McCrory on Income Inequality: Ignorance or Worse

North Carolina Gov. Pat McCrory waits for the start of the opening session the National Governors Winter Meeting in Washingto
North Carolina Gov. Pat McCrory waits for the start of the opening session the National Governors Winter Meeting in Washington, Saturday, Feb. 21, 2015. (AP Photo/Cliff Owen)

"The state of North Carolina has come back even stronger," proclaimed Governor Pat McCrory during his State of the State address earlier this year. Millions of North Carolinians beg to differ.

Estelle Sommeiller and Mark Price, of the Economic Policy Institute, recently found that, since the dawn of the economic recovery six years ago, the average income of the top 1 percent of North Carolinians, or those who earn more than $311,000 annually, has increased by 22.7 percent, whereas that of the bottom 99 percent has decreased by 1.8 percent. The most recent economic recovery is the first of the past ten, dating back to 1949, during which the average income of the top 1 percent has increased while that of the bottom 99 percent has decreased. Hence, the increase in the average income of the top 1 percent has encapsulated 188 percent of the most recent economic recovery in North Carolina, more than in any other state notwithstanding Delaware, Florida, Missouri and South Carolina.

North Carolina is one of 16 states in which the average income of the top 1 percent has increased while that of the bottom 99 percent has decreased. In the midst of the most recent recovery, nine of these states endured legislatures in which Republicans held a unicameral, or a bicameral, majority and ten were presided over by Republican governors.

Of the nine states in which the average incomes of the top 1 percent and the bottom 99 percent have increased, seven endured legislatures in which Democrats held a unicameral, or a bicameral, majority and five were presided over by Democratic governors. West Virginia, the only state in which the average income of the top 1 percent has decreased while that of the bottom 99 percent has increased, endured a legislature in which Democrats held a bicameral majority and was presided over by a Democratic governor.

Rolf Pendall, of the Urban Institute, recently found that eight of the 10 cities, with a population of 400,000 or more, in which the differences between the average incomes of the top 1 percent and the bottom 99 percent are the highest endured legislatures in which Republicans held a unicameral, or a bicameral, majority and nine were presided over by Republican governors. On the other hand, six of the 10 cities, with a population of 400,000 or more, in which the differences between the average incomes of the top 1 percent and the bottom 99 percent are the lowest endured legislatures in which Democrats held a unicameral, or a bicameral, majority and were presided over by Democratic governors.

Therefore, the explanation for such an unequal recovery is, undeniably, one of policy. Daniel Cooper, of the Federal Reserve Bank of Boston, and Byron Lutz and Michael Palumbo, of the Federal Reserve Board, recently found that, on average, conservative economic policies exacerbate income inequality. Indeed, the difference between the average income of the top 1 percent and the bottom 99 percent of North Carolinians has only increased since Republicans assumed a bicameral majority within the General Assembly and the governorship of the state.

As a result of newly implemented estate, income and sales tax reforms, for instance, the top 20 percent of North Carolinians, or those who earn more than $151,000 annually, have endured a net decrease in their annual taxes while the bottom 80 percent, or those who earn between $17,000 and $151,000 annually, have endured a net increase. The drug testing of welfare recipients, reduction of the length and maximum amount of unemployment benefit provisions, refusal to expand Medicaid coverage and repeal of the earned income tax credit, among other mandates, have likewise exacerbated the increasing difference between the average incomes of the top 1 percent and the bottom 99 percent.

Though 10 of the other 15 states in which the average income of the top 1 percent has increased while that of the bottom 99 percent has decreased adopted similar policies, the fact that North Carolina is the state in which the average income of the top 1 percent has encapsulated the fifth largest share of the most recent economic recovery is indicative of both the volume, and the extent, of the conservative economic policies implemented within the state since the dawn of the Great Recession.

Hence, McCrory's proclamation that "the state of North Carolina has come back even stronger" implies either that he has remained blissfully ignorant to increasing income inequality or worse--that he is completely aware of such inequality and has sinisterly accepted it as part of his "Carolina Comeback." Either way, it remains evident that a change of leadership in Raleigh is the only means by which income inequality may be mitigated.