To some degree, the data tells us what we already intuitively know. But that doesn’t make it any less sobering.
Between 2000 and 2014, according to a new report from the Pew Research Center, the percentage of adults living in middle-class households declined in 203 of the 229 metropolitan areas surveyed. On average, metros saw a 4-percentage-point decline; nearly a quarter of them saw a staggering 6-point drop. Adjusting for inflation, the median middle-class household now earns 6 percent less than it did in 1999.
In other words, the middle classdefined by Pew as households of three earning between $42,000 and $125,000 a yearis withering, eroded by an increasingly yawning divide between rich and poor in a recovery whose gains have been almost uniformly distributed to the top 1 percent.
If you want to know why there’s so much economic anxiety despite relatively decent top lines5 percent unemployment, about two hundred thousand jobs added a monthlook no further. For most of us, the recovery doesn’t feel real, just stagnant wages swallowed up by all-consuming debt.
This dynamic, the report shows, is true throughout much of North Carolina. While in some parts of the countryfor instance, oil-rich Midland, Texas, or white-collar cities like Bostonthe middle class is giving way to a rising percentage of wealthy people, that’s not what’s happening here.
Quite the opposite, in fact. As The New York Times Upshot blog reported, in the metro areas surrounding Raleigh, Charlotte, Greensboro, and Goldsboro, the percentage of middle-class earners has steadily declined, while the number of low-income earners surged.
Goldsboro is the most pronounced example of this dynamic in the entire country: in 2014, 48 percent of its population was considered middle class, while 41 percent was lower class; in 2000, the lower-class percentage was hovering closer to 20, while the middle class was substantially more robust. In Raleigh todayone of the fastest-growing metros in the countryjust 50 percent of the population is middle class, while the lower-class percentage has inched up to 25 (equaling the percentage of wealthy households). There’s a similar story in Charlotte and Greensboro.
So when Governor McCrory boasts about the state’s GDP growth being among the highest in the country and credits it to his tax policies, remember the flip side: those policies, which cut taxes for the wealthy, will likely accelerate this trend.
Of course, many factors are at play, and most of them are not unique to North Carolina: the decline of manufacturing and government jobs, for instance, and a recovery largely fueled by low-wage service-industry jobs. As Alexandra Forter Sirota, a policy analyst with the N.C. Budget & Tax Center, puts it, “We have a wage problem in North Carolina. That’s clear.”
There are things the state can do to ameliorate this problem, Sirota says. It could better invest in its schools and universities. It could revisit its tax cuts to make those investments possible. As she points out, we now have thirty years of evidence showing that “supply-side economics is a wholly discredited way of enacting policy.”
But the most important thing the state could do, she says, is raise the minimum wage, currently just $7.25 an hour.
That won’t happen, thoughnot with this legislature. Which brings us back to HB 2: in addition to its attack on transgender individuals, this staggeringly awful piece of legislation also forbade municipalities from raising their minimum wages, either for the private sector or their own contractors. Right now, the only thing municipalities can do to combat income inequality is increase their employees’ pay, and that won’t accomplish much. Were this not the case, local governments could at least try to tackle economic inequality.
There’s research that suggests a patchwork of minimum wages isn’t ideal and might exacerbate inequality from region to region, Sirota points out. Still, it would allow for some movement in the right direction. And the status quo is fundamentally untenable.
Without a thriving middle class, it’s difficult to maintain a high quality of life. Without a high quality of lifeno matter the tax incentives you dangle in front of themit’s difficult to attract top employers, who want to recruit top employees, who want to live in places with a high quality of life.
Ultimately, our state’s obsequiousness to the short-sighted, avaricious demands of the Chamber crowdwhich wants low wages that pad the bottom linewill bite us in the ass. And yet, we’re doubling down, both on low wages and trickle-down economics. History suggests this won’t end well.
This article appeared in print with the headline “The Widening Divide”
