Making ends meet in North Carolina

The NC Budget and Tax Center (NCBTC) recently released a report saying that a family of four could live comfortably in North Carolina on a yearly income of $97,550. Being North Carolina’s resident doubting Thomas, I decided to test this assertion.

The NCBTC is a trusted and valued state asset that does good work. Our purpose was not to discredit their work, merely to investigate for ourselves. In addition to the family of four, the report projected the income needed to live comfortably as a single adult ($42,190), an adult with one child ($75, 470) and an adult with two children ($87,700).

There were assumed expenditures for housing, childcare, food, healthcare, transportation, taxes, savings and miscellaneous expenditures. Read the full report here.

Let’s focus on the family of four. The NCBTC assumption has two working adults with a monthly income of $8,130, each earning $23.40 per hour. Zip Recruiter reports the median hourly wage in our state is $18.91. The Census Bureau reveals North Carolina’s median family income is $69,904, ranking us 34^th among states. $97k is $28,000 higher than our median.

We could increase the median family incomes by raising the $7.25 minimum wage. Only 20 states still have it. 11 have indexed minimums adjusted for economic conditions, 9 states have $15 per hour and four more planning to do so.

The model assumes that our family will spend $16,880 a year for housing or $1,410 per month. Apartments.com says the average rent for a two-bedroom apartment in NC is $1,542 per month; $1,354 for 1 bedroom. These numbers don’t include utilities (water, gas, electric, cable/Internet), easily adding $200 monthly. We need more affordable housing but land costs, building codes and inspection costs are driving up construction costs.

Childcare costs are a huge factor in family budgets. NCBTC projects a family of four spends $1,630 per month. Tootris Child Care on Demand says our state’s average fulltime childcare cost for a four-year-old is $10,206 per year ($850 monthly). Infants and toddlers are higher.

If you have two children younger than public kindergarten age your monthly childcare costs are $1,700 per month, presenting a major dilemma. After subtracting the cost of daycare, transportation, added restaurant meals, clothing and other expenses it often doesn’t make economic sense for both parents to work; one will stay home until children reach public school age, of course that reduces family income. And childcare problems are multiplied during summer months. As many as 180,000 N.C. families have one parent not working because they don’t have summer childcare.

NC Child helps provide financial assistance for low income working parents, but many don’t qualify for vouchers. Our state could improve productivity, our state economy and that of families by investing more in childcare support for our state’s working parents.

Food costs are always a factor. The NCBTC model pegs yearly food expenses of $11,040 ($212 weekly) for our four-person family. The USDA estimates the monthly food budget will range between $996 and $1,603 ($19,236/year) and those numbers don’t include much for eating out. With the recent escalation of food costs, this category is budget buster.

Healthcare is also problematic. The NCBTC projects yearly healthcare costs of $8,660 for the family of four. Forbes Magazine says North Carolina is the least affordable state for healthcare in the nation, with average per person expenditures of $8,230. Even with a “plus one” employer-provided health insurance premium of $4,781 or family premiums of $7,880, one major healthcare episode will wreck the “living comfortably” scenario and throw the family into crisis.

Transportation is projected to be the third highest yearly cost, estimated at $16,630. The Bureau of Labor statistics reports a N.C. family spends $18,714 to get around in 2022. And this number was calculated before gas prices soared to $3.00 per gallon.

Every family has miscellaneous expenses, such as clothing, insurance, contributions, repairs and other purchases. The NCBTC estimates our family of four will spend $610 per month or $7,320 per year. You judge if this is doable.

Then we come to taxes. The NCBTC projection for our family of four is $11,850, which includes sales taxes, property taxes, and income taxes. AI states the actual costs to be $14,520, even though our state has one of the lowest personal income tax rates in the nation.

The final category is savings, and NCBTC estimated our family could live comfortably while saving $320 per month. Wishful thinking?  SoFi reports that the average credit card debt in our state is $6,205.

Even if Scrooge is managing family finances it is easy to see that the NCBTC projections are hard to achieve. Our conclusion is that a large number of families of four don’t earn the $97,550 income. Even if they do, keeping expenses to $93,650 would be difficult. The hard truth is far too many of our families are barely making ends meet.

Tom Campbell is a Hall of Fame North Carolina broadcaster and columnist who has covered North Carolina public policy issues since 1965.  Contact him at tomcamp@carolinabroadcasting.com