For the 15th consecutive year, the General Assembly did not provide minimum-wage workers with a pay raise upon the arrival of the new year.
As a result, about 55,000 North Carolinians enter 2024 stuck at or below the federally mandated $7.25 an hour set in 2009, according to the U.S. Bureau of Labor Statistics.
On the positive side, that signifies there are about 5,000 fewer minimum-wage workers in N.C. when compared with the start of 2023.
Democratic Gov. Roy Cooper has emphasized a minimum-wage hike is long overdue in leading more North Carolinians to a better quality of life.
As has been the case in recent sessions, there were Democrat-sponsored minimum-wage bills filed during the 2023 session that would have raised the state minimum wage to $15 an hour.
However, the Republican super-majority in both chambers took no committee action on any of those six bills.
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The lack of a minimum-wage raise for private-sector employees likely continues to sting considering a Republican super-majority in the legislature in 2018 raised minimum pay for all full-time state government employees to $15 an hour.
“I have been trying for at least 13 years to raise the minimum wage to be more livable, with no success,” said Rep. Pricey Harrison, D-Guilford.
Sen. Joyce Krawiec, R-Forsyth, said that “there is little discussion of minimum wage hikes in the current environment.” Krawiec has announced plans to retire after the 2024 session.
“This appears to be looking for a solution to a problem that doesn’t exist,” she said.
The left-leaning N.C. Justice Center estimates 1.3 million North Carolinians, including 750,000 women, would benefit from raising the minimum wage to $12 an hour.
Among the 25 states boosting their minimum wage in 2024 are increasingly Republican strongholds Florida (up $1 to $13), Missouri (up 30 cents to $12.30) and Ohio (up 35 cents to $10.45).
For those states, the wage increases are tied to recent state constitutional amendments requiring cost-of-living indexes or ballot referendums.
However, North Carolina’s constitution does not allow for voter-initiated referendums, which gives legislative leaders the power to shelve minimum-wage bills.
“I don’t believe there is a GOP-controlled state in the country that has raised the minimum wage without a ballot referendum,” Harrison said.
Republican perspective
Local Republican legislators continue to cite hourly wage hikes into the $15 to $22 range by numerous corporations, not-for-profit healthcare systems and other businesses as examples that the free-market system is working in a still-tight job market.
Some economists also point to increasing wages being passed along to consumers in terms of higher prices.
Krawiec points to the state’s jobless rate being below 4% for most of 2023 even with several mass manufacturing layoffs affecting the Triad.
Most economists consider full employment at 5% — the point at which everyone who wants a job has one, employers have the skilled workers they need and there is limited inflationary pressure on wages.
The state’s labor force data does not distinguish how many workers are full-time, temporary or part-time, or how many jobs people are working.
“It should surprise no one that the Republican-led General Assembly has no interest in raising the government-mandated minimum wage,” said Mitch Kokai, senior policy analyst with conservative think tank John Locke Foundation.
“Legislative leaders realize that the minimum wage hurts the people it’s designed to help. It prices low-skilled workers out of the job market.”
Kokai said that even as individual businesses opt to raise their minimum wage into the $15 to $22 an hour range, “setting the state’s mandatory minimum wage higher than the federal level also makes North Carolina less attractive to businesses looking for a new home.”
“Even those businesses that pay wages above the minimum see a red flag when the state government decides to insert itself into their decisions about how much they should pay employees.”
Varied opinions
Key Republican legislative leaders have said the free-market system should continue to dictate wages for private-sector employers.
They cite the possibility of losing private-sector jobs, or disincentivizing their creation, as a consequence of increasing hourly pay.
Many pro-worker advocacy groups disagree with assessments that increasing North Carolina’s minimum wage hurts potential entry-level employees.
A cottage industry exists of pro- and anti-minimum wage studies for each point of view, but no consensus on the issue.
The left-leaning N.C. Justice Center said that increasing the state’s minimum wage could play a key role in attracting some North Carolinians who have voluntarily dropped out of the state’s labor force in the post-COVID-19 pandemic period.
The center also cites as positive economic initiatives: an increased duration and benefit cap on unemployment insurance; guaranteed sick leave and pregnancy accommodations; and the right for private employees to collectively bargain.
“The low-wage working people of our state are facing enormous financial and logistical strain just trying to provide the basic needs for theirs,” said Ana Pardo, co-director of the Workers’ Rights Project at the N.C. Justice Center.
“The pandemic showed us that it’s not only possible to do right by working people, it’s urgently important that we do so.”
Kokai counters that “if a prospective worker cannot provide a level of productivity that matches the government’s artificial wage floor, he or she will not find a job.”
“That means it becomes more difficult for entry-level workers to reach the first rung of the income ladder.”
Clear differences
For the past 15 years, states have fit in one of two minimum-wage categories.
North Carolina is among 20 states that tie their minimum wages to the federal required wage. Four of those states, North Carolina, Georgia, Pennsylvania and Texas, are among the 10 largest in the nation.
Although Virginia’s hourly minimum wage remained at $12 with the new year, it is slated to raise to $13.50 on Jan. 1, 2025.
Meanwhile, Georgia’s minimum wage remains at $7.25, while South Carolina and Tennessee have no state minimum wage.
By comparison, 20 blue, purple and red states have legislation or mechanisms legislatively approved that raise their minimum wages when certain economic conditions are met.
Conditions for raising the wage sometimes include tying it to inflation, to the size of an employer’s workforce, or to whether an employer provides health insurance benefits.
If the federal minimum wage was tied to inflation — as is mandated in several states with recent hikes — it would be worth $10.54 as of November 2023.
A full-time N.C. minimum-wage worker earns $15,080 per year.
That’s 17.6% less than the $19,720 federal poverty level for 2023 for a family of one adult and one child. The federal poverty level is $30,000 for a four-member household.
About 1.38 million North Carolinians live at or below those poverty lines, or about 12.7%, according to Worldpopulationreview.com.
“Every year that passes without an increase results in inflation reducing the value of the minimum wage even more — a dynamic exacerbated by the high inflation of the past year,” said John Quinterno, principal with South by North Strategies Ltd., a Chapel Hill research company specializing in economic and social policy.
“The legislature could grant interested municipalities the power to set higher local wages subject to democratic processes,” Quinterno said.
Widening economic gap
Quinterno said the General Assembly’s decision not to raise the state’s minimum wage “yet again is a powerful reminder of the lack of interest in, or respect afforded to, North Carolina’s lowest-paid workers.”
Rep. Donny Lambeth, R-Forsyth, has said the minimum wage remains a subject “of great debate in Raleigh,” in part out of concern for the ever-widening economic gap between urban and rural North Carolina.
“It’s too early to tell (about the 2024 session) as we have not seen the state’s most recent financial forecast, and how we are doing in 2023-24 compared to our budget,” Lambeth said.
Raising the minimum wage for state employees to $15 an hour “could very well signal to other employers it is time for them to reassess their salary for the low-wage earners and adjust accordingly,” Lambeth said.
“But the market should determine that, not government.”
Greater Winston-Salem Inc. maintains on its website that among its priorities it “supports current North Carolina law in establishing our state’s minimum wage based solely on the federal Fair Labor Standards Act, and prohibiting any county, municipal or other local minimum wage law or ordinance.”
The chamber also states that “we also continue to support North Carolina’s Right to Work laws for private and public employees.”
Zagros Madjd-Sadjadi, an economics professor at Winston-Salem State University, said that increasing the state’s minimum wage “literally is irrelevant, except for the tipping wage, where it might still be utilized.”
“Given the political makeup of the legislature, I do not see a minimum wage rise in the cards right now,” Madjd-Sadjadi said.
“But the (job) market, even for entry-level unskilled work, in our area is now well above the minimum wage.
“It might still be relevant for rural areas, but not in Winston-Salem and its suburbs since employers here have had to raise wages to well over minimum wage to attract workers.”
Quinterno said the tight labor markets since the pandemic “have helped to produce higher wages for many low-paid workers, although it can be argued how much of those gains have been erased by higher inflation.”
“Raising the minimum wage in North Carolina would help to offset the erosion in the effective value of the minimum wage, bring the state more in line with the rest of the country, provide fairer treatment to low-wage workers, many of whom are disproportionately Black, Hispanic, and/or female workers.”
Mark Vitner, chief economist with Piedmont Crescent Capital, continues to favor setting a “flexible” state minimum wage in North Carolina the way that Minnesota, New York and Oregon have established.
“Ideally, a minimum wage would have flexibility for higher rates in large urban areas and lower minimum wages in smaller metro areas and rural areas,” Vitner said.
“What is appropriate for the minimum wage in Raleigh or Charlotte may not be appropriate for Lexington, Mount Airy or Boone.
“There should also be flexibility built into any increase in the minimum wage to allow for lower minimum wages for teenagers and a lower minimum wage during training,” Vitner said.
