NC Budget and Tax Center

Reflections on an equitable economy

North Carolina’s recovery from the Great Recession has been slow and uneven across the state. While some cities have rebounded and are thriving, many communities—particularly communities of color— continue to struggle due to a shortage of good-paying jobs.

It is in this context of uneven opportunity and access that our state and nation should not just reflect on the legacy of Dr. Martin Luther King Jr. but also act to build a more equitable economy.

Ensuring that all people—regardless of where they live, their skin color or their background—can get an education find work that enables them to support their families and get ahead is increasingly the only way to create sustained economic growth. The academic literature and the experience of various small-scale policy efforts have increasingly shown that the pursuit of more equitable economic outcomes yields stronger and more sustained growth that benefits everyone. In North Carolina alone, closing the difference just in wages across racial groups would grow the economy by $63.5 billion.

North Carolina will be increasingly diverse in the years ahead. By 2040, 48.2 percent of the population will be from communities of color. Yet differences in access to and success in school, the labor market, and asset building, for example, have meant that the future strength of the economy is eroding as we underinvest today in opportunities for communities of color.

In North Carolina, the unemployment rate for African-Americans is 2.2 percentage points above pre-recession levels, and for Latinos it is 1.7 percentage points, compared to 1.4 percentage points for whites.

Meanwhile, wages for workers of color have not rebounded as much as wags for whites. For African-Americans the drop in median wages from 2009 to 2013 was 9 percent, while for Latinos it was 7 percent; median wages also fell for whites but by a smaller 3 percent.

For counties with greater concentrations of workers of color, a reliance on declining or low-wage industries drives a pattern of lower overall wages and higher unemployment. Moreover, public investments for roads and other basic infrastructure have often lagged behind in these communities, limiting direct job creation in higher-paying jobs such as construction. The absence of real investment also undermines overall supports to businesses that are seeking to locate or expand in these communities. The seventeen counties in North Carolina that have populations that are more than 50 percent people of color have unemployment rates a full percentage point higher than our state’s other counties. Just half of the jobless workers in these counties found work since 2009; 53 percent have left the labor force entirely.

Another disturbing trend that has occurred since the Great Recession in North Carolina: counties with majority people of color in North Carolina have seen greater wage losses per employee than other counties. Counties where people of color are the majority lost $814 per worker in wages annually, compared to $718 per worker in all other counties, while counties with high concentrations of Latinos lost $931 per worker in wages. These outcomes mean that the entire local economy in these communities is being impacted by disproportionate wage losses.

Today, the national evidence of progress towards a more equitable economy at the national level is mixed. It appears that African-American unemployment is set to drop below 10 percent for the first time since the start of the recession. This is welcome result and one that aligns with a whole host of signs that African-Americans and other workers of color have seen genuine improvement in labor market conditions — but one that also masks the economic scarring that has resulted from long-term joblessness and underemployment. Long-term,the nation continues to also under-deliver on pathways to opportunity: more than half of African-American children born poor will remain poor compared to less than a quarter of white children born poor remaining poor.

These are trends that merit our close attention throughout the year. Equitable growth should not just be discussed around Martin Luther King Day, but must increasingly be at the center of our policymakers’ thinking. To strengthen North Carolina’s economy, we need targeted investments and policies that build out the infrastructure of opportunity for all communities.

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