LIVING INCOME STANDARD 2008: Making ends meet on low wages

By John Quinterno, with Meg Gray Wiehe and Jack Schofield

Work is a fundamental human activity. It is the raw material from which ideas are born, enterprises are launched, families are built and neighborhoods are sustained. Human labor provides the resources needed satisfy material needs, the ability to access new opportunities and a sense personal dignity and purpose. Those benefits manifest themselves in prosperous individuals, strong families, thriving industries and vibrant communities.

For a sizable number of North Carolina families, however, work falls far short of its promise. One-third of North Carolina’s working families earn low incomes, and the number and proportion of such families has risen since 2000.

To better inform the debate around work, wages and opportunity, the North Carolina Budget and Tax Center developed the Living Income Standard (LIS), a market-based approach for estimating how much income a working family with children needs to pay for basic expenses. Updated periodically since 2001, the LIS provides a more nuanced assessment than otherwise is available of how much it truly costs to make ends meet in the Old North State.

The 2008 version of the LIS finds that the typical North Carolina family with children must earn $41,184 annually – an amount equal to 201 percent of the federal poverty level – to afford the actual costs of seven essential expenses: housing, food, childcare, health care, transportation, other necessities and taxes. To meet that level, the adults in the average family would need to earn a combined $19.80 per hour for every working hour of every week of the year.

Yet 37 percent of the families included in this study fall below that modest income threshold. Women, African Americans, Hispanics and immigrants are disproportionately likely to live in families below the LIS. And 60 percent of the adults in those families work full-time. This special report of the Budget and Tax Center updates the LIS for 2008, describes the characteristics of families that fall below the LIS, discusses the role of low-wage work in holding families below the LIS and presents strategies for helping more low-wage families share in the state’s prosperity.

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