Significant job loss during the Great Recession has resulted in persistently high unemployment rates and long-term unemployment in communities across the state. Some regions of the state, like former manufacturing towns and rural communities, have been particularly hard hit because the recent job loss compounds the economic transformation that has only made worse the ongoing loss of jobs. Unemployment, and particularly long-term unemployment, has been associated with a host of negative financial, family and health problems.
The worst possible outcome of long-term and high unemployment is the potential for people to become “discouraged”—to drop out of the labor market completely due to frustration with the lack of job opportunities. National studies have found that this is happening across the country. North Carolina’s labor force participation declined by almost 2 percent since the formal end of the Great Recession in June 2009.
North Carolina’s leaders can take two key steps to support those workers who have lost their jobs in the Great Recession and slow recovery. The first would be to strengthen the state’s unemployment insurance system and the second would be to look for innovative ways to support people facing long-term unemployment who are no longer eligible to receive benefits because of the duration of their unemployment. Let’s take each in turn.
An effective unemployment insurance system puts employer contributions in reserve during good economic times so that adequate funds are available to meet the demand for benefits during downturns, when workers lose their jobs through no fault of their own. North Carolina failed to do this ahead of the two recessions of the 2000s instead opting to cut taxes for employers during the good times of the 1990s. The result is a trust fund that is insolvent and a need to reform the financing of the fund so that it can continue to protect the economy in downturns. Adopting a forward-financing approach and other reforms will ensure that the modest benefits provided by unemployment insurance will be available to help unemployed workers keep their families afloat and will make their job searches possible. Moreover, efforts to either reduce the number of benefit weeks or the benefit amounts either the average or maximum will have significant effects on North Carolina families and undermine the ability of the system to serve its critical function of supporting a base level of consumer spending in a weak economy.
Those who have been out of work for six months or more face additional barriers to work that must be addressed through targeted policies. First and foremost, discrimination against unemployed workers must end. As NELP has documented, many workers without jobs are confronted with discrimination when they seek to apply for available jobs. We need to ensure that those who are out of work remain eligible to be considered for the jobs that are available if we are to expect improvements in the unemployment crisis in our state.
Second, North Carolina policymakers must look to innovative models that help people facing long-term unemployment connect to jobs and job-training opportunities that result in a credential or degree. To do this, it is critical that the long-term unemployed have the financial and case management support to pursue these degrees and identify job search opportunities that are a match to their skills and, or future skills. One private sector model in Connecticut is achieving positive outcomes by working with those out of work for 99 weeks or more and training them on job-getting skills. But many programs, including North Carolina’s own subsidized jobs program and 12 in 6 program supported with Recovery dollars, have the potential to connect the long-term unemployed to jobs and job training. Enhancing these programs so that they are informed by analysis of industry growth patterns would help to ensure workers are connected to stable jobs for the long-term.
Meanwhile, for many who have been out of work so long that they are no longer eligible for unemployment insurance, policymakers need to design new programs to reach out to unemployed workers and connect them to other supports so that they don’t face complete financial ruin. Hereagain, Connecticut is leading the way with an outreach effort to build bridges across agencies and with the long-term unemployed to ensure they can connect to available supports.
While there continue to be three jobseekers for every available job, making sure that those experiencing unemployment are supported in their job search and meeting their basic needs is critical.