2. Is there really a puzzle?

The idea that North Carolina is falling behind the US on average in terms of per capita production and income— in fact, has been falling behind for many years — is difficult to accept. Our self-image is one of dynamism and innovation. One way to check our puzzle is to examine other related measures of the personal standard of living in the state.

I have two related measures of standard of living we can examine. The first is the real median household income for the state. If we put all the households in the state in descending order of household income, this is the income of the household at the midpoint of our list. It is a good indicator of the standard of living of those in the middle of the income distribution, since it is not biased upward by the very high incomes of households at the top. The second is the poverty rate for the state. This is the percent of the population living in households below the poverty line.

The US Census Bureau has published statistics on real median household income since 1984 for both North Carolina and for the US as a whole. Figure 2 illustrates the evolution in that measure. (I used a three-year smoothing of the two series to provide a better picture of long-term evolution.) The US is pictured with the red dashed line, while North Carolina is the green solid line. As in per capita income, North Carolina begins in the 1980s with a smaller value. By 1997 its value is approaching that of the US average. After that time, though, the curves diverge. The percentage gap is larger in 2018 than it was in 1984,with North Carolina once again below the US value.

The poverty rate indicates the distress at the bottom of the income distribution — the higher the number, the larger the distress. North Carolina in 1959 had a poverty rate of 40.6 percent — more than four of every ten residents lived below the poverty line. (I left that off this picture so that we could see more clearly what happened more recently.) Note that the graph begins with three decennial readings in 1969, 1979 and 1989; annual figures are only available beginning in 1995. In terms of poverty, North Carolina outperforms the US average in the mid-1990s. After that, though, North Carolina’s performance is stubbornly worse than the US average — and stubbornly worse than what North Carolina achieved in 2000.

The puzzle exists in these measures as well — great achievement until the 1990s in catching up to the US average, and falling behind again in the years since.