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.

Commentary, NC Budget and Tax Center

Frontline COVID-19 workers deserve better pay now and going forward

Image: AdobeStock

It’s high time we give workers on the frontlines of the COVID-19 outbreak the hazard pay they need and deserve.

Preliminary data on the frontline workers of the COVID-19 response in North Carolina paints a picture of the yawning gap between how much we rely on people in the caring professions and the wages they are paid for that work. The Center for Economic and Policy Research provided an analysis of major frontline industries for North Carolina and found that 1 in 4 frontline workers earns wages below 200 percent of the Federal Poverty Level.

That means that people we lean on for our most essential needs can’t afford the basics themselves in communities across North Carolina. Our Living Income Standard found that the average worker with children needs to earn an income of more than 200 percent of the Federal Poverty Level (for a family of four that means $52,900 a year) to just to get by.

The disconnect between the value of work that care providers deliver and the wages they are paid isn’t something new. It has been present in our state for many years as the recession recovery has relied in large part on low-wage job growth. Even in the face of this glaring need, state policymakers have failed to raise the state minimum wage and have taken little action to raise the wages of teachers and early childhood educators.

As essential work continues amidst the pandemic, it is critical to provide workers with the pay that truly reflects their role in keeping our families safe and our communities connected.

Federal and state responses need to prioritize hazard pay that reflects this value and recognizes the personal risk to these workers.

We have heard little from the NC General Assembly about this critical issue, although agencies have recognized the issue and offered bonus pay for select workers like those in childcare centers.

At the federal level, hazard pay for essential workers is being lifted up as a way to support the necessary work happening to contain the COVID-19 pandemic and keep our communities together.

US Senate Democrats have proposed a “Heroes Fund” that would provide an average $13 an hour raise for essential workers through the end of the year; that increase would be capped for workers who earn above $200,000 at $5,000. President Trump has signaled a willingness to consider hazard pay for frontline workers in health care while Treasury Secretary Steven Mnuchin has suggested that hazard pay should target people who earn more and who as a result didn’t receive the stimulus payments from the CARES Act.

A recognition of what people earn and who most needs help will be essential to effectively targeting this policy to people whose wages have been too low. As researchers at Brookings Institution point out:

“Hazard pay compensation should be progressive to ensure that workers earning less than a living wage (or even less than the country’s median wage of $18.58 per hour) are adequately compensated at a level akin to time-and-a-half or even ‘double-time’ wages.”

It is also critical that a hazard pay proposal also consider essential workers not in health care who are working on the frontlines in hazardous conditions during the pandemic. Again the Brookings Institution outlines three fundamental truths about essential work during this time:

  • “Many essential workers are more likely to get sick or die due to their service, so there is a need to protect their family’s financial future; and
  • Many essential workers are more likely to contract COVID-19 due to activities at the job site and traveling to it, so there is a need to keep the worker and their families healthy; and
  • Many essential workers face new hazardous duties, so there is a need to compensate workers for their exposure to COVID-19 and incentivize their continued work within essential industries.”

Finally, hazard pay must move these workers closer to a living wage. For too long, many workers have had their labor undervalued. Now is the time to ensure that their earnings reflect the risks and the contributions that their work is making to our collective well-being.

A hazard pay proposal that does so will provide critical support to workers in this moment and a greater financial security for them and their families in a time of great risk. Hopefully too, this will prompt the long-needed conversation about the wages that we pay year-round to the workers who keep our economies running and our communities connected to make sure we can put food on the table, stay connected by mail and on-line with family and friends and have emergency responders on call.

Commentary, COVID-19, NC Budget and Tax Center

COVID-19 provides clarity around what it takes for NC workers to make ends meet

My colleague Patrick McHugh released a brief yesterday on the checks being sent to households across the country as part of the federal CARES Act and how it’s insufficient on its own to stabilize households and the economy.

At the state level yesterday, North Carolina’s Department of Health and Human Services announced that early childcare workers, who are now deemed essential to the fight against COVID-19, will receive $300 each month in bonus pay ($200 if working at a childcare center but not a teacher) for the next two months.

The decision to award these additional dollars in recognition of the risks of working during this pandemic, often without personal protective equipment, is certainly welcome news. However, it will be far from sufficient to protect childcare workers from hardship. Childcare workers across the state are woefully underpaid, earning on average just $10.50 an hour and often without health insurance.

For those workers, an additional $300 for the next two months won’t be sufficient to move them to within the living income standard for one adult and one child. It falls short of meeting that market-based estimate of what it takes to make ends meet for that family size by more than $1,300. Even proposals being put forward by early childhood advocates to pay these workers time-and-a-half will far short of the $3,200 needed each month just to get by.

Across nearly all levels of the policy response, there must be greater consideration of what it actually takes to make ends meet and a more systemic set of solutions proposed.

As our leaders pursue emergency measures in the face of COVID-19, it would be a mistake not to address the underlying issues facing the state’s childcare system and particularly the low wages earned by those doing the essential work of caring for and supporting the healthy development of our state’s youngest children.

Alexandra Sirota is the Director of the Budget & Tax Center, a project of the NC Justice Center.

COVID-19, NC Budget and Tax Center, public health

State and federal policy responses to the COVID-19 virus

This blog post will be regularly updated to capture key policy responses to the COVID-19 virus. (Last updated 1:45 p.m. Tuesday, March 24)

Reports from Budget & Tax Center Staff

This post summarizes steps taken thus far at both the federal and state levels. Scroll down to see a list of steps taken so far, or click on the following links to bring you directly to a specific section:

COVID-19 provides a sobering reminder of how much we need effective and well-resourced governance at the state and federal levels. Particularly in times of crisis, we need an infrastructure that delivers a coordinated, seamless response and reaches each and every person in the community.

The coming months will test federal and state leaders’ ability to blunt the impacts of this global pandemic and contain the harm to the health, well-being, and economic security of people.

Decades of tax cuts have left us vulnerable to a moment like this. Conservative leaders in Raleigh and Washington have given huge tax breaks to rich people and multinational corporations instead of building the systems we need to respond with a coordinated and collective set of programs.

Years of policies that attacked the very institutions that are so critical now have made the response more fragmented and challenged.  Our public health agencies are under-resourced for the growing complexities and services needed in the face of this new coronavirus pandemic coming on top of a very bad flu season. Our public schools haven’t received adequate resources to provide classroom materials and technology in school, let alone outside of it, and many school personnel are worried about their ability to make ends meet in this time. Indeed, many workers will struggle to make ends meet if their hours are scaled back, they get sick, or they lose their jobs because our policy choices have failed to provide access to affordable health care, paid sick days, and a strengthened unemployment system.

COVID-19 is likely going to have an even broader economic impact going forward and could push the United States into a full-blown recession.  Strengthening our programs that can automatically stabilize the economy by helping people make ends meet is critical, as will be aid for states to maintain balanced budgets without dramatic cuts to programs and services needed now.

In short, North Carolina will need a robust policy response at the state and federal level.

Read more

NC Budget and Tax Center

This Pi Day, why the pie is shrinking and what it means for North Carolinians

As people celebrate Pi Day (3/14) today around the world, the Budget & Tax Center is revisiting some of our most telling pie charts for North Carolina from the past year.

These graphs show us that, like pi, there are some things in North Carolina that are constant: that we need a collective commitment to well-being for everyone in the state, and that it hurts us all when we prioritize tax cuts for the wealthy few and don’t invest enough in our public institutions.

Income, as evidenced by the latest data, is increasingly concentrated at the top.  More than 51 percent of all income in the state in 2018 went to the top 20 percent, and 23 percent went to the top 5 percent.

 

North Carolina’s collection of revenue — that provides things that everyone needs like health care and education — relies less on income tax from personal and corporate sources. This contributes to both our upside-down tax code and, over time, our tax code’s inability to keep up with the needs in our communities.  This is in part because, as noted above, income is growing at the top. Read more