When growth fails: Inequality in Durham County and North Carolina

Durham People’s AllianceJanuary 30, 2014

Overview

• Why inequality matters

• How did we get here?

• Inequality in North Carolina

• Inequality in Durham County

A strong middle class, and low income inequality, improves economic growth

• Growing evidence that income inequality leads to shorter growth periods in business cycles

• Rising inequality slows educational attainment and generates disparities in access

• A weak middle class reduces and slows demand

• High inequality reduces entrepreneurial risk-taking

How did we get here? Drivers of Inequality

Economic transformation

Mid-wage goods-producing jobs replaced by low-wage service-

providing jobs

North Carolina Workers' Wages Failing to Keep Pace with Productivity Gains

During Current Recovery

Source: Budget and Tax Center’s analysis of Bureau of Economic Analysis and Current Population Survey. 1991-2007

Recovery from 1991 Recession

Recovery from 2001 Recession

Recovery from 2007 Recession

-10%

-5%

0%

5%

10%

15%

Percent Change in Productivity, Trough to Current MonthPercent Change in Median Wages, Trough to Current Month

When economic growth fails

Economic growth fails to produce higher incomes

for North Carolina families

Growth vs. prosperity

• In this economic reality, growth is not enough

• Lower wages, lower incomes

• Not enough jobs

• Too many lagging communities, regions

• Increasing inequality

Inequality in North Carolina

Incomes have been growing apart for three decades in NC.

1995$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

MedianTop 10%

Ho

url

y W

ag

es

(in

20

11

$)

The top holds more than half the income in the state.

North Carolina Lags Behind Nation in Absolute & Relative

Upward Economic Mobility

Source: Pew Center on the States. 2012.

NC US 0%

5%

10%

15%

20%

25%

30%

35%

40%

Absolute Mobility (per-centage change of earn-ings overtime)Relative Upward Mobility (percentage of upwardly-mobile residents over-time)

Inequality in Durham County

• Metro Durham is a bright spot for jobs Lowest unemployment in state (5.7%) Only metro with growing labor force Biggest % job growth in 2013 (3%) Highest wages in the state ($1,129/wk)

• But jobs aren’t benefitting everyone 18% poverty rate vs. 16.7% poverty in NC Almost a quarter of all census tracts in

Durham County designated high poverty Increase from 15% in 2005. These tracts have 47% poverty rate And a 55% child poverty rate

Durham by the numbers

Incomes at the top dwarf those at the bottom in Durham

$10,802 $51,510 $333,154

Poorest 20% Middle 20% Top 5%

Durham experiences widening income gap between Top 5% and everyone else

Source: American Community Survey

Top 5% see biggest growth in share of total income earned in Durham County

Source: American Community Survey

Source: American Community Survey, share of total household income, 2012

The top holds more than half the income in Durham County

Policy

• Targeting mid- and high-wage opportunities

• Building career pathways

• Helping lagging communities, regions

• Creating more equitable tax policies

• Minimum wage

Policy Responses to Inequality

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Email me at: allan@ncjustice.org

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