Prosperity Watch Issue 38, No. 3: Too many families not earning enough to make ends meet in North Carolina

It’s getting harder and harder to make ends meet in North Carolina—one in five North Carolina families earn too little to afford life’s essentials and move up the economic ladder, thanks to the long-term erosion of good-paying manufacturing jobs and their replacement with much-lower-paying jobs in service  industries like hospitality and tourism.  As low-wage jobs have boomed and good-paying jobs have vanished, workers in the middle of the pay scale have seen their wages stagnate—a trend that is unlikely to change as long as industries paying poverty-wage jobs continue to claim the lion’s share of the state’s job creation. 

All too often, the result is that full-time work just isn’t paying enough to make ends meet in the face of rising cost of healthcare costs, childcare expenses, food prices, and housing costs. Thanks to these rising costs, 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.

Unfortunately, more than a third of two-adult, two-child 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).  A greater share of Latinos (23 percent), African-Americans (13.5 percent), and Asians (14.1 percent) are living under the LIS than whites (9 percent).

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.

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.

For data on the Living Income Standard for all 100 counties in North Carolina, view the appendix of the report on North Carolina’s Living Income Standard here.


 

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