COVID-19, NC Budget and Tax Center

Four charts that explain the urgency to extend unemployment insurance

Last week, the U.S Department of Labor released the latest weekly data on unemployment insurance claims, showing persistent job losses for working people across the country. In North Carolina, the Division of Employment Security reports that more than 1.3 million people have made claims for unemployment insurance since March 15.

These numbers leave little doubt that the country is in a deep recession and that boosting the income of jobless workers is essential to securing a path to a strong and inclusive recovery.

Yet Congress has not acted to extend critical federal unemployment insurance provisions that will expire the week ending July 25. The loss of the $600-a-week boost to jobless workers’ income, especially when searching for or going back to work is tremendously difficult, will be devastating to families and communities across the state also facing a not-yet contained pandemic.

As the Economic Policy Institute writes, failing to extend federal unemployment insurance programs now is not just “cruel but bad economics.”

Workers without wage replacement through unemployment insurance will be forced to cut back on spending which is what keeps the broader economy afloat. Workers will also face greater hardship as meeting basic needs, paying bills and rent or mortgages becomes increasingly impossible.

Here are four charts that explain the urgency to extend the federal programs.

First, cumulative initial claims for unemployment over the past few weeks have been historic. The state’s labor market has lost more nearly 550,000 jobs since the start of the COVID-19 recession, and in the majority of counties those job losses have erased any gains in employment made in the last expansion.

Second, continued claims show that the number of people across North Carolina who continue to receive unemployment is unprecedented. Even as the economy has reopened and some people are safely (or unsafely) back at work, there are still more than half a million people out of work. Nationally, researchers estimate that as many as 11% of those don’t have a chance of being recalled to their prior job.

Third, researchers at the Economic Policy Institute have analyzed the power of the weekly $600 federal unemployment payment. They concluded that the additional money would provide a quarterly boost to GDP of 3.7% and to employment by 5 million jobs. For North Carolina, unemployment benefits will be critical to keeping more than 140,000 jobs and buttressing the recovery of the economy.

Fourth and finally, analysis released from the Century Foundation quantifies the impacts of the $600 a week on the economy and workers, with specific highlights on the unique harm in North Carolina due to the state’s inadequate and poorly designed unemployment program. North Carolina workers will experience a 71% decline in unemployment payments beginning July 26.  The loss of the $600-a-week boost from the federal unemployment program will mean a $364 million loss each week of income circulating in communities across the state.

 

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