Is North Carolina's affordability crisis the same as the nations?

What has been called “the affordability crisis” continues in the nation.  Most analysts set the beginning of the current affordability crisis as 2021, just after Covid. Various factors have been behind it. First was the massive federal injection of money into the economy that caused consumer spending to far outpace the ability of producers to match buying with adequate supply. This situation resulted in higher prices.  More recent causes have been the enactment of tariffs making imported products more expensive, and the Iran War that has curtailed international energy supplies and resulted in higher energy prices, including gasoline.  And because most products and services use energy, almost all prices have risen as a result.

Theres’s no question that North Carolina has certainly been adversely affected by today’s affordability crisis.  But the question of this article is whether the experience in North Carolina has been better, the same, or worse than the national situation.  Long time residents of North Carolina – including yours truly who is now a 50 year resident – know North Carolina doesn’t always copy the nation.  So, let’s look at the comparative data for the nation and North Carolina during the affordability crisis.  Then you can decide how North Carolina has endured in the nation’s shared “affordability crisis.”

An affordability crisis suggests people don’t have enough money today to afford what they bought in the past.  Hence, the straightforward way to measure the severity of an affordability crisis is to determine if increases in worker wages did or did not keep pace with the price inflation of the products and services we purchase.

From 2021 to 2025 (2026 data are not yet complete) average worker wages rose a percentage point slower than consumer prices in the nation.  While this may not seem like much of a shortfall, it is still noticeably less than the typical 1% to 2% faster annual gain in wages compared to prices for the average worker in typical years. 

When this comparison is examined for North Carolina, the answer is better.   Between 2021 and 2025, average worker wages rose faster than prices, hence meaning the average North Carolinian did see their earnings growing enough to afford the higher prices. The average wage gain over inflation was near 5% for the five year period.  Note, however, this result is for the average worker in the State.  There are certainly numerous workers whose salaries have not kept up with higher prices. 

What has been called “the affordability crisis” continues in the nation.  Most analysts set the beginning of the current affordability crisis as 2021, just after Covid. Various factors have been behind it. First was the massive federal injection of money into the economy that caused consumer spending to far outpace the ability of producers to match buying with adequate supply. This situation resulted in higher prices.  More recent causes have been the enactment of tariffs making imported products more expensive, and the Iran War that has curtailed international energy supplies and resulted in higher energy prices, including gasoline.  And because most products and services use energy, almost all prices have risen as a result.

Theres’s no question that North Carolina has certainly been adversely affected by today’s affordability crisis.  But the question of this article is whether the experience in North Carolina has been better, the same, or worse than the national situation.  Long time residents of North Carolina – including yours truly who is now a 50 year resident – know North Carolina doesn’t always copy the nation.  So, let’s look at the comparative data for the nation and North Carolina during the affordability crisis.  Then you can decide how North Carolina has endured in the nation’s shared “affordability crisis.”

An affordability crisis suggests people don’t have enough money today to afford what they bought in the past.  Hence, the straightforward way to measure the severity of an affordability crisis is to determine if increases in worker wages did or did not keep pace with the price inflation of the products and services we purchase.

From 2021 to 2025 (2026 data are not yet complete) average worker wages rose a percentage point slower than consumer prices in the nation.  While this may not seem like much of a shortfall, it is still noticeably less than the typical 1% to 2% faster annual gain in wages compared to prices for the average worker in typical years. 

When this comparison is examined for North Carolina, the answer is better.   Between 2021 and 2025, average worker wages rose faster than prices, hence meaning the average North Carolinian did see their earnings growing enough to afford the higher prices. The average wage gain over inflation was near 5% for the five year period.  Note, however, this result is for the average worker in the State.  There are certainly numerous workers whose salaries have not kept up with higher prices. 

North Carolina is not unique in its experience of the average worker staying ahead of inflation with their paycheck. Indeed, many Southern states have shared that experience.  What has been driving this good news?

There are a couple of actors.   One of the most important is economic growth.  States in the South, with North Carolina being one of the leaders, have been attracting and creating businesses faster than other states. More businesses mean more need for workers. The resulting competition for workers often results in better wage and salary gains for workers.  These gains put workers in a better position to keep ahead of rising prices.

Another reason is that price inflation tends to be more moderate in North Carolina as well as other Southern states.  As I described in a “You Decide” column a couple years ago, this good news is driven by two factors.   First, rural areas often have greater relative importance in Southern states, and a benefit of rural regions is their land costs are often lower.   Since land costs are a key factor in the production of many products, including housing and food, the result can be both lower prices and more moderate rising prices.

The aforementioned importance of economic growth on worker salaries also can have an effect on prices.  States that are fast growing will motivate more businesses to invest there, thereby creating more companies and production.  More production, in whatever form, creates downward pressure on prices and inflation.

There are many, many reasons why North Carolina is a great state in which to live. While North Carolinians have suffered from the “affordability crisis” just like the nation, data show the pain has been somewhat less severe.  North Carolina has characteristics that have cushioned the pain. Is this another reason why North Carolina is a great state in which to live and work?  You decide.

Walden is a William Neal Reynolds Distinguished Professor Emeritus at North Carolina State University.  His new book, “North Carolina in the Anxious Age” is available from The UNC Press.

. Indeed, many Southern states have shared that experience.  What has been driving this good news?

There are a couple of actors.   One of the most important is economic growth.  States in the South, with North Carolina being one of the leaders, have been attracting and creating businesses faster than other states. More businesses mean more need for workers. The resulting competition for workers often results in better wage and salary gains for workers.  These gains put workers in a better position to keep ahead of rising prices.

Another reason is that price inflation tends to be more moderate in North Carolina as well as other Southern states.  As I described in a “You Decide” column a couple years ago, this good news is driven by two factors.   First, rural areas often have greater relative importance in Southern states, and a benefit of rural regions is their land costs are often lower.   Since land costs are a key factor in the production of many products, including housing and food, the result can be both lower prices and more moderate rising prices.

The aforementioned importance of economic growth on worker salaries also can have an effect on prices.  States that are fast growing will motivate more businesses to invest there, thereby creating more companies and production.  More production, in whatever form, creates downward pressure on prices and inflation.

There are many, many reasons why North Carolina is a great state in which to live. While North Carolinians have suffered from the “affordability crisis” just like the nation, data show the pain has been somewhat less severe.  North Carolina has characteristics that have cushioned the pain. Is this another reason why North Carolina is a great state in which to live and work?  You decide.

Walden is a William Neal Reynolds Distinguished Professor Emeritus at North Carolina State University.  His new book, “North Carolina in the Anxious Age” is available from The UNC Press.