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Commentary, NC Budget and Tax Center

In case you missed it, economist Patrick McHugh at the Budget and Tax Center, poked some new and truck-sized holes yesterday in the glowing tale of a “Carolina Comeback” that continues to be spun by state leaders. As McHugh reports, worker wages remain stuck in the mud even as corporate profits soar:

A strong recovery should mean bigger paychecks. And yet, wage growth has been decidedly lackluster in the last several years, a sure sign that North Carolina’s comeback is far from complete. Despite corporate profits being at an all-time high and productivity increasing, the recovery has not translated into improved earnings for the average worker….

The latest data from December 2014 shows that across the state average wages have remained flat year over year and in eight of the state’s fourteen metro areas average wages have fallen. Economists generally say that wage growth needs to be at least 3.5 to 4 percent to deliver returns to worker’s paychecks or at least to ensure that labor is enjoying a stable share of the benefits of a recovering economy….

While average nominal wage growth was stronger from 2009 to 2011 in North Carolina, since 2012 nominal wage growth has been negative or flat year over year. Indeed for North Carolina workers, wage growth of 4 percent year over year since 2009 would have meant that the median worker would have been earning $3.00 more each hour in 2014.

The failure to achieve strong wage growth means that many North Carolina workers continue to struggle to keep up with rising costs and basic family needs….Until earnings growth improves, the strength of the economic recovery remains in question and the share of benefits that are going to workers limited.

Read the entire brief by clicking here.

Commentary

More than three-million Americans will get a raise tomorrow thanks to common sense new laws in 20 states. Not surprisingly, North Carolinians will not be on the list. This is from a post this morning at Think Progress:

On January 1, 20 states will raise their minimum wages, while one — New York — will increase its wage on Wednesday.

That means that all told, 3.1 million American workers will ring in the New Year with a pay raise.

Eleven states and Washington, DC are increasing their minimum wages thanks to changes in the law either by legislation passed by lawmakers or referenda passed by voters. Nine others will see an automatic increase because their wages are indexed to rise with inflation. Currently, 15 states have automatic increases built into their minimum wages, unlike the federal law.

The January 1 raises range from a 12-cent boost in Florida, whose minimum wage will increase to $8.05, to a $1.25 increase in South Dakota, bringing its wage to $8.50.

The increases in the New Year will mean that in 2015, the majority of states — 29 and Washington, DC — will have minimum wages set above the federal level of $7.25 an hour. They will also mean that 60 percent of all American workers will live in a state with a higher minimum wage.

Another half million workers will get a raise later in 2015, when legislation passed in Delaware and Minnesota to raise their wages goes into effect.

Meanwhile, of course, the minimum wage here in Pope-land remains stuck at a miserly $7.25 with essentially zero prospects of rising anytime soon and the inhabitants of the right-wing think tanks calling for its abolition.

Happy New Year!

minwage-2015

NC Budget and Tax Center

We keep hearing that North Carolina’s economy is turning around. But while it’s true that we’re slowly making progress in replacing the jobs lost during the Great Recession, the bad news is that the overwhelming majority of these new jobs just don’t pay enough to make ends meet. In fact, many don’t pay enough to keep workers out of poverty, despite working full time. Check out the latest Prosperity Watch for details.

NC Budget and Tax Center

At the heart of the American Dream is the idea that hard work is supposed to pay off—that anyone who works a full time job should be able to make ends and achieve upward mobility over the course of their lives. As discussed in the most recent issue of Prosperity Watch, however, seismic shifts in the global economy away from manufacturing and towards services have pushed this dream further and further away from too many of North Carolina’s workers. See the latest Prosperity Watch for details.

NC Budget and Tax Center

Governor McCrory’s Economic Development Board released it’s long-awaited strategic plan for the state’s economic development efforts this afternoon. Here is the Budget and Tax Center statement in response:

We all want to create jobs and grow an economy that works for everyone in North Carolina, and the best way to make sure that happens is to focus on raising family incomes after a decade of decline. While the Governor’s plan includes a number of useful proposals, there is an important contradiction between the plan’s call for additional tax cuts and the resources necessary to achieve the goals related to workforce development, innovation/entrepreneurship, and rural prosperity. These goals will be impossible unless the state provides adequate investment in higher education, community colleges, and rural community development initiatives. Funding for these initiatives are already well below where they were before the recession started in 2008, so it’s unlikely the state will be able to make significant progress on achieving these goals given the steep revenue losses resulting from last year’s tax cuts and any future round of tax reductions.