Economic recovery characterized by low-wage job growth and growing inequality

September 4, 2012 at 11:26 am 11 comments

Two reports came out in light of yesterday’s Labor Day holiday. One from the Budget & Tax Center, “The State of Working North Carolina 2012,” which provides an analysis of the economic trends in the state and of the labor market. The second, from the National Employment Law Project, “The Low-Wage Recovery and Growing Inequality,” looks at the trends in jobs and employment in the recovery period between 2010 and 2012.

The main takeaway from these analyses is that, despite the fact that we’re in a period of recovery, inequality is rising in North Carolina and in the nation. During the 2000s, in the state, as in the nation, we had seen a decline in high-wage jobs, such as those in manufacturing or information sector, and a shift toward more low-wage jobs, such as administrative and waste industries (see the chart below). As a result, household income declined by 9.4% since 2001, down to early 19990’s levels by 2010. It shouldn’t be surprising, then, that poverty also increased by 24.1% during this time.

After the end of the Great Recession, unemployment, underemployment (where workers take part-time work when they are actually seeking full-time work), and long-term unemployment remain persistently high.

Job gains in the recovery  have been predominantly in low-wage work, as the chart above shows. Nationally, since the first quarter of 2001, employment has increased 8.7% for low-wage jobs, increased 6.6% for high-wage jobs, but has dropped by 7.3% for mid-wage jobs.

The result is that the long-term trend of inequality is continuing and growing.  In North Carolina, the wages for the bottom 20% of wage earners remained stagnant over the past 30 years, while those at the highest end of the wage spectrum saw gains (see below).

In addition, inequalities persist across race, gender, and geographic lines. Rural eastern and western counties of North Carolina were hit harder than other counties, as shown in the map below.

The State of Working NC report includes a host of policy solutions aimed at creating a more equitable economic recovery. These range from support for the unemployed, wage standards including increasing the minimum wage, and accountability in our state’s economic development resources. But as the report concludes:

But to truly create communities of opportunity in North Carolina, state policymakers must focus on the needs of low-income people with an eye on where they live and work. This vision requires policymakers to work across multiple policy silos in order to achieve integrated development.





Entry filed under: Economic Development, Economy, Jobs & Employment. Tags: , , .

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