Democratic National Convention begins

North Carolina’s middle class shows the strain of years of job losses

Job, pay prospects getworse for many in N.C.

cjarvis@newsobserver.comSeptember 2, 2012 

About 60 people gather on a Tuesday morning at White Memorial Presbyterian Church in Raleigh – some defeated, some still optimistic, all of them hoping to network and learn job-seeking skills to escape persistent unemployment.

They look like a delegation from any suburban neighborhood, and that’s pretty much who they are. Every Tuesday, this red-brick building in a tree-shaded complex off Oberlin Road draws out-of-work lawyers, secretaries, finance executives, sales reps, accountants, bankers, engineers and developers.

They’ve cut back on the dinners out, the family trips, the movie nights. They’ve lost health insurance and struggled with kids in college. Many are burning through savings and retirement funds – the final assurances of a middle-class income.

But after more than three years with an unemployment rate higher than the national rate, North Carolina’s middle class is starting to show the wear and tear.

Median household income in the state fell over the decade by nearly 10 percent, to $43,326, according to the Budget and Tax Center, a nonprofit advocacy group in Raleigh. The center, in a report coming out this weekend, also found that North Carolina lost high-wage jobs and gained low-wage jobs. The report found that unemployment has lasted six months or more for nearly half of those who are out of work.

The center has also tracked a rapid increase in poverty in the state’s suburbs over the past 10 years. The situation is magnified nationally. According to study released late last month by the Pew Center, family income across the country declined over the past decade for the first time since World War II. And the size of the middle class shrank.

These are the people that Mitt Romney and President Barack Obama are trying to reach. At last week’s Republican National Convention, Romney and running mate Paul Ryan promised to fix the economy. Democrats will present their case this week when they meet in Charlotte for their national convention.

But the Pew survey and interviews in the Triangle suggest neither presidential candidate has convinced a majority of middle-class voters they offer a clear path to recovery.

“I don’t see either one is going to work towards benefitting me,” said Wayne Thome, an occupational safety director in Raleigh who has been out of work for two years. “Both of them talk, but neither of them are saying anything. No one is saying, ‘This is one of the small things I’m going to try to get done within the first 45 days of being elected.’ ”

Taking pay cuts

Around the Triangle, two dozen groups such as the one at White Memorial meet regularly. Organizers at the Raleigh church say they have helped 251 people find work of some sort since January of last year, and some say they are seeing promising signals on the jobs front.

Many who are laid off find work eventually, but for far less than they made before and often in a different field.

Joanna Wolfe of Durham lost her job as an information technology audit and security consultant three years ago when the recession hit. She found steady work again in January 2011, but for less money than she had been making.

“People say they will never take a pay cut, but the reality is they should be looking at a pay cut,” Wolfe said. “People have to be realistic. The economy doesn’t bear people making salaries in the same terms as 2008. Even with years of experience, there’s a 25 to 50 percent pay cut.”

She says employers are often reluctant to hire someone who is over-qualified because they fear the employee will leave once the economy turns around. Others have heard about employers who are putting off hiring until after the election.

Nicole Miller, who lives in northern Wake County, has a background in marketing and sales in the health, pharmaceutical and consumer products industries. She has been without a job for nearly three years. She knows she’s fortunate because her husband makes good money. Still, she says, they have cut back.

Miller says in three of the four interviews she has had this year for positions that squarely matched her experience, the jobs were put on hold at the last minute until the end of the year. She says she doesn’t know if it was the election, the economy or both, but it makes her wonder.

Her experience with unemployment is shaping her political views, she said.

“President Obama was handed an ugly situation to deal with,” Miller said. “Whether it was him or John McCain, there were such big problems it would definitely take more than four years to fix.”

While she says she is still on the fence in the presidential election, her choice for governor is clearer.

“I will be going Republican for governor this time,” she said. “I understand the focus has been on education and other things that are very important. But not enough has been done to address the economic situation in this state.”

Knocking tax breaks

Blair Jerome of Raleigh says the two major political parties share the blame. Jerome, a 60-year-old with a background in teaching and technology, just landed a contracting job after being unable to find full-time work for two years and 51 weeks, as he puts it. His wife, also laid off, was unemployed for 10 months.

“One thing you learn, every time we left the house we would look at each other and say, ‘Want or need?’ ”

Jerome wants to be optimistic about the future of the economy, but he says there are mixed signals. “I think gas prices over the next month may have as much to do with what happens as anything else,” he said.

The political front is also a mixed bag for Jerome.

“Personally, I think the government has ignored the unemployment issue, both sides,” he said. “Partly, I think they don’t know what to do. Partly, I think they tend to look at longer-term things like the deficit versus the short term.”

Joel Thigpen of Raleigh has built two careers – his first one and the one that followed his layoff about 20 years ago. A native North Carolinian who was a Morehead Scholar at UNC-Chapel Hill and has an MBA, Thigpen worked in sales and marketing for Fortune 500 companies and traveled the world on business.

After losing his job in a consolidation, Thigpen went to work for Nortel Networks and became a senior manager there, but when Nortel started shedding hundreds of employees, he bailed out and signed up with a spinoff firm at about half the salary. That company did well for a time but began retrenching this summer, and Thigpen was laid off in June.

He turns 60 this year, and says that’s too young to retire. But age is a barrier, as many of the unemployed middle-class are finding.

Thigpen doesn’t think Romney or Obama can stop the growing national debt on their own. Congress, he says, missed the boat by not backing the Bowles-Simpson deficit-reduction plan, which recommended cutting spending and raising taxes.

“I don’t know that any president can do a whole lot in and of themselves, because they’ve got to have a Congress that’s going to be supportive with stimulus efforts,” he says. “But right now our Congress is so dysfunctional, I don’t know if they’d help each other across the street in a rainstorm. … I don’t think the governor’s election will make a difference, either.”

Thigpen has grave concerns about the state of the economy.

“The United States, among almost all countries, has historically had the strongest and largest middle class, which was a real key to our growth and economic engine,” Thigpen said. “It was easier for people in the United States to move from the lower class, or from lower education, into the middle class. It was a goal seen as relatively obtainable – it could be worked for, and in a generation, lives change.”

He says tax advantages for the wealthiest aren’t going to help the economy. Rather, he says, it’s people in the center who are spending money and could use the help.

“It concerns me greatly that the middle class is under attack through tax policies and other government policies. It’s asked to carry the burden for the wealthiest Americans. Someone in my situation doesn’t have those (tax) shelters.”

A run on food banks

While the networkers in Raleigh learned how to perfect resumes and wring the most out of job interviews, a line of people formed outside another brick building, this one at the southern end of Wake County. They came because they were hungry.

At the tiny, one-story Fuquay-Varina Emergency Food Pantry, organizers say demand has soared in the past two years. Run by a coalition of churches, it now feeds about 2,000 people every month. “There are so many of them that never ever dreamed they would be in this position,” says director Mary Frances Goodard.

Jennifer Caslin with the Food Bank of Central and Eastern North Carolina, which provides food to outlets such as the one in Fuquay, says it is distributing 21 percent more food than it was four years ago. In Raleigh, the volume increased from 3 million pounds of food a month to more than 4 million pounds, she said, and hit record distribution this past fiscal year.

She said agencies that receive its food report that they are seeing more hungry people who haven’t needed help before.

There is hard data to back up the street-level impressions.

The Budget and Tax Center issued a report last month that took a look at suburban poverty in North Carolina. It found the number of poor people in the suburbs grew by 40 percent during the past decade – to about 77,500 suburban poor. Suburban poverty increased about 13 times faster than in urban areas, the report found.

“That has been driven in large part by the lack of employment opportunities brought on by the Great Recession and a recession earlier in the decade,” said Alexandra Sirota, director of the center, “also by the many other challenges for those who are working but earning lower wages.”

The center also found that since June 2009, a period when the country has been recovering in other ways, median wages have dropped 4.2 percent.

Public officials have not addressed the implications of suburban poverty, she said, such as connecting the suburban poor with social service networks and to job opportunities in urban areas.

There are other ways to measure the shrinking middle class, such as at The Open Door Clinic, a medical facility in Raleigh for those who earn no more than 185 percent of the federal poverty guideline and are uninsured. By its own count, it has seen a 16 percent increase in male patients in the past five years.

Clinic director Pablo Escobar says it’s clear what that number means.

“Males used to be the wage earners,” he said. “They had insurance through their employer or paid for medical care out of their pocket, and they are no longer able to do that because of the economy.”

Researcher David Raynor contributed.

Jarvis: 919-829-4576

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