Prosperity Watch Issue 24, No. 5: Hard work not enough to keep low-income families afloat

In recent policy debates, the crucial fact that work alone does not provide sufficient income to lift families out of poverty has often been overlooked. In fact, more than two out of three low-income families were working in 2010, a slight dip from years when three out of four low-income families in North Carolina were working.  Critically, while employment growth in the mid-2000s slightly increased the number of low-income families who were working, this job growth failed to deliver meaningful economic gains for low-income workers.

The recent decline in low-income work rates is likely attributed to the intersection of persistently high unemployment and the replacement of middle-wage manufacturing jobs with service sector jobs that often pay significantly lower wages in the years since the Great Recession.  This is borne out by data showing that the share of North Carolina’s working families with incomes below 200 percent of the federal poverty level, (which in 2011 was $44,106 for a family of four) has grown more than 4.5 percent since 2007. Our neighboring states of South Carolina, Georgia and Florida—among 7 others—fared worse: their share of working families who were low-income grow by more than 5 percent.
Additionally, rising wage inequality since 2009 has resulted in a significant drop in wages among the lowest fifth of earners, who saw their wages drop by 7 percent (from $10.18 to $9.47 an hour), while the top fifth of earners experienced the same 4.2 percent drop as median earners.

This rising wage inequality reinforces the challenges of low-wage work for North Carolina families.  From making ends meet to securing their own retirement and educational opportunities for their children to pursuing advancement opportunities, North Carolina families engaged low-wage work face economic insecurity despite having a job and a path to the middle-class fraught with hurdles and barriers.  

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