NC Budget and Tax Center, Poverty and Policy Matters

Hard work isn’t enough for North Carolinians to climb out of poverty, new report finds

Allan Freyer contributed to this blog post

The American Dream is continuing to slip out of reach for many North Carolinians. Far too often, working hard just isn’t enough to lift many of North Carolina’s low-income workers out of poverty, according to a new report from the NC Budget & Tax Center.

As we mark the 50th anniversary of the War on Poverty, the report finds that the persistence of economic hardship in North Carolina is largely due to a changing economy and the replacement of middle wage jobs in manufacturing with poverty wage jobs in the services sector. As a result, public investments in the safety net—such as food assistance and tax credits for working families—and economic development programs are often all that stand between low-wage workers and deep poverty. Far from failing, these are the programs that have lifted hundreds-of-thousands of Tarheel workers out of poverty while also helped those living just-above the poverty line too.

Specific findings include the following:

A changing economy has replaced thousands of middle class jobs with booming poverty-wage jobs that don’t help workers make ends meet despite working full time. Since 2000, high-wage manufacturing employment in North Carolina fell by almost half, a larger drop than the national average and that of any surrounding state. Eight of the top 10 industries with the biggest job losses over this period were in manufacturing. At the same time, the serviced sector boomed, growing by 15 percent and generating an explosion of poverty-wage jobs, which often require little education and pay less than $23,484 per year. The total number of these poverty-wage jobs grew by 19 percent since 2000, the fastest category of jobs in the entire economy.   At the same time, high-wage jobs—those paying more than $43,950 and requiring significant education—grew by 3 percent.

Figure 2_Poverty Wage Jobs Explode in North Carolina

Working hard is failing to keep people out of poverty. Given the changing economy, full-time work is no longer enough to provide economic security to Tar Heel families or allow them to meet their most basic household needs. More than 3 in 10 workers in North Carolina earned wages at or below the official poverty line in 2012, up 23 percent since 2000, and the 8th-worst ranking in the nation.

Public investments in food assistance and tax credits for working families can support people as they work their way out of poverty. While the state’s poverty rate has jumped by more than one-third since 2000, it would have been much higher if vital services weren’t available to temporarily help struggling families make ends meet as they try to gain a foothold on the economic ladder.  These programs are now working overtime to make up the financial shortfall created by too few jobs and poverty-level wages.

Figure 4_Safety Net Kept Poverty in Check in 2012

Unfortunately, state and federal lawmakers have cut the very programs that create good-paying jobs and help lift so many people out of poverty. Over the past three years, lawmakers cut public investments in schools, colleges, and job training, while simultaneously eliminating the state Earned Income Tax Credit. At the federal level, policymakers have allowed federal emergency benefits to expire for the long-term unemployed and agreed to cut $8.6 billion from SNAP over the next decade.

Read the full report here.

2 Comments

  1. JIMFITZSR

    February 27, 2014 at 11:37 am

    WALMART EMPLOYEES COST THE LOCAL, STATE, AND FEDERAL
    GOVERNMENT UP TO $1,000,000 AT EACH BIG BOX STORE TO
    COVER EMPLOYEE BENEFITS!

    WHY SHOULD THE GOVERNMENT PAY FOR EMPLOYEE BENEFITS,
    IF A COMPANY PREFERS TO NOT PROVIDE HEALTH CARE
    INSURANCE THAT COST SHOULD BE IN THEIR WAGES.

    OVER THE YEARS,THE MINIMUM WAGE HAS NOT KEPT UP WITH
    THE ACTUAL “COST OF LIVING” AND MUST BE CHANGED TO KEEP
    UP WITH CPI!

    I UNDERSTAND THAT ALMOST 50% OF WORKERS RECEIVE SOME
    TYPE OF GOVERNMENT BENEFIT. THAT DOES NOT MAKE SENSE!

    OUR GOAL SHOULD BE TO HAVE THE “FREE MARKET” ACTUALLY
    PAY FOR THE ACTUAL “COST OF LABOR”!!!

    TIMES HAVE CHANGED FOR THE WORST! I WORKED FOR A
    COMPANY THAT PROVIDED HEALTH INSURANCE FOR MY FAMILY,
    SPONSORED RETIREMENT PROGRAMS AND PAID A LIVING WAGE
    THAT I COULD RAISE MY FAMILY ON. I NEVER RECEIVED ANY
    GOVERNMENT SUBSIDIES IN MY 45 YR WORKING CAREER.

    YES, I AM AN “OLD GEZZER” AND I DO RECEIVE SS AND
    MEDICARE, A COMPANY PENSION, AND AN ANNUITY FROM MY 401
    ACCT! I WOULD NOT HAVE THESE THINGS IF I HAD TO START OVER!

  2. LayintheSmakDown

    March 2, 2014 at 5:17 pm

    50 years doing the same old tired things, and still losing that same war. Progressives are like the two sides in the War of Northern Agression before they figured out some of the realities of modern warfare…..just keep marching your troops towards the cannon, it does not matter how many die.