Prosperity Watch Issue 38, No. 4: North Carolina experiences boom in low-wage jobs since Great Recession

North Carolina’s recovery from the Great Recession has been marked by slow job growth and persistent challenges for working families to make ends meet. Making matters even more troubling is the reality that the overwhelming majority of job creation since the Recession has occurred in industries that on average pay low wages.

Low-wage work is defined simply as work that pays less than what it takes for a family or an individual to make ends meets, according to a new report from the North Carolina Justice Center. Based on the Budget and Tax Center’s Living Income Standard, a worker with one child has to earn $$33,709 each year to meet this standard. Most of the jobs created since the start of the official recovery in 2009 pay less than the Living Income Standard—sometimes so far below it that full-time work doesn’t pay enough to keep workers out of poverty. These ultra-low-wage industries are some of the fastest growing in the state’s economy.

North Carolina saw an explosion of jobs in low-wage and ultra-low-wage industries between June 2009 and the third quarter of 2013. More than 57 percent of North Carolina’s job creation over this period occurred in industries that paid on average less than the $23,580 per year families need to lift themselves out of poverty. Another 26 percent occurred in industries that paid enough to keep these workers above the poverty line but not enough to meet the Living Income Standard. Taken together, more than 80 percent of all jobs created since the end of the Recession occurred in industries that on average don’t pay workers enough to make ends meet despite full-time work.

This boom in low-wage jobs is also bad news for the economic recovery. When workers earn low wages, they struggle to meet the rising costs for their most basic needs: food on their table, roofs over their heads and clothes for their children. In turn, this reduces the amount of money they can spend at local businesses. With fewer customers, these businesses earn smaller sales, and with smaller sales comes smaller business profits, reinvestment, and ultimately lower job creation. Ultimately, policy makers need to address these challenges by supporting job training pathways to the middle class, an increased minimum wage, and a strong safety net to help working families make ends meet as they struggle with low-wage jobs.

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