Opinion: Carolina Beat

No. 922: WHO’S WINNING THE ECONOMIC RACE IN NORTH CAROLINA?

It’s hard to believe that half of the 21st century’s first decade is over. The decade has been a challenging one for the economy. First was Sept. 11, then the recession hit and was followed by a slow recovery, and finally hurricanes Katrina and Rita brought sky-high gasoline prices.

In North Carolina, we’ve had the added challenge of the transition out of our traditional economy (tobacco, textiles, and furniture) to new manufacturing (pharmaceuticals, technology, food processing, machinery parts) and the service economy.

It shouldn’t be surprising, therefore, that the economic progress of N.C. households this decade has been uneven. Average household income, after adjusting for inflation, fell by 8 percent from 2000 to 2005, and the inflation-adjusted average wage rate of all workers was flat.

Of course, as is often said, no one is average. These income statistics mask considerable differences going on beneath the surface among N.C. households. So who has been moving ahead, and who hasn’t?

One of the biggest winners in the N.C. economy has been workers with more education — specifically those with a college education. In the last five years (2000-2005), both the incomes and wage rates (each adjusted for inflation) of full-time workers with a college degree have climbed. This continues a trend we’ve seen in the nation and North Carolina over the last 25 years of college-educated workers doing well in the modern economy.

By comparison, full-time workers with less than a college degree have fallen behind this decade. Average inflation-adjusted incomes and wage rates of high school dropouts, high school graduates, and even workers with some college training but no degree have dropped. In particular, the wage rate of high school dropouts is off by 10 percent and their income is down by 16 percent. Is hasn’t been a pretty picture for these households.

Differences are also seen this decade in the wage rates of workers in different occupations. Only full-time workers in professional occupations (engineers, architects, lawyers, managers, etc.) and sales occupations have enjoyed improvements in their hourly earnings (after adjusting for inflation). The pay of other occupations in the service sector, farmers, and “blue collar” workers has fallen behind.

What about the longstanding differences in earnings of male and female workers? Have N.C. women workers made progress in the 21st century?

The answer is a definite “yes.” Among women working full-time, inflation-adjusted hourly wages are up by 5 percent this decade, versus no change for full-time male workers. Indeed, in the last 25 years, inflation-adjusted wages of women working full-time in North Carolina have increased more than twice as fast as for men.

A big reason comes back to education. Since 1980, the percentage of people in North Carolina with a college degree has increased more rapidly for women than for men. In fact, the percentage of N.C. women with a college degree has doubled in the last 2 1/2 decades, and this has opened up a greater number of higher-paying jobs for females.

The message of all these numbers and statistics is clear. This is not your grandparent’s North Carolina. It isn’t even your parent’s North Carolina. The three “Big T’s”—trade, technology, and teaching—have made today’s North Carolina more open and more competitive. But individual progress isn’t guaranteed unless workers are prepared for the new economic realities.

Dr. Michael L. Walden is a William Neal Reynolds distinguished professor at North Carolina State University and an adjunct scholar of the John Locke Foundation.