Economy is putting

the pinch on families
By Scott Nicholson

If you’re feeling the pinch of the sluggish economy, you’re not alone, and you might need to pinch pennies for a while longer.

Newly released U.S. Census data shows North Carolina has made no gains to median household income over the last seven years. The figures, based on the state’s largest 37 counties, reflected a median household income of $44,670 in 2007, an amount the N.C. Tax & Budget Center said is statistically no different from the 2000 level of $39,184, after adjusting for inflation.

The two dates were picked as an “economic cycle”because they are both points considered the peak years just before a recession, said John Quinterno, research associate at the N.C. Budget & Tax Center, a nonprofit advocacy group.

“In all probability, we’re in a recession,” he said. “There are probably a lot of communities where it feels like the last recession (in 2001) never ended.”

He said communities that built their livelihood around core industries that have been relocated “have had their legs cut out from under them” and are probably feeling the effects more acutely than more metropolitan areas in which the data was drawn. Counties with populations of under 65,000 were not included, though those figures will be out in December.

Watauga County had a median household income in 2000 of $32,611. In 2004, it was $34,165, and in 2005 was estimated at $33,897.

The county’s poverty rate was 17.9 percent in 2000, and in January was estimated by the Census Bureau at 21.8 percent. The statewide poverty rate is 14.9 percent.

Quinterno said the news since 2007 has gotten worse, with 2008 carrying job losses, mortgage problems and higher health-care costs.

“I think definitely (it will be worse) because it will pick up all the things that are real to folks now,” Quinterno said of rising expenses. “We’ve lost jobs every month in North Carolina and people’s budgets are being pushed by energy prices. When the book is closed on 2008, I would guess that the numbers will be worse, largely because of what we're seeing happening in terms of jobs.

“One thing to keep in mind is some folks will say it’s just an economic cycle, that there will be hard times and then it starts growing again.

“But you’re seeing many more structural changes occurring, in the economy as a whole. But the job market is the bridge and the job market is not living up to its ability to create broadly shared opportunity and prosperity.”

Quinterno said it would take political will to address some changes, while other issues were more complex. “Some of these problems are fundamental and will require structural changes that are complicated and will take time,” he said. “You’re going to have to have the will to make those things happen. The benefits of economic expansion haven't benefited most families in North Carolina.”

Quinterno said the increase of the minimum wage from $6.55 to $7.25 next summer will help the lower income scales, but still will not be enough to dramatically change the overall economic picture.

“The minimum wage is still lower now than it was in 1968, and if they kept pace, it would be $10 an hour,” Quinterno said, noting that skyrocketing health-care costs still pressured family budgets, though some commodities were cheaper now than 40 years ago.

“There’s a disconnect between wages and the benefits provided by many jobs and what it takes to actually afford to keep a family going. Housing, food, insurance, child care, they are going up in ways that incomes are not,” he said.

The Current Population Survey data show that 17.2 percent of North Carolinians lacked health insurance in 2006-07, up from 15.1 percent in 2004-05. And the number of uninsured state residents has risen to 1.5 million, up from 1 million in 2000-01.

“The economic expansion that likely ended in 2007 failed to benefit most North Carolina families,” Quinterno said. “For the first time on record, it appears that median household income is no different, and poverty rates higher at the end of an economic expansion than at the beginning.”

“Despite solid economic growth in recent years, most North Carolina households have seen their standard of living stagnate,” he said. “The benefits of growth have been concentrated among a handful of households, resulting in a troubling rise in income inequality.”

The highest median income in North Carolina was reported in Wake County, where half of all households had incomes above $61,554. In Robeson County, which had the lowest median income of any large county, half of all households earned less than $30,882.

Quinterno said it would require long-term commitment and short-term policy changes to stabilize family incomes and spread prosperity. He said policy changes had led to some of the income discrepancies, particularly the international trade policy, erosion of the minimum-wage scale, and the shifting of more tax responsibility onto lower-income people.

“There’s definitely a policy role in change, involving short-term and long-term, federal- and state-level actions,” he said.

He cited improving unemployment insurance, providing adequate funding for health insurance and children's services and public assistance as first steps.

“They help folks who are dealing with hard times, and they also provide a great deal of stimulus to the community,” he said. “If an unemployment check comes into the community, it gets spent and circulated, so it’s also beneficial to local economies at large.”

Quinterno said though there had been some overall economic growth, it was concentrated in the higher-income levels.

“The benefits have become highly concentrated in fewer households,” he said. “It’s just the gap between the richest and the poorest has widened a great deal in the last 20 years, and in the last eight years you've seen a significant widening of that as well.”

U.S. Census Bureau statistics for Watauga County:
http://quickfacts.census.gov/qfd/states/37/37189.html