NC workers fuel our economy. Tax cuts do not.
Working people power the economy. Their labor delivers critical services to make all of our lives easier, creates new products and technologies, builds roads and infrastructure to connect us, and provides the care that heals our communities. If the economy is strong, it should support the people who make it possible.
But when policymakers choose to ignore that worker’s wages, working conditions, and power in the workplace are lagging — and they enact tax cuts to primarily benefit profitable corporations and the wealthiest — people, entire communities, and our economy struggle.
For years, North Carolina policymakers have touted rankings that put NC as the top state for business. These rankings reward states for low taxes, weak regulation, and minimal union representation, rather than provide a true measure of economic success: whether people are thriving today. The reality is that North Carolina policies are not making life affordable and aren’t ensuring that people can live and plan for the future. That’s why our state consistently ranks as the worst state to be a worker.
In the lead up to Labor Day, let’s look at the state of work in North Carolina with an eye to the role that public sector employment plays in our communities and the importance of an economic agenda that funds the supports to work that generate health, wealth, and shared prosperity.
Workers are falling behind
A strong economy gives families room to breathe, pay bills, care for kids, and look ahead. When everyday life feels unstable, the economy is failing its most important job: serving the people who power it.
For workers across North Carolina, the economy has felt like it’s moving in the wrong direction, and people blame policy choices. Some 63 percent of North Carolinians say the economy is moving in the wrong direction for everyday people, while just 26 percent say it is moving in the right direction. Fewer than 1 in 4 North Carolinians say NC’s economic policies are more likely to benefit everyday people than the wealthy.
This isn’t surprising. The costs of the basics are rising faster across many areas in NC than across the country, and in many cases, they are rising faster than wages. In a recent analysis of housing prices, a NC worker earning minimum wage would have to work 132 hours to afford a one-bedroom apartment at Fair Market Rent — that’s more than 3 full-time jobs.
Since 2020, following the onset of the COVID-19 pandemic, real wage growth for the median worker in NC has been negative. But over that same period, real corporate profits have climbed nationally.
Tax cuts haven’t boosted employment or wages
For more than a decade, state lawmakers have promised that reductions to personal and corporate income tax rates would deliver better economic outcomes. But as the primary economic policy of policymakers, tax cuts have failed to deliver.
Regional neighbors like Georgia and South Carolina with higher personal and corporate income taxes have higher GDP growth and comparable employment outcomes. Virginia also has higher personal and corporate income tax rates, and while NC’s GDP growth slightly outpaces VA, notably VA has much stronger employment outcomes over the past 16 years, as measured by a lower unemployment rate.
The flaw in trickle-down logic is that state and local taxes combined account for just one-quarter of 1 percent of all business expenses, so tax breaks very rarely drive relocation and hiring decisions. What does drive these decisions are considerations like consumer demand for products and services, availability of qualified workers, and access to essential supply lines.
Income tax cuts do succeed in accomplishing sizable losses in state revenue. If NC had the same corporate and personal income tax rates as we did in 2013, the state would have an additional $18 billion to spend this year alone. Put differently, because of relentless tax cutting by policymakers for more than a decade, the state has $18 billion less to spend this year on public services, including pay for public sector workers.
When we can’t fund the services that people need and competitive pay for workers delivering these services, hardship increases, consumer spending declines, and overall economic progress slows.
Decades of tax cuts have led to poverty wages for public sector workers
Since 2010, the gap in pay between NC public and private sector workers has grown from a mere 1.5 percent pay gap to an 11 percent gap. This gap is even larger when we focus on the average public school teacher salary, which is about $60,000 in 2025 — an 18 percent difference from the average salary in the private sector.
Public sector employment accounts for a significant share of total wages in every county. On average, across NC, public sector wages account for 20 percent of all wages by county, so this gap between private and public sector wages constitutes a significant loss in consumer spending and economic activity in communities.
All told, an 11 percent increase in the wages of public sector workers across the state, eliminating the gap between public and private sector wages, would result in an additional $4.6 billion in total wages. When low-wage workers are paid more money, their spending boosts the economy. That $4.6 billion in total wages would lead to multiplying gains and potentially $5.5 billion in new economic activity.
It’s not just that public sector workers are making less than private sector workers on average. Neither public sector nor private sector workers are making a living wage on average. But the gap is over 3 times larger for the average public sector worker compared with private sector workers. When focusing on teachers, the gap is even more stark, with the average teacher in NC making 20 percent less than the Living Income Standard (what it actually takes to make ends meet in NC). The average new teacher is making 40 percent less than that standard.
| 2025 | Annual Salary | Percentage below LIS |
| Living Income Standard (1 adult, 1 child) | $75,500 | – |
| Average NC Private Sector Worker | $72,200 | -4% |
| Average NC Public Sector Worker | $64,700 | -14% |
| Average NC Teacher | $60,300 | -20% |
| Average NC Teacher Starting Salary | $45,000 | -40% |
Even with the new salary schedule for teachers established in the state budget this year, which gives an average raise of 8 percent across the schedule and is weighted more heavily toward early-career teachers, the starting pay for teachers of $48,000 is 36 percent below a living wage. Adjusting for inflation, this leaves new teachers earning less than they did a decade ago.
When NC pays our teachers poverty wages, it’s no wonder why we’re facing thousands of teaching vacancies and plummeting enrollment in and completion of educator preparation programs. In 2024, 800 fewer people complete educator preparation programs than in 2023 — an 18 percent drop.
Public funding and policies can shape better conditions for workers across North Carolina
The impact of lost revenue doesn’t stop at the loss of pay for public sector workers, nor at the consequences for our schools and the education of our children. It fundamentally undermines our ability as a state to invest in services that promote well-being and create communities where everyone can thrive. Without adequate revenue, we cannot fund services like affordable and adequate child care, quality health insurance for all North Carolinians, and food assistance so that no one goes hungry.
This impacts the working people who depend on these services, but it also impacts the broader economy.
For example, every $1 invested in SNAP food assistance generates between $1.50 and $1.80 for local economies. Child care-related workforce disruptions are estimated to cost NC’s economy $5.65 billion annually, so by funding child care programs so that all North Carolinians can access affordable, quality child care, we can save billions in lost economic activity. Similarly, it’s through tax revenue that the state is able to respond rapidly and effectively to stabilize economies and support workers when climate disasters, economic downturns, and other sorts of crises occur.
Across North Carolina, working people are struggling with an economy increasingly rigged against them. But they are also coming together to organize and demand that policies reflect the priorities that they have for their families, neighbors, and communities.
This Labor Day, we’re calling for policies that put the working people who fuel our economy first.
