Falling Behind in NC, NC Budget and Tax Center

A higher minimum wage AND reinstating state EITC good for the economy

As North Carolina continues to recover from the Great Recession, most of the jobs that have been added pay low wages, making affording even basic necessities difficult for many hard-working North Carolinians. Raising the state minimum wage and reinstating a state Earned Income Tax Credit (EITC) are two policy tools that North Carolina state lawmakers can use to help boost wages, widen the path out of poverty, and reduce income inequality, a report released this week by the Center on Budget and Policy Priorities (CBPP) highlights.

Wages for the least paid workers are no higher than they were 40 years ago, the CBPP report highlights. Yet evidence shows that lifting the income of families earning low wages provides a range of benefits, including improved learning and educational attainment and higher future earnings in adulthood for low-income young children. Furthermore, raising the minimum wage and an enhanced state EITC together works to put families and individuals on a path to financial stability and self-sufficiency.

Nearly 907,000 North Carolinians claimed the state EITC for tax year 2012. State lawmakers chose to let the state EITC expire at the end of 2013, which resulted in a tax increase for families earning low wages. Furthermore, the minimum wage has not kept up with inflation over time and leaves a family with a parent working full time in poverty. The CBPP report highlights that raising the state’s minimum wage and indexing the wage to the rate of inflation is one action state policymakers can take to address stagnant wages, poverty, and income inequality.

Raising the state’s minimum wage and reinstating a state EITC are two effective policy tools that promote shared economic prosperity for all North Carolinians. Boosting the income of low-wage workers and families help reduce poverty and income inequality, improves life outcomes for low-income children, and enhances the state’s economy. These outcomes benefit all North Carolinians and warrants action.

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