Congress threatens North Carolina’s economic recovery
As the economic recovery continues its brutally slow pace, many workers continue to face long-term unemployment because of a severely depressed job market. Nationally, there are more than 6 job seekers per opening. Jobs that were once temporarily lost and could be expected to get back on-line with recovery are increasingly, permanently gone. In North Carolina, as of April 2010, 3 out of 4 unemployed workers do not expect to be recalled to their job.
North Carolina has some of the longest jobless spells in the nation. And workers in North Carolina are more likely to be unemployed for longer periods today than at anytime in the past 30 years.
Long-term unemployment is not only driven by the failure to create new jobs but, perpetuating a vicious cycle, it has the potential to undermine recovery by limiting consumption and creating household budget crises that can lead to foreclosures and other financial hardships with widespread social costs. This is particularly true if Congress fails to extend unemployment benefits until the end of the year and excludes COBRA subsidies that provide health insurance coverage to the unemployed. The Congressional Budget Office found that for every $1 in unemployment aid to jobless workers circulating in the economy, $1.90 would be generated in GDP. By far, unemployment insurance and aid to those without work provides the greatest boost to economic and employment growth of all available policy options.
The House is likely to vote today on a bill that, while extending unemployment benefits, will present significant challenges to workers and states. Of particular concern is the removal of the COBRA subsidy and FMAP extensions. The removal of an extension to COBRA subsidies will raise the costs of care for workers and undermine their well-being. In addition, the exclusion of the FMAP extension, already included in proposed N.C. budgets from the Governor and Senate, eliminates much-needed fiscal relief to states and threatens thousands more jobs.
The Senate must include the six-month FMAP extension when it takes up the House bill next week. The Senate must also ensure that extensions to both unemployment insurance and COBRA subsidies are included to support workers seeking jobs in a depressed job market. Absent such support for workers we cannot hope to see significant improvements in the future.