These days, with the weak and lopsided economic recovery, one has to seriously question the status of the American Dream. Is the traditional American belief that “hard work will pay off” just another fairy tale that we’re taught at a young age? Sadly, for far too many North Carolinians trapped in the booming low-wage labor market, the answer to this question is a resounding “yes.” For them, hard work and a full-time job just isn’t enough to climb out of poverty, make ends meet, or achieve economic security.
The changing economy is a major driver behind why so many working families are facing economic and material hardships. In our state, we’ve seen the replacement of middle-wage jobs in manufacturing with poverty-wage jobs in the services sector. The thousands of low-skill jobs that provided a critically important ladder out of poverty and into the middle class for three generations of North Carolinians have disappeared and been replaced with jobs in hospitality, retail sales and other services that pay much less.
North Carolina’s transition away from manufacturing jobs has been particularly acute: eight of the top 10 industries with the biggest job losses since 2000 were in manufacturing. To add insult to injury, the fastest-growing industry in the state—leisure and hospitality—pays just $14,350 per year on average. In other words folks, welcome to the squeeze on middle-class living standards. The bottom and top ends of the income ladder are becoming more and more sticky, with stagnant mobility in-between.
As is to be expected given this trend in employment and wages, the share of North Carolina workers earning poverty-level wages is growing rapidly too. More than 3 in 10 workers in the state earned wages at or below the official poverty line in 2012. This is the 8th-worst ranking in the nation. It’s fair to say that this is not exactly what one would call a winning strategy for the state’s economic future.
In yet another sign that the American Dream is slipping out of reach for many North Carolinians, the ability of the minimum wage to deliver even the most basic standard of living has eroded considerably over the last few decades. In 1980, the state’s minimum wage was nearly 60 percent of the earnings of the average worker. By 2012, it dropped to just more than 47 percent. This wage deficit isn’t just a number in a newspaper: it means parents with children toil on the job day after day but still struggle to keep up and afford basic housing, food, child care, health care, and transportation. Who has this kind of “dream”?
Public investments in the safety net—such as food assistance and tax credits for working families—and economic development programs are often all that stand between low-wage workers struggling to get by and destitution. Far from failing, these are the programs that lift hundreds-of-thousands of Tar Heel workers out of poverty while also helping those living just-above the poverty line too. These programs are working overtime to make up for the financial shortfall created by too few jobs and poverty-level wages.
Unfortunately, state and federal lawmakers have cut the very programs that create good-paying jobs and help lift so many people out of poverty. Over the past three years, lawmakers have fallen short of what’s needed to adequately fund schools, colleges, and job training, while simultaneously eliminating the state Earned Income Tax Credit. At the federal level, policymakers have allowed federal emergency benefits to expire for the long-term unemployed and agreed to cut $8.6 billion from food assistance over the next decade.
No one expects a “rags-to-riches” experience, but there is an expectation that full-time, hard work should be enough to secure a modest living standard. One music artist put all of these numbers in real terms with the words: “I love paying rent when the rent’s due.” Indeed, it is satisfying to live without the hustle of juggling bills on a paper-thin budget—no one enjoys the robbing-Peter-to-pay-Paul routine. To work with dignity is the American Dream, and it is slowly slipping out of reach for many of our neighbors despite hard work and increased productivity.
North Carolina needs policies that enable equality of opportunity, rebuild entryways into the middle class, and ensure that prosperity is broadly shared so that all of can reach our economic potential. Living-wage jobs are a core piece of this policy solution. Policymakers have the power to put North Carolina’s broken economy on a better path. Perhaps if they care enough to fix this, the next generation won’t think economic mobility is just another common fairy tale.