NC JUSTICE CENTER REPORT: North Carolina's Low-Wage Recovery is Hurting Workers and the Economy

By Allan Freyer & Alexandra Forter Sirota
Budget & Tax Center
June 2014

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North Carolina’s recovery from the Great Recession has been marked by slow job growth and persistent challenges for working families struggling to make ends meet as costs rise. The job growth that has occurred is concentrated in low-wage industries and will only make the challenges greater for North Carolina’s workers and the economic recovery.

Low-wage work can be measured in many different ways, but it is fundamentally work that pays less than what it takes for a family or an individual to make ends meet. The Living Income Standard, a measure produced by the Budget & Tax Center, provides a realistic marker of how much families across the state must earn to afford a basket of basic goods like food and clothing. A worker with one child has to earn $16.21 an hour to meet the standard.

The vast majority of jobs created in North Carolina since the start of the official recovery in 2009 pay less than the Living Income Standard and, even more disturbing, the growth in poverty-wage jobs has exploded.

  • North Carolina still has to create 482,400 jobs to replace the ones lost during the recession and keep up with the growth in the state’s population.
  • The state saw an explosion of jobs in low-wage and ultra-low-wage industries between June 2009 — the formal end of the Great Recession — and the third quarter of 2013, the most recent data available. More than 80 percent of the jobs created since the end of the recession were in industries that pay workers less than the $33,709 they need to make ends meet every year.
  • Despite recent economic growth, workers have actually seen their wages fall. Output per worker, as measured by the North Carolina’s share of all the goods and services produced in the U.S. (the Gross Domestic Product), increased by 3.3 percent between the end of the recession and the end of 2012, 42 months into the recovery. Over the same period, however, inflation-adjusted wages (in 2012 dollars) fell by 5.5 percent, indicating that workers are not being rewarded for their more efficient work and increased output.

When workers earn low wages, they struggle to meet the rising costs for their most basic needs: food on their table, roofs over their heads and clothes for their children. The broader economy also suffers from a shrinking middle class and increased public spending to help working families afford housing, health care and food.

One key tool in building a stronger middle class and ensuring jobs are good, quality jobs that support families is supporting workers ability to collectively bargain for better wages and working conditions. This means both removing current policy barriers to unionization as well as supporting employers as they seek to ensure their workplace and supply chains support labor rights. Workers, too, must be able to seek better wages and a stronger pathway to the middle class.

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