Prosperity Watch Issue 51, No. 2: Workers in metropolitan areas are seeing declining wages

When adjusted for inflation, wages have decreased in eight of North Carolina’s Metropolitan areas.

New data released last week paints a forbidding picture of North Carolina’s recovering economy. Employment has slowly risen since the recession, however, it still has not reached 2007 levels in most parts of the state.

Although employment rates and workforce levels are important, they do not tell the whole story of North Carolina’s recovery. A question often ignored is: where are people finding work, and how much are those jobs paying? The same jobs report from last week showed that in eight of North Carolina’s 15 metropolitan areas, wages have not kept up with inflation. This means that workers’ wages are not keeping up with the costs of basic household needs. In effect, these workers are actually being paid less than they were for the same work before the recession.

While wages have failed to rise, expenses have not. Housing and child care have risen at exceptionally high levels, placing an extra burden on families. In 2007, the average rent for a two-bedroom apartment in the Charlotte metropolitan area was $707 a month. In 2015, that same apartment costs $831. At the same time, a worker who made $2,000 a month is now only making $1,980 after adjusting for inflation. Declining wages in other metropolitan areas are even greater. Between 2007 and 2015, the cost of a two-bedroom apartment in Wilmington increased from $711 to $847, but wages decreased by 14%. After inflation, a worker who made $2,000 in Wilmington only makes $1,720 today.

Families with young children have felt the decline in wages even harder. Between 2009 and 2013, the costs of child care across the state increased by 28%.

This trend of declining wages is even grimmer when put in the context of overall North Carolina productivity. Between 2007 and 2014, the gross state output, or how much North Carolina produces, has grown by 18.5%, faster than the country as a whole. While the state is seeing positive economic output, workers are not reaping those benefits in the form of higher wages.

In the current policy debate, metropolitan areas have been highlighted as hubs of economic growth. As is clear from this data, however, workers in those communities are not seeing the same economic progress. Workers spend locally and invest their paychecks into North Carolina businesses. Declining wages in our largest cities, and across the state, present a problem for the economic recovery and for North Carolinians striving for upwards mobility.


 

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