never opened from its new-jobs list. Also, Haley said she will use a new accolade in her stump speech that the state recently received from a trade magazine, instead of the outdated, fastest-growing economy statistic.

Still, Haley defends the numbers she has used, saying they help promote the state and win jobs for South Carolinians.

"It amazing -- whether it's you guys (the media) or somebody else -- we've got a great story to tell, and there's going to be people who want to (talk) down our story," she said.

Economists and political scientists say Haley deserves some credit for developing policies and paying attention to economic development, moves that helped South Carolina's employment rise faster than that of much of the country since Haley took office in 2011.

"Good policies can certainly help economies continue to grow, but they don't guarantee it," said Wells Fargo senior economist Mark Vitner of Charlotte. "She has made it better."

Haley's supporters say her experience, working in her family's clothing store, makes her a better economic leader than Sheheen, an attorney from Camden.

"We don't need go backwards and get a trial lawyer to come in here and play governor," Leighton Cubbage, co-founder of the Greenville property management firm Serrus Capital Partners, says in a promotional video for Haley. "Things are improving for a reason."

"Take credit for it'

Political observers said they are not surprised Haley is focusing on her economic record as her strong suit for her re-election bid.

"What else is she known for?" said Neal Thigpen, a retired Francis Marion University political scientist. "It may be her only biggest suit."

In her speeches, Haley is not shy about taking credit for the state's post-recession rebound.

The first-term incumbent brags about appointing business-friendly directors and board members to regulatory agencies. She highlights new caps on lawsuits and lower business taxes. She mentions getting regional economic development councils to work together. She touts having state employees answer phones by saying, "It's a great day in South Carolina," showing they are emphasizing customer service.

"Then, we started to sell South Carolina and magic happened," Haley told an industry group in Dorchester County this month.

In her speeches, the statistics follow. The state's jobless rate has fallen sharply. More South Carolinians are employed than ever. The state has the East Coast's fastest-growing economy. And her administration has announced 57,000 jobs.

It's true that the top numbers are better.

South Carolina's jobless rate has fallen to 6.4 percent in August from 10.5 percent in January 2011 -- the fourth-biggest drop in the nation during that time, according to an analysis of federal labor data.

"(S)teady new jobs announced by Gov. Haley since 2011 have helped bring the number of unemployed people downward," the S.C. Department of Employment and Workforce, an agency that reports directly to the governor, said in a statement.

Meanwhile through August, South Carolina has added 94,165 jobs since Haley became governor. The state's 4.8 percent rate of growing jobs has been the 14th-best in the country since 2011, according to an analysis of federal labor data.

Also, South Carolina hit an all-time high in employment in May.

But not all the statistics are good.

The number of jobs statewide has fallen by 15,224 in the last three months combined.

The state's labor force -- which counts both those working and looking for work -- has increased by only a fraction of 1 percent in the past three and a half years.

And the percentage of work-eligible South Carolinians over the age of 16 who were employed was the sixth worst in the nation in August. Meanwhile, the state's labor force participation rate, which looks at how many people are working and looking for work, remains near an all-time record low.

That comes despite South Carolina's working-age population growing by 160,013 since 2011. That was the nation's 11th largest increase, according to federal data.

Economists say some S.C. workers have fallen off the labor force rolls because, after years of futile searches, they have stopped looking for jobs.

Economists also cite South Carolina's popularity with new retirees as a factor. Nearly two out of three of the 149,500 new residents who have come to the state since Haley took office were 65 years and older, according to U.S. Census data.

But armed with generally positive economic news, Haley has a message that might survive most voters' doubts about the strength of the recovery.

"The recovery is underway, but, psychologically, many people remain very concerned," said Mike Bitzer, a political scientist at Catawba College in Salisbury, N.C. "So selling that positive message is something (candidates) can do at a time like this."

Some economists say more is going on than salesmanship. Steve Rondone, a U.S. Labor Department senior economist, said everything South Carolina has to offer -- lower taxes, few unionized workers and a business-friendly climate -- has contributed to its economic success.

"It's holistic, including making a good sales pitch," he said. "You see a number of key industries in South Carolina doing well. They have been bouncing back. … We have been seeing a lot of rebound in a lot of the states."

Still, Furman University political scientist Danielle Vinson questions the role any one leader might play in South Carolina's economy. If Haley can claim credit, perhaps others can too. "How much credit does President Obama deserve?" Vinson asked.

"A governor can help the business climate in the state," Vinson said. "A governor can be effective in getting companies into the state. But the reality is that if an executive on the state or national level could affect everything, we would never have a bad economy.

"But just because they can't control it, doesn't mean they are not going to take credit for it."

In an interview last week, Haley declined to say how much credit she and her administration deserve for the recovery. Instead, she gave credit to economic development officials statewide.

"Is my name at the top? Yes," Haley said. "My name is at the top whether we win. My name is at the top whether we lose. What I will tell you is everything we do is as a team. ... This is a success story, and everybody in the state deserves to feel good because they all had a part in it."

"Devil is in the details'

Haley has worked to back up the moniker used by her staff, the "jobs governor."

The governor gives industrial prospects her cellphone number. Chief executives cite her personal pitches when they make project announcements. She is a regular at ribbon cuttings and plant tours.

Mentions of the 57,000 announced jobs have become a ubiquitous part of Haley's speeches and biography.

But many voters don't hear "announced" and think the jobs have been filled, political scientists said.

"They're more focused on the number than what's after the number," Catawba's Bitzer said. "(Politicians) are always going to use the best numbers to their advantage, when it turns out the devil is in the details."

University of South Carolina political scientist Mark Tompkins says voters don't care. "They hear her focus on jobs and focus on the economy, and that's a good thing to them."

Companies announcing jobs in South Carolina say they will take from two to 10 years to fulfill their hiring goals, according to news releases from the state.

Haley said residents in the communities that have landed projects know it will take time to fill the announced jobs.

"I think you undermine the intelligence of the people of South Carolina," she said.

The Commerce Department said it does not keep track of how many jobs are filled after companies announce their plans.

To find out how many announced jobs have been filled, The State newspaper surveyed the 25 largest job announcements from 2011 and 2012, using a S.C. Department of Commerce list supplied by the governor's office this summer.

Because of ties in the number of jobs announced by some companies, the newspaper requested information from 54 projects. The projects surveyed had announced plans to hire at least 100 employees each.

The newspaper received responses from 41 projects that had announced 14,895 jobs, according to state news releases. Those 41 projects represented 58 percent of the total job announcements during Haley's first two years in office.

Based on interviews with company representatives and economic development officials, 8,378 of those 14,895 announced jobs, or 56.2 percent, have been filled.

Getting a portion of the jobs filled is a win, said retired Francis Marion political scientist Thigpen. "Six out of 10 is six out of 10."

Haley said she is pleased with the the rate of getting jobs filled.

"Reality says it takes a long time to build a plant, it takes a long time to train people, and it takes a long time to get it going," she said.

The companies surveyed by The State newspaper said they have not reached their employment goals because they expected to need years to ramp up production or because of delays in working with clients.

Part of the jobs shortfall also comes from getting workers up to speed with employers' needs, S.C. Chamber of Commerce president Otis Rawl said.

"We have a skills gap now," he said. "We need to prepare the workforce to get into the jobs we have now."

Sheheen says the 56 percent of announced jobs filled, found by the newspaper's survey, probably overstates Haley's success. If all 210 job announcements from 2011-12 had been surveyed, the percentage of filled jobs would be lower, he contends.

The larger projects surveyed by the newspaper involved more established companies, usually locating in urban areas, he said. Based on his campaigning around the state, smaller projects announced in rural areas "tend not to deliver," Sheheen said.

"A blatant lie'

The Haley administration jobs list includes at least five projects that closed after a year or never opened, The State found in its survey of major announcements from 2011 and 2012.

Those companies collectively announced plans of up to 1,822 jobs.

Yet those job numbers remain in the totals that Haley touts in civic club and business group speeches.

The inclusion of those closed businesses in the governor's job tally might surprise voters, Thigpen said. "I don't know that, and I think a lot of people won't know either," he said.

Sheheen was more blunt. "That's a blatant lie," he said. "A governor should know better."

One of those companies that announced jobs, opened and closed was NK Newlook in Barnwell County.

Jean-Philippe Meunier said he closed the retail fixture company in 2012, after a year of operation, because he could not find enough qualified workers. The 100-employee Blackville plant lost its main client, Pandora jewelry, because of poor-quality work, he said.

Meunier said he moved the company to Barnwell County from Miami because he received a deal on a building. "I was burned pretty badly," he said. "It was the kiss of death."

Economic development officials in the region that includes Barnwell County suggested other factors might have contributed to NK Newlook's closing. Online court records show the company has close to $700,000 in federal tax liens. Efforts to reach Meunier about the liens were unsuccessful.

On Friday, the Commerce Department said it had culled three businesses with plans for 1,375 jobs that never opened from its job announcements list: 5-Star USA, which promised 1,000 jobs in Marlboro County; Atlantic Beverage, which announced 300 jobs in Spartanburg County; and Pyrotec, which expected 75 jobs in Charleston County.

But businesses that closed soon after opening remain on the jobs announcement list. That list also touts the full job numbers announced by the now-closed businesses.

ECAPS Corp. in Marlboro County, for instance, had about 15 of the 150 jobs that it promised when it closed, said S.C. Commerce Secretary Bobby Hitt, a former BMW executive appointed by Haley.

NK Newlook's 212 promised jobs also remain on the list.

"No business lasts forever," Hitt said. "But they still created jobs."

The Commerce Department said it is seeking to recover state incentives from one now-closed company on the jobs list, NK Newlook. Other closed and never-opened businesses had not qualified for incentives.

Haley said she gets her data about the number of jobs created by projects from the Commerce Department, which is supposed to scrub companies that did not open from the list.

"They give me a weekly number as well as what projects we're going to be announcing that week," she said. "So I go by that number."

Not all companies have fallen short of jobs promised. The State newspaper survey found 11 companies that said they have met or surpassed their promised employment goals.

They include an expansion at BMW's Greer plant, a new Otis Elevator manufacturing plant in Florence and a new Belk department store distribution center in Jonesville. Belk alone hired twice as many workers as expected.

The last accolade given

South Carolina's job numbers under Haley are higher, Hitt said.

Some companies don't want their project plans announced publicly, the Commerce secretary said. Hitt said 39 projects with 2,212 jobs are not included in state totals.

But the jobs tally that Haley uses also is inflated by the inclusion of 4,350 jobs promised with the opening of new Wal-Mart stores.

The Commerce Department does not recruit retail jobs, Hitt said. But, he added, "She (Haley) feels strongly about them, and so we put them on the list."

Haley said she includes those jobs because she worked directly with Wal-Mart to land them. Haley has spoken at Wal-Mart's supplier conferences. And she and Hitt said several companies, including television and toy manufacturers, have built plants in South Carolina because of those corporate appearances.

The job numbers, however, are not the only imprecise figures Haley stumps on.

In recent speeches, the governor has said South Carolina has the "fastest-growing economy on the East Coast," a claim that is no longer true.

New data, released in June, shows the state's economic growth ranked 35th in the nation in 2013, a year after South Carolina tied North Carolina for the fastest-growing state economy on the East Coast.

Haley said she will switch her sales pitch to touting South Carolina as the nation's third-best state to do business, a ranking released last week by Area Development magazine.

"When it comes to sales, when it comes to promotion of your state, you go with the last accolade that was given," she said. "Whatever it is that allows me to bring companies in and continue to get South Carolinians into these jobs, that's what we do. ... We said it as long we could, and now we'll switch off to the next one."

Sheheen said Haley's outdated claim about the state having the fastest-growing economy on the East Coast shows the Republican is "out of touch with real-family lives."

"They know things are not OK in South Carolina," he said.

"Forgive and forget'

Debating the accuracy of economic data is not going to win Sheheen the Governor's Mansion in a Republican-heavy state, political scientists said.

"Unless you get something like an indictment or criminal charge -- look at your now suspended (Republican House) speaker (Bobby Harrell) -- that is where the public would say, "Enough is enough,'" Catawba's Bitzer said. "With most foibles, they're willing to forgive and forget."

Sheheen, who lost to Haley by 4.5 percentage points in 2010, is missing an opportunity, USC political scientist Tompkins said.

While Haley touts her job numbers, Sheheen should promise to push for more higher-end, skilled jobs, Tompkins said. "We end up chasing jobs at the low end -- though that's better than no jobs at all."

Sheheen said that if he wins in November, he will focus on growing South Carolina's small businesses in addition to trying to win big economic development projects.

"We can walk and chew gum at the same time," he said.

A winner in this economic spat between the major party candidates could be Tom Ervin, who is spending millions on a petition run for governor, Tompkins said. In his $2.5 million ad blitz, the former state lawmaker and judge from Greenville has been sharing his ideas for fixing the state's crumbling roads and slowing the rise in college costs.

"There's an opportunity for a vision candidate," Tompkins said.

Ervin said if he is elected, he will focus his economic development efforts on two of South Carolina's biggest industries -- tourism and agriculture. He also promises to post economic incentives that the state gives companies on a website after the deals are struck.

"Let everyone decide for themselves if it was a good deal," Ervin said. "We have learned that we can't trust (Haley's) numbers."

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