By Alexandra Forter Sirota, Tazra Mitchell, and Cedric Johnson
Budget & Tax Center
One in five North Carolina families earn too little to afford life’s essentials and move up the economic ladder. A North Carolina family of two adults and two children must earn $52,275 annually to afford housing, food, child care, health care, transportation, taxes and other necessities, based on the Budget & Tax Center’s Living Income Standard (LIS) for 2014.
More than a third of two-adult, two-children families in North Carolina earn less than that, and more than three-fourths of families with one adult and two children fall below the standard, which varies by family size.
People in families with incomes below the LIS are more likely to be women (59 percent), working age (56 percent), and have a high school degree or less (63 percent). Moreover, white North Carolinians are less likely to live under the LIS than North Carolinians of color. Nine percent of the total white population lives below the LIS while 23 percent of the total Latino population does and 14 percent of the African-American population does.
The LIS provides a more accurate and comprehensive picture than more traditional economic measures of what it takes for a family to make ends meet in each of North Carolina’s 100 counties. Under the outmoded but still official federal measure of poverty, a family of four would not be classified as needy unless it earned less than $23,550. However, the Federal Poverty Level does not take account of major expenses like child care or regional differences in the cost of living. The LIS corrects these shortcomings and provides a clearer picture of the true extent of the challenges facing a growing number of North Carolinians, which can help guide policymakers in their efforts to create more ladders to the middle class and widespread prosperity.
To meet the LIS, adults in an average four-person family would need to earn a combined $25 an hour, working full time. Yet, if current employment and industry trends continue, fewer and fewer jobs in North Carolina will meet this wage standard. The loss of manufacturing jobs and the growth of an economy dominated by lower-paid service industries like hospitality and tourism have caused wages to stagnate for workers in the middle of the pay scale. As the economy slowly recovers from the Great Recession, North Carolina is seeing an explosion in jobs that pay wages below the LIS, as well as the continued loss of jobs in industries that pay wages above the LIS.
Public policy decisions can play an important role in supporting a living income standard for North Carolina families. At the federal, state and local levels, policymakers have the tools to ensure that well-paying, high-quality jobs are created and that more families are able to earn a wage that can support their family. Among these strategies are:
- Raising the minimum wage and allowing it to grow automatically with inflation, as well as ensuring that wage standards are enforced.
- Ensuring that work pays for everyone by reinstating the state Earned Income Tax Credit, which would boost the incomes of low-wage working families in North Carolina.
- Providing other effective supports for low-wage families to ensure that they can meet basic needs like health care, child care, and a nutritious diet.
- Requiring all taxpayer-supported jobs — including direct government employment, contracting and jobs created through subsidies to corporations — to meet a living income standard and provide benefits that can support retirement security.
- Investing in education at all levels and ensuring that workers can get skills training that meshes with job opportunities where they live.
- Encouraging private businesses to pay a living wage and receive voluntary certification.
Work not only allows individuals and families to meet most basic needs, it also opens the door to new opportunities and a sense of dignity and purpose, all of which have driven America’s economic growth for generations. Restoring the promise of work in well-paying jobs with benefits is the central challenge confronting North Carolina as the state maps its course out of the Great Recession. The LIS can be a measure of how successful the state is at creating high-quality jobs and it can support local efforts to understand that for families to make ends meet, their wages must match the costs of basic household goods.