Uneven recovery demands targeted response but state decisions move in opposite direction
Disparities in economic opportunity for North Carolina’s workers have persisted for generations, including the last few decades when the state’s economy transformed away from manufacturing employment and toward service employment. These disparities have grown since the Great Recession, according to a newly released State of Working North Carolina report. Although the downturn’s economic pain was pervasive, it was not spread evenly throughout the state. The new report shows that some communities and regions were harder hit than others and continue to struggle with high unemployment and few opportunities for growth.
There are multiple storylines to this “tale of two economies” reality. One is the rural and urban divide. Rural North Carolina is continuing to lose jobs, while cities and suburbs have seen employment growth. Another reality is the race and ethnicity divide among whites and communities of color. This gap has always existed but grew after the recession when communities of color—African Americans in particular—bore the brunt of job losses. There is also the long-standing gender gap that narrowed during the downturn but widened post-recovery as men have been quicker to regain lost ground.
There is a clear need to target policies to the hardest-hit communities in order to improve equity of access and opportunity. Yet, the new state budget and other state-level policy decisions—such as the elimination of the Earned Income Tax Credit—do more harm than good in delivering targeted relief.
For example, the budget shifts economic development investments away from low-income, distressed populations and communities and toward more broad-based efforts focused on attracting more businesses to NC. Elimination of funding for the nonprofits that help reduce poverty, create jobs, and strengthen small businesses—such as the Institute of Minority Economic development and its women’s business center—move rural communities, African Americans, and women in the wrong direction. The budget also reduces funding for low-wealth school districts that are essential to developing our future workforce. These cuts come on top of federal budget cuts to education resulting from the sequester, which is taking a harder toll on low-income areas.
Seeking to reverse disparities is in the best interest of all North Carolinians because everyone is impacted when economic hardship grows. As such, it is critical that state investments foster the well-being of residents in opportunity-deprived areas by supporting access to a high-quality education, living-wage jobs, and small-business development. Doing so will strengthen the opportunity structure—especially in disadvantaged areas—and help build a more inclusive economy that will support all workers and the recovery.