NC Budget and Tax Center

Focus on wages to ensure the future of work works for all North Carolinians

The Institute for Emerging Issues wrapped up its forum on the future of work yesterday. The forum brings together leaders from across the state each year to discuss issues of importance to the well-being of the state. This year the topic was the future of work– the ways in which automation and technology are changing how we work and the relationship between workers, employers, consumers and communities.

Despite the projections and well-intentioned guesses about what the future will bring, no one knows for sure what the outcome will be.  What we do know is what we do today can support better economic outcomes for more families, businesses and communities in the state.  Research is clear that wage growth and public policy will be key to ensuring that the future of work has the number and quality of jobs that can boost the economy for everyone.

If this sounds familiar, it should. North Carolina’s wage problem is front and center in the daily lives of workers and the communities where they live today.  Without wages that ensure workers can provide for the basics and spend locally, employers struggle to see the demand for goods and services that allow them to expand and communities are challenged to support the opportunities that build the long-term potential for children’s economic success as adults.  North Carolina’s uneven recovery and elevated hardship today are indicators of what happens when policy doesn’t focus on wages or the ways in which all communities can connect to economic opportunity.

On the first day, a panel of policymakers, Senator Chad Barefoot and Speaker Tim Moore, were joined by Rick Glazier with the North Carolina Justice Center and John Hood with the John Locke Foundation to discuss just where policy can ensure that the future of work delivers greater opportunity and shared prosperity.

John Hood highlighted the critical goal of ensuring that workers have the “capital” to meet their needs and make investments that support advancement of themselves, their families and build assets in their community.  This is indeed the goal and a broadly shared one that is the concern of the vast majority of North Carolinians. A workers’ ability to make ends meet and spend is what the economy needs to function well and expand.  That is why a focus on boosting wages and what communities need to do so, not on reducing the size of government, is needed.

The solutions are readily available to North Carolina policymakers today. They are proven ones that will strengthen the economy for the future. To grow wages, North Carolina must:

  1. Ensure that there are enough jobs for those who seek employment.  Without a better match between the number of workers seeking employment and job openings, employers won’t raise wages.  It is therefore critical that policymakers focus on proven job creation strategies.  As the Center on Budget & Policy Priorities highlighted in recent research that means focusing on home-grown businesses and entrepreneurs and helping them to start-up and expand rather than pursuing broad-based tax cuts or seeking to attracts firms from outside the state.  Such a focus has the added bonus of being better able to target job creation in communities—largely rural—that continue to struggle to create jobs and support many of the public goods that businesses and residents enjoy.
  2. Raise the minimum wage to boost the economy. Without workers who earn enough to afford the basics and spend locally, there isn’t demand for businesses goods and services and the sustained opportunity for expansion.  The minimum wage standard in North Carolina today of $7.25 falls far short of what is needed to meet even the most basic family budget.  It also has eroded over time meaning that a minimum wage worker is able to purchase far less with an hours work than 10 or 5 years ago.  Raising the minimum wage standard at the state level can directly boost the economy.
  3. Reconnect productivity to wages. If the market continues to produce the outcome that  workers are more productive but wages fail to keep up, policymakers must consider not just how it can encourage employers to deliver wage increases to workers but how it can remove barriers to collective bargaining that have eroded the potential for workers to negotiate a wage that boosts the economy.
  4. Support high-growth industries by building a skilled workforce, supporting emerging technology. This was the area where most of the discussion at the IEI Forum was pitched and it is an important one. But it is one that will always be insufficient if the policy choices above aren’t also in place.  Public investments in education from birth through to career are the foundation of opportunity, these investments must be adequate and equitable across the state.  And the career pathways, bridge programs and prior learning assessments that recognize learning is lifelong will require a far greater public commitment to our community colleges so that they can implement training in advanced technologies and keep that skills training affordable to all.

Broad-based tax cuts and the pursuit of low regulation won’t address our economic realities today and won’t position North Carolina to contend with the disruption of technological advancement. They are a policy approach rooted not in today’s economic realities or the anticipated future of work but in flawed theories. A focus on wages and the systems that we build collectively to ensure every community has opportunity is the best way to ensure the economy works for all today and in the future.

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