Unemployment rate Is Sanford's albatross 

Perpetually dire jobless number plagues governor's legacy

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It's hard to imagine these days, but there was once a time that Mark Sanford revelled in telling you, the voter, what the state's unemployment rate was. As the road narrowed toward the November 2002 election, then GOP candidate Sanford would often mention the state's unemployment rate.

"In 1998, South Carolina had the 14th best unemployment rate in the nation," he said in a campaign release. "Now, South Carolina has the eighth worst unemployment rate in the country."

In 2009, Sanford only wishes he could boast about a ranking of eighth worst in the nation.

Early on in his administration, which began in Jan. 2003, Sanford continued using the unemployment numbers to press his tax-cut plans. When he got what he wanted, and the numbers still didn't change, the administration suggested the unemployment rate was incorrect and irrelevant. On more than one occasion, Sanford has suggested that jobless vagabonds from far off states like Michigan and Massachusetts are loading up their cars and coming to the unemployment Mecca of South Carolina to find gainful employment, messing up the numbers. Seriously. And once it was evident late last year that the state's job picture was really in the crapper, Sanford and his staff began suggesting unemployment offices across the state were essentially shadowy mobster hideouts.

Since 2004, South Carolina has remained one of the five states with the highest unemployment rate. Following a Gulf Coast hurricane crisis, a bursting of the housing bubble, and eventual global economic failure, S.C. has stayed among the worst.

Save My Small Business

A year into his administration, about the time when the unemployment rate stopped being the last guy's problem, Sanford told ABC News that South Carolina small businesses were desperate for tax relief.

"One thing that I hear consistently across South Carolina is that if you want to make a difference in the livelihood of people and their ability to sustain a small business, you need to impact tax load," he said.

Once elected, Sanford had his eyes set on reducing the state's personal income tax from 7 percent to 4.75 percent. As monthly unemployment numbers rolled out in the first two years, Sanford's office continually suggested it was the state's burdensome tax rate that was stifling small businesses and a lower tax rate was the solution.

Sanford's support for the little guy was commendable, but the flaw was in the logic that a lower tax rate could turn the economy around one job at a time. South Carolina didn't need one job at a time; the state needed 100 jobs at a time.

In March 2005, Sanford called the rising unemployment rate a "clear and present economic danger." He pointed to neighboring states that were doing well and said that change in South Carolina started with lowering the tax rate.

After estimates revealed a whopping $1 billion price tag, the legislature cut Sanford's proposal to a more modest 5 percent rate that more narrowly focused on small businesses, expected to cost only $129 million. He wasn't completely satisfied, but Sanford went ahead and claimed victory, signing the bill on the day before Tax Day 2005.

"I've got a message for every small business in South Carolina filing its tax return tomorrow ��� government's reach into your pockets is about to get a good bit shorter," Sanford said in a statement.

Three months later, credit rating agency Standard & Poor cut South Carolina's top credit rating, citing persistent unemployment as one of its reasons. The group also praised the legislature for avoiding a potentially worse fate that would have fallen if it had approved Sanford's original tax plan.

Nowhere to Go, But ...

That same summer, Sanford made his first move to whittle away the authority of the Employment Security Commission, which is responsible for determining the unemployment rate. His utter contempt for the agency had not yet been fully realized, but Sanford's ever persistent drive to cut corners in government operations was already strong.

In June, the governor transferred the management of federal Workforce Investment Act funds, primarily used for retraining efforts, from the ESC to the governor-run Commerce Department. About half of the staff managing the $45 million in Workforce funds were let go by Commerce, with officials citing a duplication of existing services already available through the department.

When the credit rating dropped, House Speaker Bobby Harrell and Congressman Gresham Barrett, now a 2010 gubernatorial candidate, raised questions about Sanford's job growth bonafides.

Sanford's office went on the attack, pointing to successes (where available) and vilifying the legislature. When he wasn't blaming the Statehouse for stifling his vision for job growth, Sanford was blaming legislative leaders; claiming they'd grown the government to the point that the state couldn't grow the economy.

Globalization was partly to blame, pointing to manufacturing jobs going overseas and pressing new technology as the savior. And that other elephant in the room, the haunting success of past administrations, was marginalized and later deemed inferior.

"Of the jobs recruited in the 1990s by the Department of Commerce, 36 percent of them aren't here any more," spokesman Joel Sawyer told The Greenville News in October 2005.

By the end of 2005, Sanford could legitimately point to the creation of nearly 100,000 more jobs in the state. But the unemployment rate had gone up to 6.8 percent; the jobless number had increased by more than 17,000 since Sanford first took office.

"Make no mistake that there are still far too many people unemployed in South Carolina," Sanford said in October. "But despite month-to-month changes in our unemployment rate, our state is making overall progress."

At that point, the only states with higher jobless numbers were those hit by Katrina and the perpetual weather disaster that is Alaska.

And so, Sanford switched the unemployment pitch, spending the next few years driving home two different points. First, Sanford blamed the very people he'd hoped to bring here with his lower tax rate, frequently citing the state's growing population for driving up the unemployment numbers.

"We're always going to be concerned about the number of people without work in our state, but the bottom line is that the unemployment number alone doesn't tell the whole story with what's happening with respect to the economy," Sanford said.

And that would remain the mantra of the governor's office ��� please look at any other economic indicator but this one. That is, until all the other indicators went south, too.

WTF, ESC

Another avenue by which Sanford attacked the rate was by questioning the calculation, primarily determined through surveys. Sanford called for a review of the formula by the federal Bureau of Labor Statistics in 2005. It found no problems, but Sanford's advocates, both appointees and private sector supporters, would go on to criticize the calculation.

"We've got to get this number fixed because we're being unfairly penalized by it," said John Rainey, head of the governor's Board of Economic Advisors, in February 2006 to the Associated Press.

By March, the numbers were going back down. Sanford would call it "obviously great news for our state" and "one more sign that we're moving in the right direction with respect to our economy."

When the summer came and the unemployment rate went up again, Sanford was distressed.

"There is clearly a disconnect," Sanford said in July 2006. The numbers "point to positive things happening in people's lives."

The governor would no longer celebrate slight oscillations in the unemployment rate, focusing his pride almost entirely on job growth through the Department of Commerce ��� an office he could control.

By July 2007, Sanford had moved more deck chairs from the ESC to Commerce ��� this time, it was programs that helped displaced workers and provided some of the state's job data collection (but not the unemployment rate). The governor's office explained that the move was about coordinating efforts, the same pitch it's now using to eliminate the ESC.

When the unemployment rate fell again in the spring of '08, Sanford knew better than to cheer.

"While we'd normally be very pleased about a drop this significant in the unemployment rate, we're beginning to develop some real concerns about the reliability and accuracy of these numbers," Gov. Sanford said in March.

And so, the unemployment rate, at first a powerful weapon for the governor was now deemed a wholly inaccurate yardstick.

The Battle for the Rate

When the global market fell apart last October, the governor's office went on the attack, suggesting that the reason the state wasn't finding work for the now 170,000 jobless (44,000 more than when Sanford took office) was because the ESC was not sharing information on the unemployed with the Department of Commerce.

"That's the kind of data we feel strongly will be helpful as we recruit businesses to South Carolina," said Commerce spokeswoman Kara Borie. "We've had record years in terms of our recruitment levels, and we find that's not having an impact on the unemployment level."

By December, the money set aside to pay unemployment benefits had dried up, as it had in a handful of other states. Sanford seized the opportunity, refusing to request federal aid to pay for the benefits until the ESC agreed to concessions, giving the Commerce Department the information it wanted and agreeing to an independent audit.

Sanford also suggested that perhaps some of the state's unemployed weren't unemployed at all. Perhaps they were working some sort of scam with their employers to get benefits. Others might not be "actively seeking employment" ��� a requirement for aid.

"We've been told that some interpret that to mean making just one phone call in a week to qualify as 'seeking employment,'" he said in a State opinion piece. "In a 40-hour work week, it doesn't seem like one five-minute phone call should qualify you as looking for work."

After Commerce Secretary Joe Taylor suggested in February that the unemployment number may be impacted by drug users who can't pass job screenings, Sanford told the Associated Press, "it was an interesting point."

As the ESC continued struggling to pay benefits, the commission came under ever more scrutiny, eventually leading to legislation endorsed by the governor that would move the entire operation under his office and the Commerce Department.

Sanford got his audit (currently under way) and Commerce got the numbers it was looking for, but the legislature has balked at moving the ESC.

Meanwhile, the governor is largely back to square one on unemployment ��� he's now calling for eliminating corporate income taxes to lure business, with his ever-present optimism that private industry, not the government, will bail us out.

And he's still running from that damn number, telling the Associated Press in March, "You've got to look at the numbers behind the numbers in how we get to where we are."


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