NC Budget and Tax Center

NC Budget and Tax Center, Poverty and Income Data 2013

The gains of economic growth from 2012 to 2013 passed over low- and moderate-income North Carolinians for yet another year, according to  data released by the US Census Bureau last month. Poverty and stagnant living standards in North Carolina have become the norm during the current economic recovery. High rates of hardship persist because of the state’s ongoing job shortage and the rapid acceleration of low-wage work that fails to provide a pathway to the middle class.

A glimmer of hope exists, however. The poverty rate would have been much worse in the absence of public policies that provide necessary support. US Census Bureau data show that work and income supports blunted the extent of poverty’s reach across the United States. Using an alternative poverty measure, the Supplemental Nutrition Assistance Program (SNAP), Unemployment Benefits, and Social Security helped keep poverty in check by lifting millions of American above the federal poverty line. That’s an annual income of $11,490 for an individual and $23,550 for a family of four in 2013.

SNAP, formerly known as food stamps, lifted 3.7 million people out of poverty and helped them meet basic needs, as illustrated in the graphic below. Read More

2015 Fiscal Year State Budget, NC Budget and Tax Center

Despite the fact that almost three-quarters of North Carolina voters support expanding NC Pre-K and Smart Start, state lawmakers continued a pattern of underinvestment in key early childhood education services in the state budget they passed this year. NC Pre-K is a proven program which helps prepare children for later success in life, yet lawmakers failed to keep up with the needs of young children in the budget. They provided a one-time $5 million increase for NC Pre-K, but these are not recurring dollars and most of the money goes to increase teacher salaries. While improving teacher pay is critical, there is little left over to provide additional Pre-K slots. This education program currently is not able to serve thousands of children on a waiting list and thousands more who would otherwise be eligible. This is just one example of the many trade-offs state legislators made due to their choice to prioritize tax cuts primarily for those at the top over needed investments in our children, families and workforce.

Child care subsidies, another effective program which helps lower income families afford quality child care and serves as a work support, also took a hit in this year’s budget. Like NC Pre-K, the child care subsidy program helps make sure young children have access to quality early education, and it also has a waiting list of thousands. Lawmakers did little to address the shortage of services and actually made it harder for some low-income families to access this support. They lowered the income eligibility requirements for children under five years old to 200 percent of the federal poverty level (about $39,000 for a family of three). The program used to be available to young children in families earning up to 75 percent of the state median income (about $42,000 for a family of three). The changes were even worse for school-age children using subsidies for after school care. One positive change lawmakers made in this year’s budget was to how much child care providers are reimbursed for serving children who get subsidies, bringing the cost per child closer to the market rate and helping providers recoup more of their expenses. However, providers still are not paid the full market rate, making it hard for many child care settings to accept children who receive subsidies.

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NC Budget and Tax Center, Poverty and Income Data 2013

The latest data on poverty released by the U.S. Census Bureau last week confirms that work does not inoculate adults from experiencing poverty. One in three workers in North Carolina earned poverty wages, up from a low of 24 percent in 2002. The proliferation of low-wage jobs not only makes it difficult for workers to support themselves and their families but it puts a drag on the entire economy by depressing consumer spending.

The poverty threshold for a family of four in 2013 was $23,834. A full-time, year-round worker would need to earn an hourly wage of $11.46 to reach that level. That is well above the current federal and North Carolina minimum wage of $7.25 as well as higher than the proposed increase in the federal minimum wage to $10.10. And yet, low wage workers play key roles in the lives of our communities: they are home health aides who care for our parents or child care providers who are entrusted with the care of our children or bus drivers who get us safely to work each day.

In the increasingly prominent public debate about the falling wages of workers and the failure of the wage standards to ensure work pays, this latest data provides further evidence that workers are not only struggling but that it doesn’t have to be this way.

The trend data show that progrWorkers and Povertyess was made in the state for workers over the past thirty years but has been reversed more recently. North Carolina actually performed better relative to the rest of the nation through the 1980s and 1990s seeing a rapid decline in its poverty rate for workers over that period–an actual reduction from the high of 44 percent of workers earning poverty-wages in 1983. This faster decline is largely attributable to the state’s stronger employment opportunities than the nation in middle-wage industries like manufacturing and construction during that period as well as lower income inequality.

Beginning in the 2000s, those gains were lost as North Carolina began to see an increase in the number of workers earning poverty-wages. Contributing factors to this trend are likely the significant job loss in manufacturing and construction, the fallout of two successive national recessions and the significant growth of low-wage work since 2009. As of 2013, the share of North Carolina’s workers earning poverty wages was four percentage points above the national average.

When workers earn poverty wages, the entire economy struggles as does the broader community. That is because as workers struggle to meet their family’s most basic needs, they are less able to consume on main streets or pay their rent or mortgage. Workers who work hard yet earn poverty wages seek out other ways to bridge the gap in their income whether that be through taking on additional jobs, reducing their time to support their children’s development and their family’s well-being, incurring significant debt through the use of credit or informal loans to make needed payments, or seeking out resources or support from private charities or public programs. The result is an economy that fails to ensure work pays and can support strong local economies through vibrant main streets and stable families.

This is the seventh post in a series that takes a detailed look at the 2013 US Census Bureau poverty data released on September 18th. Previous posts examined: 1) how North Carolina is faring overall; 2) how poverty varies by race, 3) poverty by County; 4) child poverty; 5) the impact, or lack thereof, of the current economic recovery on poverty in our state and 6) the public success of Social Security in bringing down poverty rates for older North Carolinians. Read the entire series here.

2015 Fiscal Year State Budget, Falling Behind in NC, NC Budget and Tax Center

This week the Budget & Tax Center released a new report on North Carolina’s 2015 fiscal year budget. While other states across the country are beginning to reverse the worst cuts made during the Great Recession, North Carolina continues to underfund crucial public investments in order to pay for tax cuts that took effect this year. Lawmakers failed to provide a high-quality education for all children, protect natural resources, support community-based economic development, or provide adequate health and human services to North Carolina residents.

Under the final budget, state investments are 6.6 percent below pre-recession levels five years into the official economic recovery. The new budget for the 2015 fiscal year is the 7th budget enacted since the Great Recession hit, and North Carolina has yet to bounce back to its pre-recession investment level. This is in contrast to spending during previous economic recoveries – spending did not dip after the 1981 and 2001 recoveries and state lawmakers restored investments to the levels that were in place when the 1990 recession hit within three years. Read More

NC Budget and Tax Center, Poverty and Income Data 2013

Social SecurityAccording to data released last week by the U.S. Census Bureau, in 2013 the percentage of older adults (65+) whose incomes fall below the federal poverty threshold is lower than it is for children and non-elderly adults. 1 in 10 (10% exactly) older adults in North Carolina lived in poverty in 2013, compared to 17.9% of the state’s population overall and 25.2% of children. The percentage of North Carolina’s older adults living in poverty in 2013 is one percentage point higher than it was in 2007 when the recession hit.

The reason for the comparatively low rate of poverty amongst older adults is plain and simple – Social Security. Established in 1935, this relatively simple and universal public program continues to accomplish its primary purpose of providing basic economic security for older Americans. Read More