North Carolina households derive the overwhelming majority of their annual incomes from earned wages and salaries. Job losses and slackness in the labor market are therefore serious problems—problems that can push households onto a path of downward mobility. The quality of jobs also matters greatly for households seeking to better themselves through work. Unfortunately, too many jobs in North Carolina are low wage jobs; by one count, a third of all working Tar Heels in 2014 earned less than $11.65 per hour.1
Low wages are pronounced in certain growing industrial and occupational groups, many of which rarely offer such important workplace benefits as health insurance coverage, retirement savings, or paid medical leave. Many industries also have come to rely heavily on various forms of contingent work and the use of illegal labor practices, such as the improper classification of employees as independent contractors.
Fortunately, state leaders can pull on any number of policy levers to update and to enforce labor laws so as to ensure that North Carolina’s productive workforce shares in the prosperity produced by their industry. For inspiration, public leaders can look to the progressive labor practices already used by the many best in class employers across the state.
Begin by raising North Carolina’s minimum wage to at least $10/hour.
The living wage model is a measure of a household’s basic needs. It uses locally specific data on a family’s likely minimum costs on things like food, child care, health insurance, housing, and transportation. According to the Massachusetts Institute for Technology’s Living Wage Calculator, two working adults with two children would each need to earn $14.28/hour to make a living wage in North Carolina.2 That’s nearly twice our current minimum wage of $7.25/hour. According to MIT, a single adult with two children would need a living wage of $25.83 to make ends meet – more than three times the current minimum wage.
North Carolina should consider raising the state minimum wage to at least $10/hour as a crucial first step towards supporting low-income families in their efforts to gain economic security.
In an effort to raise the minimum wage, North Carolina shouldn’t be distracted by common myths about the minimum wage. Opponents argue that higher minimum wages scare away potential business and force employers to hire fewer workers. But recent research finds living wage laws on the books have had no meaningful impact on employment.3
Reinstate the state Earned Income Tax Credit.
At both the state and federal level, the Earned Income tax Credit (EITC) is one of the most effective anti-poverty tools at the government’s disposal. It provides short-term income support to keep working families out of poverty, incentivizes employment, and keeps families from using programs like welfare or food stamps. The EITC has historically enjoyed bipartisan support. But in 2013 North Carolina voted to eliminate the state’s EITC, making us the first state in three decades to curtail this popular form of income support.
Between 2011 and 2013, the state EITC kept over 350,000 North Carolinians – including nearly 200,000 children – out of poverty.4 Children living in poverty are more likely to be at risk for toxic stress, high food-insecurity, and lower educational achievement; all of which threaten economic growth.5
The EITC is also helpful for working mothers. Over two million women in the state are employed, and over 40 percent of those women are the primary breadwinners for their families. Single mother households in North Carolina earn a median income of just $20,393 a year, and are more likely than any other type of household in the state to live in poverty.6 These households are helped the most by the small income boost the EITC provides.
Establish a paid sick leave standard of seven days a year and create a state-administered Family Medical Leave Insurance Program.
Approximately, 1.2 million North Carolinians – 39 percent of the state’s workforce – don’t have paid sick days.7 They don’t have the option of calling in sick without losing pay or getting fired. Low-wage workers are the least likely to have paid sick days, which means the people who can least afford to miss pay are the ones who most often face that outcome. Over one million people in North Carolina also care for adult family members, partners, or friends suffering from chronic illness.8 The vast majority of them don’t have paid family and medical leave, so they can’t take paid time off to care for an ill or injured loved one, or bond with a new child.
Lacking paid leave puts an undue economic burden on low-wage working families, leaves communities vulnerable to public health issues like seasonal flu or a norovirus outbreak, and weakens workplaces through lost productivity and high turnover.
Connecticut, Massachusetts and Oregon all require paid sick days. New Jersey and Rhode Island have paid family and medical leave. California has both.
North Carolina should establish a paid sick leave standard so that workers can earn up to seven days of paid sick leave per year to use for their own illness or to care for a sick spouse, or child.9
In addition, North Carolina should create a state-run Family Medical Leave Insurance Program that would use employee payroll contributions to fund extended medical leave. Employees would be eligible to earn a portion of their weekly income while caring for a new child, an ill spouse or relative, or recovering from a personal illness or injury.10
Quantitative and qualitative data from states with family medical leave shows positive impacts for business owners and employees alike.11 Business owners see lower turnover (and lower turnover costs), higher productivity, and fewer occupational injuries. Because the program is paid with employee contributions, employer costs are limited to lost employee time. Employees are even bigger winners. They can take the time to bond with and care for a new child or go to the doctor instead of worrying about missing a paycheck.
1 Economic Policy Institute analysis of Current Population Survey, 2014.
3 Lester, T. William. (2012). “Labor Standards and Local Economic Development—Do Living Wage Provisions Harm Economic Growth?” Journal of Planning Education and Research. Fall 32(3): 331-348.
4 The Center on Budget and Policy Priorities. North Carolina Fact Sheet.
5 Ruble, Keller Anne Bumgardner. (October 2015). A Stronger Foundation: How a Refundable State EITC Can Support Child and Workforce Development. Institute for Child Success.
6 Institute for Women’s Policy Research. (2012). “Key Findings on the Economic Status of Women in North Carolina.”
7 Institute for Women’s Policy Research. (2014). “Research Brief: Access to Paid Sick Days in North Carolina.”
8 NC Families Care. (2014). “Get the Facts on Family Leave Insurance.”
9 Model paid sick days legislation is available from the National Partnership for Women and Families. "Paid Sick and Safe Days Model Legislation."
10 Model paid family and medical leave legislation is available from the National Partnership for Women and Families. "Model State Paid Family and Medical Leave Statute."
11 Johnson, Marion T. (November 2015). Family Matters: How Paid Leave Pays Off For Working Families. Think NC First.