Commentary, NC Budget and Tax Center

Four steps the General Assembly must take to improve unemployment insurance in NC

The failure of the U.S. Senate to extend federal unemployment insurance programs that expired at the end of July means jobless workers have will soon have lost a month of income.

Economists suggest that the cumulative effect of that lost income could create a reduction in economic growth similar to that experienced during the Great Recession. Concerns are already mounting that consumer spending is slowing.

And with the latest data released by the Department of Labor on Thursday showing an increase in initial claims week over week, more than 600,000 North Carolinians are receiving or waiting to receive unemployment insurance benefits.

For jobless workers, their families, landlords, and neighbors, the loss of the federal $600/week boost will lead to real and immediate impacts on housing stability, access to food, and poverty rates, as well as the associated threats to health — both in the near and long-term.

The White House’s Executive Order is no substitute for congressional action. The inadequate proposal from the Trump Administration will push costs to states and create administrative challenges in implementation, all while using unsustainable sources of funds and failing to commit to keep supports in place through a secured recovery.

As legislative leaders and Governor Cooper have noted, North Carolina can take action to improve the rules governing our own unemployment insurance system—a system with the dubious distinction of being the worst in the nation after changes made by lawmakers in 2013.

The importance of a state fix, now and for the long-term, should be clear as we see the barriers to access that jobless workers have experienced during the COVID-19 pandemic and the broad-based ripple effects of job loss throughout our communities.

Here are four steps the North Carolina General Assembly can take to ensure our state unemployment insurance system can support an inclusive economic recovery: Read more

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.

Commentary, NC Budget and Tax Center

Federal aid to state and local governments is essential to sustain our recovery

The U.S. Senate is finalizing its proposal for what is likely to be the final federal response to COVID-19 before the November elections. Senate leaders are currently appearing to disregard calls to address the urgent issue facing state and local governments: responding to the need for increased public services and adapting for delivery of quality public services in the COVID-19 context even as state and local revenues collapse.

Leaders from industry, advocates for the well-being of children and families and government officials charged with stewarding public dollars towards collective impact are calling for the next federal package to include at least $500 billion in aid to state and local governments. These dollars, as estimates from the Center on Budget & Policy Priorities suggest, would go some way toward covering anticipated shortfalls in revenue brought on by COVID-19.

The reality though is that the duration and severity of the public health and economic crises will depend on the policy and investment choices made by Congress in this next package. With a bold commitment to well-being and supporting people through the economic harm of COVID-19, Congress can ensure our recovery arrives quickly and that it secures greater well-being for Black, brown and white North Carolinians.

Federal aid to state and local governments has been a critical component of relief packages during times of recession, providing stabilization to budgets that must be balanced each fiscal year and containing the damage of harmful cuts to programs and services that people and communities need to be well and thrive.

While some may view issues related to federal aid to state and local governments as the domain of finance officers and budget wonks, the simple truth is that, without such assistance, our state and local governments will not be able to effectively and equitably respond to the challenges people face in this pandemic.

Without more federal aid to North Carolina and its local governments, experience tells us that many of the people-first policies that we know must be part of the response are at risk of being cut short. It is therefore essential that such aid be a component of the next package alongside addressing the housing, health, hunger and unemployment issues facing Americans.

Here are four ways in which federal aid now can make sure North Carolina contains further harm to people. Read more

Commentary, NC Budget and Tax Center

Hardship across North Carolina requires immediate federal action

As members of our North Carolina congressional delegation return to Washington to develop additional responses to COVID-19 and its public health and economic impacts, it’s essential that they closely examine evidence of the devastation the pandemic is wreaking here and around the country and shape a legislative response accordingly.

This is particularly true of our U.S. Senators Burr and Tillis, who have yet to vote on a relief package since the early days of the COVID-19 crisis.

In analysis release today, the Center on Budget & Policy Priorities demonstrates the staggering need that has arisen across the country (including North Carolina) in the face of COVID-19 and its public health and economic impacts. As the authors write:

“Hardship is high among families for varied reasons. Many have lost jobs or seen their earnings fall. While many jobless adults qualify for unemployment benefits, some do not. For example, those who were out of work prior to the pandemic often do not qualify for jobless benefits. This includes those who left employment because they were ill or needed to care for a new baby or ill household member and those who lost employment during the normal labor market ups and downs that occur even during good times. It also includes people who recently completed schooling or training and now can’t find a job. Households are also facing rising food prices and higher costs as children are home and missing out on meals at school and in child care and summer programs. And with widespread job losses, getting help from extended family members and friends can be more difficult.”

Data from the report on the hardships afflicting North Carolina include:

  • 713,000 households (including 522,000 children) didn’t have enough food to eat during the last week of June through July 7′
  • the number of households receiving food assistance from February to May 2020 increased by 13%; and
  • 1 in 5 North Carolinians are behind on rent.

And while these indicators point toward families struggling to meet basic needs, they don’t fully capture the compounding effect this moment is having in blocking communities of color from the opportunity to survive and thrive. As the report authors note:

“Hardship, joblessness, and the health impacts of the pandemic itself are widespread, but they are particularly prevalent among Black, Latino, Indigenous, and immigrant households. These disproportionate impacts reflect harsh inequities — often stemming from structural racism — in education, employment, housing, and health care. Black, Latino, and immigrant workers are likelier to work in industries paying low wages, where job losses have been far larger than in higher-paid industries. Households of color and immigrant families also often have fewer assets to fall back on during hard times. Immigrant households face additional unique difficulties: many don’t qualify for jobless benefits and other forms of assistance, and those who do qualify for help often forgo applying, fearing that receiving help will make it harder for them or someone in their family to attain or retain lawful permanent resident status (also known as “green card” status) in the future.”

Given this backdrop, swift and bold action from Congress — particularly from of our U.S. Senators — is essential in order to build a legislative package that will respond to the crisis and secure an inclusive recovery. In particular, new legislation must shore up supports for families and communities in need and sustain public infrastructure at the state and local levels until this crisis is under control.

The bottom line: Hardship left unaddressed will stall our recovery, worsen health, education and economic outcomes for individuals and communities and signal a rejection of the humanity of all people across North Carolina. It is time for the Senate to act.

Click here to read the full report.

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

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. Read more