Summary:
- The American economy is remarkably strong and still improving
- Conditions are ideal for raising North Carolina’s state minimum wage
- Economic arguments against higher minimum wages have been flatly debunked
A central fact about the American economy in 2023 is our red-hot jobs market.
The United States currently has a historically low unemployment rate. And just below the good top-line numbers are even better trends:
- Historically low Black unemployment
- Historically low Latino unemployment
- Highest labor force participation rate in over 20 years
A hot jobs market and thriving national economy have pushed wages up, enticing more and more people to find work. And what about inflation? It’s been dropping sharply since the Biden administration’s Inflation Reduction Act. Average worker wages are also rising faster than inflation, leaving most working Americans better-off.
Nevertheless, low-wage workers in North Carolina face a very difficult economic landscape. Average wages might be rising, but low wages are still low. Even a remarkable national economic expansion isn’t trickling down to them, let alone equitably, as we are so often assured it will one day by supply-side true believers.
Yet North Carolina’s policymakers have a very powerful tool to use to help the low-wage workers who make our economy run: raising the state minimum wage. Raising North Carolina’s minimum wage, currently equal to the federal minimum of $7.25 an hour, would directly benefit a gigantic swath of our resident workers who are struggling. And best of all, state lawmakers could do it at literally any time they chose. As with most reforms, best time to do it was ten years ago; the next best time is right now.
Who would raising the wage benefit?
North Carolina has long been home to a huge low-wage workforce – an artifact of our state’s economic history. According to the NC Department of Commerce, approximately half of all of North Carolina’s workers make $32,000 a year or less. Only the top 20% of workers make $68,000 a year or more – yet that group takes home a clear majority of all wages actually paid out.
Nearly all of those bottom 50% of workers are hourly. Relatively few make the absolute legal minimum of $7.25 an hour – most make between $9-$13 an hour. But that is still far from a livable wage. At 40 hours a week, 50 weeks a year, a worker making $13/hour will make $26,000, which is not financially survivable in most parts of our state (let alone with dependents).
Massive wage inequality has proven remarkably stubborn, and even tight labor markets have not historically been enough to meaningfully change it. Low-wage workers in North Carolina make approximately the same overall share of total wages today that they did in the mid-2000s, despite massive overall economic growth.
Raising the minimum wage to $15 an hour – and indexing it permanently thereafter to inflation – would deliver a life-changing raise to these workers, their families and communities. It would not just strengthen families and marriages, improve child health and educational attainment, and reduce dependency on government social services, but also fuel the economy by juicing consumer demand, as low-wage workers are more likely than higher-wage ones to spend their income on necessities.
Would raising the wage hurt job growth?
Arguments against raising the minimum wage have relied primarily on highly theoretical concerns about hurting job growth. Yet many U.S. states and cities have plowed ahead and done it anyway. So what have the real-world effects been?
We in North Carolina actually have the benefit of a perfect side-by-side “natural experiment” of the effects of raising the minimum wage. In 2021, Virginia’s newly Democratic state legislature raised the Commonwealth’s minimum wage, setting it on-track to rise to $15/hour by 2026. Now, with the benefit of 2.5 years of data, it’s settled: far from hurting Virginia’s job growth, raising the minimum wage boosted it. In particular, it appears that job growth was actually higher in low-wage industries. By any reasonable standard, this debate is over.
But while the argument may be settled as far as Virginia goes, what about other states that have raised their minimum wage? It turns out that their experience has been similar. Numerous other states – including such hotbeds of socialism as Missouri, Arkansas and Florida – have raised their wages since 2018, leaving the U.S. federal minimum (and North Carolina) far behind:
And nearly all of these states have also surpassed North Carolina for employment growth:
Not only has job growth generally been strong in states that raise their minimum wage, but also specifically in industries dominated by low-wage labor, like retail and hospitality.
In short, there is simply very little real-world evidence of minimum wage hikes hurting employment.
Raising the minimum wage is both a pro-worker, and pro-work, policy. Critics on the right frequently complain about social spending supposedly disincentivizing people from working. Though this is rarely actually the case, the obvious alternative would be to favor policies that specifically incentivized working - like raising the minimum wage. Making a livable wage a reality would be a good way to draw people into the labor market while also reducing dependency on public support.
Best of all? Voters themselves don't need to be convinced. Raising the minimum wage enjoys broad public support among North Carolina voters:
Here in the real world, of course, the big business lobby, in the form of the NC Chamber of Commerce, shuts down attempts every legislative session to hike North Carolina's minimum wage. (Here was this year's bill, which did not even receive a hearing.) The corporate lobby has no interest in paying workers more, for all the obvious reasons.
Yet as always, good policy makes for good politics. Raising North Carolina's minimum wage is a slam-dunk on the economics, policy and politics. When will the leaders in our legislature listen?
