JP Morgan Chase has a study out that shows the powerful role of unemployment insurance based on a review of a unique dataset: their customers’ financial behavior. The findings are particularly telling for North Carolina where policymakers have moved in the opposite direction of modernizing the system, dismantling many of the best practices the state had in place when they overhauled unemployment insurance in 2013 (and many that the JP Morgan Chase study highlight as important).
As we have written about in many other spaces, the result of such changes in North Carolina has been an unemployment insurance system that is providing too little support for too few weeks to too few of the state’s jobless workers.
The JP Morgan Chase study is important to providing further evidence that job loss without unemployment insurance takes a greater toll on consumer spending—the key to America’s economic engine. Here are key findings:
- Unemployment insurance softens the drop in family income from job loss to just a 16 percent drop compared to a 46 percent drop in monthly income without unemployment insurance.
- The higher wage replacement that a state provides through unemployment insurance the lower the drop in spending. Unemployment insurance payments reduce the spending drop associated with job loss by 74 percent.