Commentary, COVID-19, NC Budget and Tax Center

Recovery from historic unemployment claims will take time

On Thursday, the U.S. Department of Labor released another set of weekly data on unemployment insurance claims that boggles the mind — more than five million Americans filed for unemployment insurance during the week of April 11.

Since March 16 in North Carolina, more than 580,000 workers have filed for unemployment insurance.

Policies like unemployment insurance are necessary now to provide much needed wage replacement so as to minimize the ripple effect of these job losses throughout the economy.

COVID-19 job losses are different than losses from other downturns in the sense that some people could be rehired to the same work when social distancing measures are lifted, but the loss of income now can ripple through a household budget in dangerous ways that put food, utilities, and housing at risk.

As policymakers do the urgent work of making sure our state unemployment insurance system can serve the workers of this state, they should also be oriented toward the long-term effects of job loss on people and communities.

The research is quite clear that job loss can have a lasting effect on people’s well-being and financial security.

Addressing this “economic scarring,” as economists describe these long-term impacts, should be as central to the response to COVID-19 as the urgent, near-term measures.

This is why a fourth package from the federal government that provides additional stabilization dollars for state and local governments and that provides direct stimulus and income supports to individuals is critically needed, and it is something we can afford to do given the long-run benefits.

This is why our state legislative leaders should be oriented toward legislative proposals dealing with issues not only in the near term but also establishing the policies and systems that will support recovery from this economic crisis over the long term.

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