Prosperity Watch (Issue 47, No. 2)

March 25, 2015

Six years after the end of the Great Recession, jobs are finally becoming more plentiful in North Carolina, but there still aren’t enough jobs for everyone who wants to work. Worse yet, the overwhelming majority of those jobs don’t pay enough to make ends meet, provide necessary benefits to help families get by, or create sustainable pathways into middle-class prosperity. In short, North Carolina is not creating enough quality jobs—employment opportunities that pay workers enough maintain basic spending on necessities like food and doctor visits, ensure retirement security, and provide paid time off when they or family members are sick. Without enough quality jobs, the middle class will shrink, consumer spending will drop, local business sales will suffer, and the overall economy will contract.

For much of the 20th century, North Carolina’s manufacturing-oriented economy provided workers with plentiful jobs with at least some access to pensions, decent wages, and opportunities to climb the career ladder into prosperity. But as the state’s economy has transitioned away from manufacturing and into services, these quality jobs have steadily vanished—and been replaced by jobs that just don’t meet the needs of the state’s workers, according to new data released by the Working Poor Families Project.

Wages continue to stagnate in North Carolina, contributing to declining household income and wages that are considerably lower than the national average. Even more troubling is the boom in ultra-low-wage jobs—the fastest growing industries in the state don’t pay enough to lift families out of poverty despite full-time work, industries like restaurants and merchandise retailers. Since 2001, the share of all employment belonging to poverty-wage jobs grew from a quarter to more than a third (see Figure below). Taken together, these trends reflect a contraction of opportunity in the state—if poverty-wage jobs come to outnumber quality jobs in the state, North Carolina’s working families will have fewer and fewer opportunities to use employment to climb out of poverty and into the middle class.

Additionally, the boom in low-wage work has been accompanied by a similar erosion in jobs that don’t provide any meaningful opportunity to ensure a financially sound retirement. Americans’ retirement security traditionally rested on three pillars—Social Security, individual savings, and an employer-provided pension. Unfortunately, the boom in low-wage work has seriously undermined the ability of families to earn enough discretionary income—after paying necessary bills like groceries, rent, and healthcare—to set aside money for retirement. And as the figure demonstrates, employer-provided pensions have dramatically declined. Since 2001, the percentage of workers without some kind of employer-provided pension or 401k has increased from 54 percent to 61 percent in 2013. At this rate, more than two-thirds of North Carolina’s will lack an employer-provided pension by 2025.

Lastly, a quality job allows employees to take time off when they’re sick or when they need to take care of a sick child. Unfortunately, far too many of jobs fail to provide these important protections, forcing thousands of North Carolina’s workers to choose between their paycheck and going to work sick. In North Carolina, almost half of the private-sector work force—and two-thirds of low-income workers—lack access to any earned paid sick days. This is bad news for an economy already struggling to benefit everyone in North Carolina. Sick workers, or workers with sick children, are less productive, and more likely to spread infectious diseases that spread to others in their workplace and their communities, further reducing business productivity.

North Carolina needs an economy that works for everyone, and the erosion of quality jobs is making that climb much steeper for the state’s working families.