A report from the North Carolina Department of Commerce examined the state’s poverty rate decline over the past decade, marking the fifth biggest drop in poverty in the nation during the period from 2013 to 2023.
The report utilizes county-level data from the Small Area Income and Poverty Estimates (SAIPE) program, produced annually by the US Census Bureau, in conjunction with information from the American Community Survey (ACS) and various administrative records, to create reliable estimations of poverty rates statewide and locally.
During the 10 year period, North Carolina’s average poverty rate fell more than nearly every other state in the nation, decreasing 40% more than the national average. Starting a full two points higher than the national average in 2013 at 17.8%, the rate of poverty in the Tar Heel State dropped five percentage points to sits just three-tenths above the national average of 12.5%.
The state with the biggest drop, Arizona, fell six points.
A whopping 350,000 fewer people were in poverty in North Carolina in 2023 (1.35 million) versus 2013 (1.71 million), according the the report.
The timeframe coincides with a decade of tax and economic policy reforms at the state level in which income tax rates were lowered and flattened, standard deductions were raised significantly, and corporate income taxes were cut. Following the reforms, North Carolina experienced considerable economic and population growth, has been named multiple times as the best state in which to do business, and, according to this data, cut poverty by nearly a third.
“Critics of North Carolina’s historic tax cuts in 2013 – and the years of subsequent tax cuts – warned that tax cuts would only benefit ‘the rich and big corporations, but this recent report confirms that those critics have been wrong all along,” says Brian Balfour, senior vice president of research. “The tax cuts helped North Carolina reduce poverty at the fifth fastest rate in the nation, directly benefitting hundreds of thousands of low-income households. A growing economy is the best remedy for poverty, and cutting taxes is an important policy tool to encourage the productive investment that creates more job opportunities and higher wages.”
Conditions are not uniform across the state, of course, as the report notes that counties vary widely when it comes to the prevalence poverty. Economic and population hubs like Wake County, the most populous county and home of the state capital, sport poverty rates in the single digits; whereas other pockets in the Sandhills or northeastern North Carolina have a quarter or more of their populations living at or below poverty level.
The urban/rural divide — the disparity in economic prospects in terms of jobs, growth, and prosperity between more urban or more rural counties — has been a point of attention (and contention) as North Carolina as a whole has grown over the decade.
While statewide policy can only do so much to smooth out such regional disparities, goo policy sets the table for prosperity overall, says Joseph Harris, fiscal policy analyst for the John Locke Foundation. He argues the marked decrease in average poverty rates is a direct testament to good economic policies that tax less and encourage more production.
“This reduction in poverty was not driven by an expansion of government programs; instead, it was facilitated by the decreased income tax rates that spurred job creation and economic growth,” Harris told Carolina Journal. “By allowing individuals and businesses to keep more of what they have earned, people are incentivized to be more productive, and productivity growth has been the greatest diminisher of poverty in human history.”
Read more of the report from NC Commerce here.