Commentary

NC wages not keeping up with real cost of living

In case you missed it, the latest edition of the Justice Center’s “Prosperity Watch” has some less-than-encourgaing news about the “Carolina Comeback”:

With wages stagnating, the price of many necessities soars

Getting by is getting harder in North Carolina. The cost of some basic necessities are growing faster than wages in North Carolina, catching households that have to spend the bulk of their income on things like food and housing in a tightening vice. When families don’t earn enough to make ends meet, they can’t buy goods and services that provide jobs for other North Carolinians, so the entire economy slows down.

Inflation has been low over the last year or so, with some economists arguing that this should blunt concerns over wage stagnation. From the end of 2007 through July of this year, the cost of all goods and services that the average household purchases increased by 12.6%, while wages increased by almost the same amount. However, as can be seen above, the cost of essential needs like food and shelter has actually outpaced many other types of consumer goods. The price of shelter increased by 14.5% from December 2007 to mid-2015, and the cost of food went up almost 20% during that same period, growth that outpaces wages in both instances.

The practical effect of these trends is that families living in poverty are feeling the squeeze more than the average household. It should come as no surprise that low-income families are forced to spend a larger share of their income on basic necessities than their more prosperous neighbors.

For example, households in the bottom fifth of income spend 16% of their outlays on food, compared to 11% for the top income group. Households at the bottom of the income distribution spend over 40% of their budget on housing, while the top group comes in around 30%. The real world consequence of this is that poorer families have seen the cost of what they have to spend their money on go up much faster than middle of high income families.

High-level economic data can often shield the most economically vulnerable from view, masking the daily challenges that arise when wages don’t keep up with the growing costs of the basics.  Before anyone declares victory in North Carolina, we need to see wage growth that allows working people, and the economy, to make progress.

5 Comments


  1. LayintheSmakDown

    September 2, 2015 at 5:09 pm

    This is not just a phenomenon NC is experiencing the same thing that is happening across the country. Low wage, part time jobs are replacing better jobs due to progressive roadblocks like Obamacare that give employers incentives to hire workers that don’t require paying benefits. Pretty soon you are going to see even more of the low paying jobs being replaced by self-service kiosks too. This is not a political issue, it is just reality as we get into an increasingly automated world where manufacturing is sent overseas to slave labor and illegal immigrants willing to take ever decreasing pay continue to pour in.

  2. Pertains!

    September 2, 2015 at 6:31 pm

    Of course you would spin it around and blame it on anyone beside our Republican dominated NC government. Some things such as the rich are getting richer due to the tax cuts and the poor are getting poorer are due totally to internal factors in NC.

  3. LayintheSmakDown

    September 3, 2015 at 2:41 pm

    There is no one to “blame” in NC if it is happening all across the country. Although I could say the same as you are rabidly pursuing a scapegoat for the failed policies that progressives passed which got us to this point.

    As far as the disproven mantra in your last sentence, I don’t know about you but the Feds confiscate a lot more money than the NC government does. And, again, if the same thing is happening all across the nation then you are completely wrong. If it is happening everywhere, then how can NC be influencing say Michigan or Nevada or California and causing their wages to not keep up either.

  4. Rob Schofield

    September 3, 2015 at 2:42 pm

    LSD — Did you get the email?

  5. LayintheSmakDown

    September 3, 2015 at 8:13 pm

    Yes…I did. I even replied. Is there still something wrong or am I unable to refute inaccuracies/insults posted in my direction.

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