Commentary, NC Budget and Tax Center, Trump Administration

As shutdown lingers, unemployment insurance claims for N.C.’s federal workers in holding pattern

President Donald Trump (Credit: Gage Skidmore/Wikimedia Commons)

As highlighted last week in The News & Observer, the federal shutdown is having another ripple effect through North Carolina.

That’s because recent state policy changes make it harder for agencies to respond to community needs that arise when the unexpected occurs.  Federal workers’ claims to receive unemployment insurance are not being paid, leaving a critical stabilizer to household budgets and local economies unavailable to far too many in our state.

The article noted that the state unemployment insurance system is accepting claims but not currently issuing payments for claims made by federal workers affected by the shutdown. A look at weekly claim numbers confirms that there is, as yet, no spike in the number of claims issued over the extended federal shutdown.

In part that is due to the complicated nature of the shutdown, where some federal workers are showing up to work without pay, while others are furloughed. In the case of those essential workers working without pay, current guidance suggests these workers are not able to claim unemployment insurance.

However, questions remain about the urgency for federal workers, enough so that Gov. Gavin Newsome in California is considering providing unemployment insurance to these workers. Guidance says furloughed workers can receive unemployment insurance benefits, but will need to repay the benefits when the shutdown ends and back pay is received.

Many states have proactively made clear the guidelines for those federal workers affected by the shutdown, including prominent placement on websites about the claims process and making clear their willingness to support workers through this difficult time.

In North Carolina, state changes make the matter even more complicated. New requirements state that the Division of Employment Security must give employers 10 days to respond to a claim before moving that claim forward. But right now, many employers themselves are difficult to reach because they are not at work. A second requirement — reporting on the number of work searches —is impossible for most federal workers to meet because they are not looking for work but instead waiting to be recalled.

For contract workers and others whose employers have been impacted by the federal shutdown, their job loss, through no fault of their own, leaves them to access a flawed North Carolina unemployment insurance program — one that replaces the lowest share of lost wages of any state in the country for the fewest number of weeks, and with the lowest recipiency rate in the country.

A number of states are taking steps to ensure federal workers and those affected by the shutdown are able to access unemployment insurance.  Gov. Michelle Lujan Grisham of New Mexico proposed waiving work search requirements. Massachusetts Gov. Charlie Baker is weighing providing unemployment benefits, including tapping into state funds to do so, so that people have the security of dollars coming in to stabilize their budgets. 

Moreover, a number of states are considering the ways that the financial impacts of income loss will have on households. The governors of Connecticut and Oklahoma asked their state banking commissions to find ways to support workers with payment of mortgages, including engaging banks to restructure loans and deadlines for federal workers. In New York, Gov. Andrew Cuomo is working with several agencies to ensure supports are available to workers while also securing agreement to restructure utility payment deadlines. Here in North Carolina, we have a Foreclosure Prevention Program that can assist with mortgage payments for laid off workers and should be publicized so furloughed and unpaid federal workers know how to access its assistance.

The federal shutdown highlights not only the myriad ways that government affects our daily lives, but also the ways in which state and federal policy choices can make our systems work better — or worse — in times of great need and uncertainty.

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