Prosperity Watch Issue 48, No. 2: Wages in North Carolina counties fall short of supporting working families

Wages in North Carolina have failed to keep up with rising costs for a family's most basic needs such as food on the table, a roof over their heads, and gas in the car. The resulting challenge to make ends meet for working families creates broader costs for the state including the potential for slower growth resulting from inequality. It also reflects a failure to fulfill the promise of an economy that works for everyone.

Since the recovery began in 2009 through 2014, the worker in the middle of the earnings distribution in North Carolina (the median worker) actually saw their wages decline by 8 percent. The failure of workers to see their wages increase despite an official recovery in its fifth year is connected to both the continued lack of jobs and, over the longer-term, the policy choices that have driven a wedge between worker’s productivity and earnings. Among those policy choices is the decision by policymakers at both the federal and state level to allow the minimum wage standard to erode in its relation to most measures of what worker’s need to make ends meet.

For North Carolina, the decline in the purchasing power of the minimum wage has been even more dramatic than the nation’s much noted fall. This means that despite working the same hours, North Carolinians are not able to purchase the same level of goods and services as workers in many other states. In 1979, the minimum wage was 64.4 percent of the state’s median wage. Today the state’s minimum wage of $7.25, which is the same as the federal standard, is 41.2 percent of the state’s median wage.

Analysis of the median wage across all 100 counties for 2015 finds that workers continue to struggle in many of the same places of the state—Eastern North Carolina and the Foothills had the lowest median wages. Counties that have seen more robust employment growth—Durham, Wake, Forsyth—had the highest median wages. Interestingly, Jones, Person and Wilson counties were also among the counties with the highest median wages.

In 34 counties across the state, the minimum wage falls below the standard threshold of 50 percent of the county median wage. Economists agree that for a wage floor to be effective it should conservatively be set to at least half of the median wage in a labor market.

In 79 counties the median wage falls below the Living Income Standard for a worker with one child. To reach the Living Income Standard in Currituck County, the median worker would need an increase in their hourly wages of $8.33, while in Cumberland County the median worker would need an increase of just 15 cents. The average raise needed for the median worker across all 79 counties falling below the Living Income Standard would be $1.27. However, because half of workers earn far less than the median wage, an increase to the hourly earnings rate of workers in all 100 counties would be needed, and at a level far greater than these averages, to move the majority of working families into greater economic security.

Taken together, these findings point to the need not only to address the eroding standard of the minimum wage as a wage floor in the state but also the failure of the minimum wage to reflect what it actually takes to make ends meet and the need for a living wage for all North Carolina workers.


 

Projects: 
Research & Publications: