Prosperity Watch, Issue 65, No. 1

Sept. 13, 2016

Since the great recession, North Carolina has struggled to create jobs which pay workers a wage that meets their families’ needs and boosts economic activity. As a result, one-third of workers in the state earn below a poverty level wage. This is the 2nd worst ranking in the nation, putting North Carolina only slightly ahead of Arkansas. A poverty wage is defined as the wage at which a full-time worker’s income still places them below the federal poverty threshold for a family of four or $11.65, above the minimum wage in the state of $7.25.

The increase of workers earning below poverty wages is indicative of a shrinking middle class and lopsided job growth. Between 2009 and 2016, middle-wage occupation grown has declined by nearly 81,000 jobs in the state. In that same period, low-wages occupations have seen a growth of over 90,000 jobs.

North Carolina’s post-recession shift from middle-wage to low-wage occupations is not representative of how most states have fared during the recovery. Since 2009, North Carolina has seen a 21 percent increase in workers who earn poverty wages. This increase is the second highest in the South, the 6th highest in the nation. The number of working poor in North Carolina has grown at a rate nearly three times the national average. In fact, many Southern states such as Mississippi and Kentucky have managed to reduce the number of workers earning poverty level wages.

The surge of the working poor in the state is not the result of unavoidable labor market forces. There are important policy choices that can help bring higher quality and better paying jobs. Establishing a minimum wage and a state Earned Income Tax Credit would allow workers to earn a livable income and would ensure that those who work are able to make ends meet. Additionally, investing in education and skill training would create a higher qualified workforce, capable of fulfilling higher wage occupations.

Without a collective commitment to deliver on the promise that hard work should keep everyone out of poverty, too many working North Carolinians will continue to struggle to care for their families and afford basic needs which holds the economy back from full progress.