NC economy suffers from lack of labor policies, report shows

A new report from the North Carolina Justice Center says the failure of North Carolina elected officials to ensure the state's workers receive adequate wages and benefits like paid sick days is costing the economy billions of dollars each year. (Photo by Kevin Dietsch/Getty Images)

North Carolina’s economy is missing out on billions of dollars in economic activity each year due to inaction from lawmakers, according to a North Carolina Justice Center report released Thursday.

Entitled “ The Cost of Inaction — 2024 State of Working North Carolina ,” the report attributes the losses to the failure of state lawmakers’ to ensure or provide for adequate wages, paid leave, childcare and elder care funding, and unemployment insurance improvements.

Unlike most policy discussions, which typically revolve around the public costs of implementing new policies, the report takes a different approach by examining the cost of lost economic activity.

“We look at the cost of not having policies that support working people,” said Brandon Cunningham, a labor policy analyst with the Workers’ Rights Project at the Justice Center.

The report focuses on five major policy areas: low-wage work and minimum wage, unemployment insurance, paid leave, paid sick days, and care economy.

North Carolina is one of only 10 states with a minimum wage still pegged to the federal minimum of just $7.25 per hour.

Advocates in the state have spent years asking for a minimum wage raise to $15 per hour, which would still fall short of providing all workers with a livable wage and economic security, according to the report.

As a result, workers are often left to find ways to cut costs for housing and transportation. Without reliable transportation, people are left with lengthy commutes and more likely to struggle with attendance and absenteeism.

Taking an extra hour in round trip commuting time per day adds up to more than $4,500 per year in time costs for a full-time worker, according to the report.

“When we don’t have a higher minimum wage, we’re missing out on economic activity,” Cunningham said.

The report authors say that by not setting a minimum wage of at least $15 an hour, North Carolina misses out on nearly $4.5 billion each year, which would be creating greater security for workers and their families.

The other major policy areas tell similar stories.

North Carolina’s unemployment insurance program provides benefits that are well below the national average, consistently ranking in the bottom five states for its low percentage of jobless workers who receive benefits and for its short average duration of benefits.

Less unemployment insurance income leads to less economic activity, since there is less money for people to spend.

By not offering unemployment insurance benefits that are closer to the national average, the state’s economy is missing out on $1.57 billion in activity each year, according to the report.

Paid leave and paid sick days allow workers flexibility and stability when facing life events like a health crisis, welcoming a new baby, or getting sick.

“It’s super helpful giving parents time to bond with and care for young children,” Cunningham said. He noted that there are positive impacts on a child’s brain development and emotional stability, as well as reduced infant mortality.

Without protected paid leave, many parents return back to work shortly after their child is born, with a 2012 study finding that nearly one in four U.S. moms returns to work within two weeks of giving birth.

The report found that the low rate of women’s labor force participation, which stems in part from a lack of paid family and medical leave and affordable childcare, costs North Carolina approximately $23 billion in economic output each year.

Additionally, the lack of investment in childcare systems costs the state’s parents, businesses, and taxpayers an estimated $3.5 billion per year, according to the report.

For less drastic life events, employees often rely on paid sick leave.

However, the report discovered roughly four in 10 working North Carolinians, or approximately 1.6 million people, do not have paid sick leave.

Not having paid sick days leads to lost productivity and the increased occurrence of illness, which costs businesses in North Carolina roughly $1.7 billion per year, according to the report.

“Pro-worker policy is an investment to meet the needs of working people, to grow our economy, and to reap the economic benefits of good workplace policy,” Cunningham said. “We need to invest in workers, families, and the people of our state.”