Commentary, NC Budget and Tax Center

The next federal package must recognize that N.C. and our economy need healthy people

The news Thursday that the country experienced the most significant single-quarter contraction on record may be a shock to some, but it reveals the fundamental truth of our economic life some policymakers wish they could ignore — a healthy economy requires healthy people.

The U.S. Senate Republicans have put forward a COVID-19 package that not only rejects this fundamental truth but would undermine any hopes that states and localities seeking to do better could do so.

In new analysis from the Economic Policy Institute, the scope of the harm of proposals, or lack thereof, to North Carolina in the proposed Senate version of the next federal package is made clear. The loss of the $600/week boost in Unemployment Insurance would cost North Carolina 95,000 jobs.  That’s because it would reduce the income by $400 each week for those hundreds of thousands North Carolinians out of work, forcing impossible choices between basic needs.

The failure to keep food on the table of North Carolinians by boosting SNAP is another missed opportunity that would bolster the well-being of families and the economy at the same time.  Again, food assistance provides families struggling with a key support to meeting a basic need and spending locally.

The next to nothing support to states to ensure the provision of affordable health care through Medicaid during a public health crisis is yet another missed opportunity.  So is the lack of rental assistance that would stabilize housing — supporting not only family well-being and security but public health goals for containing the virus.

Unnecessary hardship for families is not only cruel but bad economics.

It will be compounded by the failure of Senate leaders to include federal aid to state and local governments.  Such aid would shore up state and local budgets experiencing revenue losses due to the economic downturn at the same time that new and changing investments are needed to respond to the public health crisis and its ripple effects through public institutions and community life.

North Carolina has already lost nearly 40,000 state and local jobs since February 2020, a seasonally adjusted figure that shows beginning signs of a potential impact on public sector staffing.  Leading into COVID-19, this staffing was already below the levels of public sector employment as a share of the population before the Great Recession.  The impact of fewer public sector workers has a double effect on the recovery: reducing spending in local economies and reducing the capacity for government to deliver effective, efficient services.

Also, the risk of job loss in the public sector will disproportionately affect veterans (40,000 veterans work in state and local governments in NC), workers of color, and women.

A robust public response to this public health and economic crisis will require a public infrastructure at the state and local level that can sustain public services, adapt to the pandemic context, and ensure people are supported through and beyond the recovery.

A federal package will delay the recovery and be too uneven to be sustainable if it doesn’t drive investments to people and the things that advance the well-being of those people. In its current form, its only purpose seems to be advancing the political and economic interests of the very few while making a show of caring about the harms to the many. If our leaders actually care about the harm to all people, they need to do better and fix the response to those harms. And to do that, they’ll have to fully recognize that a healthy economy requires healthy people.

Alexandra Sirota is the director of the N.C. Budget & Tax Center.

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