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NC Budget and Tax Center

With unemployment in North Carolina at 9.6%, policy makers are rightfully focused on ensuring that the state’s economy creates more jobs for Tarheel workers. But as this week’s Prosperity Watch demonstrates, the state also needs to focus on creating better jobs, as well, jobs that pay decent wages and allow workers to support their families. Creating these good jobs would reverse the troubling reality of low-wage job creation seen during the 2000s.  As the new issue points out, North Carolina’s economy lost hundreds of thousands of high-wage jobs from 2001 to 2011, and in their place, saw a boom in low-wage employment instead. What caused this shift from high-wage to low-wage work? For more details, see this week’s Prosperity Watch.

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The N.C. Budget and Tax Center reported recently that while North Carolinians are working harder than ever, most are not reaping the benefits economically. The report points to the “off-shoring” of jobs as a major contributor to soaring income inequality.

Yesterday, Senior Economist John Schmitt of the Center for Economic Policy Research reported similar findings on the national level; American workers are better and more productive than ever.

“The workforce today is more experienced, much better educated, and working with more –and better– capital. Largely as a result, GDP per capita was 63 percent higher in 2010 than it was in 1979.”

Schmitt’s report, however, points to parallel and closely related contributing cause for growing wage and income inequality: the decline in worker bargaining power. Read More

NC Budget and Tax Center

North Carolinians are working harder than ever before, but the economy doesn’t seem to be working for them. At least, that’s the verdict of a new Budget & Tax Center report, which finds that during the current economic recovery, North Carolina’s workers have increased their productivity and gotten paid less for the first time in 30 years, yet another sign that the current economic recovery is barely living up to its name.  In fact, this productivity gap—in which rising worker productivity is not rewarded with new job creation or higher wages—is one of the most troubling features of the current recovery.

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Today, on the three-year anniversary of the last increase in the federal minimum wage, a broad coalition of groups and activists across the country will call for a realistic raise for the lowest-income earners.

Currently, the federal minimum wage stands at a low $7.25, and North Carolina tracks this federal standard. The minimum wage used to be a much more realistic wage standard – after its creation in 1938, the value rose steadily until reaching a high point in 1968. Since that time, however, the minimum wage’s value has steadily eroded as Congress has failed to correct for inflation over time. If properly adjusted for inflation, the minimum wage would be $10.55 today.

While the minimum wage hasn’t increased in the last three years, the prices of basic goods certainly have. As NELP’s chart below illustrates, the price of tuition, food, gas and utilities have steadily climbed while the value of the minimum wage has not. $7.25 translates to roughly $15,000 per year for a full-time worker while a conservative measure of actual family costs for one adult and one child in North Carolina requires an income of more than twice this amount.

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A new study from the N.C. Budget and Tax Center confirms what a lot of worker advocates have been saying for some time: average North Carolina workers are working harder and more productively than ever but their their wages are stagnant or falling. Meanwhile, high end jobs continue to grow, thus contributing to a two-tier labor market in which mid-level wage employment is disappearing as the jobs are outsourced overseas.

Here are the key findings:

  • The economic recovery from the Great Recession is different from any recovery in the last 30 years, as seen in unprecedentedly sluggish job creation and, perhaps most obviously, falling wages.
  • A unique feature of the current sluggish recovery is the productivity gap, in which—for the first time in 30 years—rising worker productivity (a key driver of economic growth) is not being rewarded with higher wages.
  • This productivity gap has contributed to the emergence of a two-tier labor market, with growth in low-wage and high-wage occupations, but little growth in between. The result is the worst wage inequality seen in 30 years.

Read the entire report by clicking here.