REPORT FINDS A MAJORITY OF NORTH CAROLINA FAMILIES
CANNOT AFFORD TO RAISE A CHILD

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Raleigh – Sixty percent of North Carolina families with children, comprising 1.6 million individuals, are not earning enough to meet their basic needs according a major policy report released today by the NC Justice and Community Development Center (the Justice Center). The report, entitled Working Hard is Still Not Enough, updates the Justice Center’s 2001 Living Income Standard (LIS) and finds that, on average, North Carolina families with children need more than twice the income of the “federal poverty level” to meet their most basic needs. Even for small families with one or two children, this amounts to an average wage of $10.60 per hour. Over 600,000 North Carolina families with children simply do not earn this.

“In the majority of these families at least one parent is working. Before the recession, it is likely that even more had a job,” said Sorien Schmidt, co-author of the report and the Justice Center’s Legislative Director. “The problem is that these families are caught in a major restructuring of the economy. The manufacturing jobs that paid enough to support a family are permanently leaving the state and being replaced with a new economy that is divided into low-wage work and high-skill jobs. That trend did not start with the recession and it won’t end with it either.”

Working Hard is Still Not Enough reveals that six of the eight fastest growing occupations in the state pay average wages less than the Living Income Standard and, indeed, less than average manufacturing wages. Some, like childcare, pay only $7.23 per hour on average. Other fast growing job sectors, such as registered nurses, pay more but require higher or different skills than those possessed by most manufacturing workers.

The report identifies two other prime reasons that family income levels have stagnated. First, except for a small boost from the strong 1990’s economy, value of real hourly wages has been dropping in tandem with the decline of minimum wage. Neither the minimum wage (which has remained at $5.15 for six years) nor real average hourly wages have kept up with rising family costs, especially childcare and housing expenses. Second, as wealthy households have seen a drop in the overall share of their income going to taxes, the tax burden on middle and low-income North Carolina households has risen. This has meant that the families least able to bear the cost of increased taxes are being asked to pay the largest share of their income.

As a result, families are relying more heavily on unemployment insurance, the Health Choice children’s health insurance program, food stamps and other government funded services. These programs not only help the families make ends meet, but they also add much needed revenue and economic activity to communities, especially in counties devastated by plant closings.

“The bottom line is that North Carolina is becoming increasingly split in two, with half losing ground or stagnating,” said Elizabeth Jordan, Fiscal Policy Analyst at the NC Budget and Tax Center and co-author of the report. “Since the recession began, it appears that middle and low-income families have lost the income gains made in the 1990’s, while the wealthy are still experiencing income growth. Rural counties are also falling farther behind the urban. The middle class appears to be moving downward, rather than the poor moving upward as we would hope.”

“The good news,” Jordan continued, “is that this report provides state leaders and the public with the information they need to define the issues facing families and to deal with them. It lays out a blueprint for addressing the issues that are holding back the majority of families and ultimately, the entire state.”

The report makes specific recommendations to improve state and local policies in six areas:
1.	Raise the minimum wage and ensure that state and local government employees are paid a living wage;
2.	Coordinate and enhance workforce development and training, particularly services provided to those who become unemployed in a mass layoff or plant closing;
3.	Improve preparation of the future workforce by ensuring all public school students receive a sound basic education;
4.	Increase tax fairness and adequacy;
5.	Sustain families earning less than a living wage by maintaining and enhancing programs providing basic necessities, such as health care, child care and food; and
6.	Improve consumer protections against predatory practices in the manufactured home, home mortgage and payday lending industries.

“Ultimately, state leaders, advocates, workers, employers and families must come together in a concerted effort,” concluded Schmidt, “to bring the state through this economic transformation and craft an improved 21st century economy so that all hard working North Carolinians can meet their basic needs and have hope for the future.”

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The North Carolina Justice and Community Development Center (the Justice Center) is a non-profit, non-partisan organization whose mission is to help low income and working poor North Carolinians escape poverty and achieve economic security. It includes several well-known projects within its umbrella and is professionally staffed by a team of attorneys, community educators and policy analysts.