Minimum Wage Stagnation in NC 

Jordan Meadows, Staff Writer

While a surge of minimum wage increases swept across more than 20 states in 2024, North Carolina finds itself lagging behind, stuck at the federally mandated $7.25 an hour.

This rate, set over a decade ago in 2009, remains unchanged despite calls for action and mounting evidence of its insufficiency to meet the rising costs of living.

One of the organizations working on this issue is the NC Justice Center. With a mission to alleviate poverty and ultimately eradicate it, the center engages in policy advocacy and litigation on issues disproportionately affecting low-income individuals.

The Workers’ Rights Project at the NC Justice Center, co-directed by Ana Pardo, engages in lobbying and litigation efforts to hold bad actor employers accountable for violating wage laws. Additionally, it conducts communication campaigns and convenes coalitions to address various workers’ rights issues.

SB 20 and HB 447, two bills aimed at addressing the minimum wage issue in the state, have been stuck in committee since the spring of 2023. Referred to the Rules and Operations of the Senate, these bills await action from the Republican supermajority in both chambers. However, no substantive measures have been taken, leaving thousands of North Carolinians, approximately 55,000 according to the U.S. Bureau of Labor Statistics, trapped in low-wage employment.

The recently passed state budget by the North Carolina General Assembly in late 2023 allocated funds for pay raises for state employees over the next two fiscal years. According to the proposed budget, most state employees are set to receive a 4% salary increase for the 2023-24 fiscal year, followed by a 3% raise for the 2024-25 fiscal year.

The minimum wage stagnation in the state contrasts with the actions taken by other states like Florida. However, as Pardo noted, Florida’s approach involved a ballot initiative that empowered voters to decide on the wage floor – a strategy not easily replicable in North Carolina, given the lack of legislative support from the majority party. While Florida’s initiative stands out, it remains somewhat of an outlier in the Southeast U.S., with no other states in the region having taken similar actions, the closest being Virginia and Arkansas.

Pardo underscored the absence of robust union representation and the declining density of unions in North Carolina. The shift in perspectives regarding the $15 minimum wage have been volatile: while it was once deemed an appropriate benchmark, the current economic landscape paints a different picture.

“There are some counties in our state now where, thanks to inflation and the skyrocketing cost of housing, childcare, and all these basic needs, $15 an hour is no longer a solution,” Pardo said. “Rather than planting a stake in the ground saying this is the number, it’s more about changing the way that we talk about our wage floor period.”

In response to these challenges is the statewide initiative known as Raising Wages NC. This coalition advocates for a meaningful increase in the minimum wage in North Carolina, aiming to address the pressing economic realities faced by low-wage workers statewide.

Certain segments of the workforce, including tipped workers, incarcerated individuals, and those with specific disabilities, may legally receive wages below the standard minimum wage.

“Until we have higher union density in our state and more people are covered under a labor contract, employers are free to provoke benefits as they feel like it,” Pardo said.

While shrugging off claims that increasing the minimum wage would inevitably lead to job losses and reduced hours for workers, Pardo acknowledges the potential for employers to adjust their hiring practices. She notes that some employers may opt to cut workers’ hours to mitigate the costs associated with providing benefits such as healthcare and sick days.

Some suggest another approach, similar to measures adopted by other states, which allows employers to adjust gradually and plan for wage increases effectively. This, Pardo argues, can help ensure that minimum wage adjustments are manageable for businesses while still benefiting workers.

“It doesn’t lead to job losses if done correctly; one of the things we advocate for is a phased-in approach. We see many other states do that: it makes the wage increases easier to manage for employers and allows employers to plan ahead,” Pardo said.

The idea that minimum wage positions are predominantly occupied by teenagers is countered by Pardo, who reveals that over 88% of workers in the state poised to benefit from a minimum wage hike are aged 20 or older, with nearly one-third surpassing the age of 40.

Almost one in four parents would see positive impacts from such an increase. Pardo suggests that a raise in the minimum wage would have a “ripple up” effect throughout the salary spectrum, benefiting a broader range of workers.

“Low-wage workers are overwhelmingly adults and many of them are adults with dependents,” Pardo said.

Women and people of color stand to gain the most from an increase in the minimum wage.

“Women, in particular, of all racial backgrounds are overrepresented in low-wage work in our state,” Pardo said. “Historically, women’s work has been devalued, in part because of the legacy of slavery and work that’s perceived as women’s work being seen as unvalued.”

The lowest-paid workers are also the most qualified for receiving government expenditures such as Medicaid and SNAP benefits. However, even the administrative leaders of these programs understand that the federal poverty line does not encapsulate all poor people in the nation.

“Nearly one in three workers in our state are at or below the federal poverty line, and the federal poverty line isn’t even a good indicator of what poor means – it’s well below what poor means now,” Pardo said. “We know this because, in many programs, the eligibility is based on 200% of the federal poverty line.”

Several healthcare institutions in North Carolina have announced increases in their minimum wages: Atrium Health, based in Charlotte, will raise its minimum wage by $1 and ECU Health in Greenville will do the same. Outer Banks Health will also increase its starting wage to $18 an hour. These adjustments come amidst rising living wage rates across the state, with Buncombe County’s living wage rate reaching over $22 per hour in 2024.

Despite the challenges, advocates for minimum wage increases remain hopeful for progress. They stress the importance of providing a living wage to workers to improve their standard of living and reduce poverty. Additionally, they argue that higher wages would lead to increased consumer spending and improved employee morale, benefiting both workers and businesses.

Opponents of minimum wage increases raise concerns about potential job losses and increased operating expenses for businesses. They caution against policies that could lead to inflation and reduce job opportunities, particularly for young or less experienced workers.

According to the Harvard Business Review, one alternative approach to complement a minimum wage increase involves implementing additional measures aimed at ensuring consistent work schedules and ample hours for employees, without unduly burdening employers and risking job losses.

For instance, some cities and states have enacted “fair workweek” laws since 2014, mandating employers to provide workers with greater stability and predictability in their schedules. These laws often include provisions for part-time workers to have opportunities to increase their hours before new staff are hired.

Other alternative approaches to addressing low wages have been suggested, such as tying the minimum wage to the lowest living wage necessary in the state, providing additional financial assistance to employers or workers, or tying the wage floor to the level of inflation.

Donald Trump’s stance on raising the federal minimum wage has varied over time; initially open to the idea of raising the wage floor during his 2016 campaign, he later expressed opposition to it. More recently, Trump and his campaign officials stated support for raising it to $10 per hour.

President Biden has consistently advocated for a $15 federal minimum wage after Democrats, led by Vermont Senator Bernie Sanders, incorporated this into their party platform in 2016. Currently, the 5th Circuit is reviewing an appeal by the Biden administration regarding a Texas federal judge’s ruling that blocked the enforcement of the minimum wage against state agencies in Texas, Louisiana, and Mississippi.

As discussions continue, advocates of an increased minimum wage urge policymakers to prioritize the needs of low-wage workers and take decisive steps to address income inequality in North Carolina.

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