Prosperity Watch Issue 58, No. 4: Middle-Class Living Standards Are Stalled in North Carolina

February 23, 2016

North Carolina’s off-kilter economy is keeping middle-class living standards out of reach for many, making it more difficult for families to get ahead and for the state to rebuild a stronger, more inclusive economy.

A Tar Heel household at the mid-point, or median, of the income distribution brought in less income in 2014 than it did at the start of the millennium, according to United States Census Bureau. That is a decade and a half of decline in the resources that are available to households to make ends meet. Looking back to the beginning of the Great Recession, inflation-adjusted median household income in North Carolina has fallen or stayed flat every year, including the post-recovery years (see the chart below).

Since 2007, median household income has dropped by 8.7 percent, to $46,556. That $4,444 decrease is roughly equivalent to what a moderate-income family of three spends on food in a year, according to the 2014 North Carolina Living Income Standard.

Compared to 2010, the first full year of the official economy recovery, median household income in 2014 stayed flat with no improvement. This lack of progress is not unique to North Carolina. Thirty-one other states also had median household incomes in 2014 that did not experience a statistically significant (or meaningful) change from 2010, demonstrating that the national economic recovery is still failing to deliver broadly shared economic gains in the majority of states. Of the remaining 18 states that experienced a significant change in median household income since 2010, only 10 made gains under this measure and none of those states were in the South. 

North Carolina and the nation as a whole need policies that focus on wage growth to help families and the economy get back on track. Creating more jobs for all who want to work is the first step, followed closely by policies that ensure jobs pay an economy-boosting wage.  

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