Commentary, NC Budget and Tax Center, What's Race Got To Do With It?

New report confirms: Low federal minimum wage = higher poverty in NC

The latest edition of Prosperity Watch from Alexandra Sirota of the N.C. Budget and Tax Center highlights a new report from the Economic Policy Institute which confirms something that common sense long ago revealed — namely, the low and inadequate federal minimum wage is directly linked to North Carolina’s high poverty rate.

“In North Carolina, nearly 1 in 8 working families (126,000) live below the federal poverty level in the state according to the Working Poor Families Project.

Researchers adjusting the 1968 minimum wage for inflation find that a full-time minimum wage worker would have earned roughly $10 an hour or $20,600 a year in 2017 dollars. Yet a worker paid the federal minimum wage in 2017 could only earn $15,080 working full time.

This falls below the federal poverty level for a worker with one child ($16,543) and far below what it takes to make ends meet in North Carolina for the same family size ($35,710).

Not surprisingly, the data also confirm that a boost in the minimum wage would reduce poverty:

“Boosting the minimum wage to its value in 1968 would have a significant benefit to all workers and particularly workers of color.  That is because workers of color are more likely to be paid hourly wages, engaged in part-time work and working in industries whose pay is at or close to the minimum wage.  The reasons that Black and Latinx workers are more likely to find this type of employment is connected to historic barriers to opportunity, systems that have excluded certain employment from wage standards and ongoing discrimination in the labor market….

Economic Policy Institute researchers found that nearly 3.3 million African Americans and Hispanics would no longer be in poverty had the value of work today earned a minimum wage equivalent to that earned in 1968.

For North Carolina, a similar boost to the minimum wage for state workers would increase the number of Black and Latinx workers living above the poverty threshold by an estimated 328,000.

The poverty-reducing effects of raising the minimum wage would likely taper off as the minimum wage got closer to $15, simply because at those higher wage levels, fewer workers are in poverty to begin with. But, if continuing to raise the minimum wage from $10 to $15 reduced poverty by just 1 more percentage point that would mean 92,000 fewer NC workers would be in poverty.”

 

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