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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 [1].

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 [2]

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 [3]

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 [1].