Politically, North Carolina is called a “purple state,” an even mix of red and blue. But in terms of economic balance within the state, North Carolina is red with inequality.
That’s the startling image shown in an income map created by Ted Abernathy of the economic consulting firm Economic Leadership. The map was presented to business and government leaders at a state economic forum last week. Using data from the U.S. Bureau of Labor Statistics, Abernathy colored North Carolina’s 100 counties by how their average income relates to the state average, red for those below, green for those above.
The result is a red state with only five green counties. Ninety counties are at least 10 percent below the state average, and the vast majority of those are at least 25 percent lower.
What it means is that North Carolina’s economic recovery and most of its population growth are centered in the urban counties of the Research Triangle, the Triad and Mecklenburg County. The rest of the state is struggling.
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This map should be a guide to state tax and economic policy. Instead, it’s an indictment of the approach taken by the state’s Republican leadership. The GOP-led General Assembly, abetted by Republican Gov. Pat McCrory, has cut corporate and personal income taxes and sharply restrained state spending. They say it is spurring an economic recovery.
But the map says that tax cuts are going mostly to where the money is: the green counties. And those counties are doing fine without them. Meanwhile, red counties that would benefit from more state spending are being denied. Instead, they’re getting tiny income tax cuts offset by higher state fees and a broadening of the sales tax.
Two things the governor and General Assembly could do immediately to ease the economic imbalance:
▪ They could significantly increase support for public schools. A better-educated population makes rural counties more appealing to businesses seeking to expand or relocate. More directly, better pay for teachers and other school employees would help systems that are often one of the largest employers in rural counties.
▪ They could expand Medicaid under the Affordable Care Act. An infusion of billions of federal health care dollars would boost rural hospitals – another major rural employer – and improve the health and the job prospects of the working poor in red counties.
And there are other steps.
▪ Restoring a state tax credit for renewable energy would increase the value and expand the use of farmland for solar arrays and wind farms. Instead, Republicans let that credit expire at the end of 2015.
▪ The state’s Earned Income Tax Credit was allowed to expire in 2014. Losing the credit was effectively a tax increase for 900,000 low-income workers. Restoring it would direct money where it’s most needed and where it will be rapidly spent in the local economy.
▪ Raising the state’s minimum wage would help low-paid workers in all counties, but especially those in rural counties. North Carolina’s minimum wage is the same as the federal wage of $7.25. Adjusted for inflation, the federal minimum wage peaked in 1968 at $8.54 an hour (in 2014 dollars). It was last raised in 2009. Twenty-nine states plus the District of Columbia have set a minimum wage above the federal level.
The red map of North Carolina ought to hang in the governor’s office and in the office of every state legislator. It’s a depressing statement of where North Carolina is, but it also points to where the state’s taxing and spending policies must go.