Prosperity Watch Issue 62, Number 2: North Carolina’s economic expansion fails to deliver for most families, consolidates income of top 1 percent

June 21, 2016
 
Economic Policy Institute has published updated data on the state of inequality across the country, finding that lopsided income growth continues to be the case in most states, including North Carolina. In the current expansion, the top 1 percent of North Carolinians saw average real income growth of 7.1 percent, while the bottom 99 percent saw their average real income decline by 0.6 percent. This growing inequality of incomes will only hurt North Carolina’s economic strength.
 
The state level findings for North Carolina raise significant concerns  because many of the factors that strengthen economic growth are inhibited by income inequality.  For example, high income inequality is one of five significant factors that reduce economic mobility in a region; greater income inequality serves as a deterrent to entrepreneurial ventures, and it can also deter workers from moving careers or finding a better match for their skills. 
 
Beyond growth, however, there are other important reasons to care about inequality. The basic tenets of the American social contract are that work should pay off, that there should be equality of opportunity, and that upward mobility should be available to all. Growing income inequality threatens the fabric of this social contract and, with it, the foundations of democracy.
 
It hasn’t always been this way. In the expansions before 1980, 99 percent of North Carolinians experienced more than 80 percent of income growth in the expansions back to 1949. In contrast, expansions since 1980 have consolidated the position of the most well-off North Carolinians. In the most recent expansion, 2009 to 2013, the top 1 percent of North Carolinians experienced real income growth of 7 percent while the bottom 99 percent of North Carolinians saw their incomes decline by 0.6 percent on average (See Figure).
 
 
The latest analysis from the Economic Policy Institute adds new local level data at the county and Metro area to assessments of how the economy is performing for the majority of North Carolinians. That data shows that income growth even in communities where job growth is strong have been uneven and that smaller and more rural counties have experienced a lopsided distribution of income gains in the current recovery. Click here for tables of county and metro area data in North Carolina
 

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