NC Budget and Tax Center

North Carolina’s unemployment insurance debt is being paid down, but a little recognized fact is that it is workers who have contributed the most towards its repayment not employers.

The debt itself was a result of the historic job loss of the Great Recession and the tax cuts that were provided to employers during good times that left the unemployment insurance trust fund underfunded when it was needed the most. Borrowing from the federal government was the only way in which the state could meet its commitment to provide workers who had lost their jobs through no fault of their own with a temporary and partial replacement of their wages until the economy recovered.

Unemployment insurance payments not only mitigated even worse fallout from the Great Recession for workers and their families, it likely stopped a further decline in consumer spending and the resulting spiral of job loss that would have hit businesses harder and made the economic recovery even longer for everyone.

North Carolina policymakers took these economic conditions and the debt as a reason to enact some of the harshest cuts to unemployment insurance, many of which are unlike what any other state does in designing their unemployment insurance systems. Among the results: jobless workers receive just 14 weeks of unemployment insurance, half of the 26 weeks most states offer, and $300 less each month on average in benefits, far less than what is needed to maintain their spending and meet a family’s most basic needs. These changes and others delivered “savings” that translated into nearly two-thirds of the debt being repaid by workers.

The waiver that North Carolina recBTC - Changes to UI Benefitseived this week will mean that employers won’t receive a federal penalty for holding debt given that the state is likely to pay down the debt by May 2015. That penalty was the primary way in which employers were contributing to the debt repayment as can be seen in the chart above. State tax changes under the 2013 changes represented just 0.7 percent of total contributions by employers. Read More

NC Budget and Tax Center

Last week voters in four states–Arkansas, Alaska, Nebraska and South Dakota–approved minimum wage increases that will address in part the eroding value of their state’s minimum wage for workers earning at the lowest end of the wage distribution.  As of January 1st, at least 25 states will have minimum wages higher than the federal level of $7.25.

It turns out voters and state policymakers recognize that the wage floor must have some connection to what workers need to make ends meet and what wage conditions are in the labor market overall.

At Prosperity Watch this week, the Budget & Tax Center looked at the minimum wage to median wage ratio in North Carolina over time.  This ratio signals the strength of a minimum wage relative to local labor market conditions.  The lower the ratio, the fewer goods and services a worker can purchase for every additional hour worked. North Carolina’s minimum wage to median wage ratio fell from 64.4 percent in 1979 to 41.2 percent in 2013.  Find out more at Prosperity Watch here.

NC Budget and Tax Center

As we honor the service and sacrifices made by veterans today to protect our freedom and the American Dream, we should not forget that for too many veterans the American Dream remains out of reach. Some veterans and their families face the same economic struggles of the many families working to make ends meet and provide a better opportunity for their children in today’s economy, an economy characterized by high unemployment and low-wage work. For veterans, like their non-veteran neighbors, public policies have proven effective at improving their opportunity to meet basic needs and get ahead. And when policy choices have sought to limit access to health care or supports for workers earning low-wages, for example, veterans have also been hurt.

Veterans overall have a lower unemployment level than the national average, nearly one percentage point lower. But as of October 2014 Gulf War II-era veterans—those who served in Iraq and Afghanistan—had a 7.2 percent unemployment rate, representing a full 188,000 veterans who are out of work. Young veterans have also been disproportionately impacted by the lack of jobs. In 2013, 24.3 percent of male veterans between 18 and 24 years old and 14.3 percent of female veterans between 18 and 24 years old were unemployed. Given the large presence of military bases in North Carolina and active duty personnel it is not surprising that North Carolina’s veteran unemployment rate is slightly lower than these national numbers with an unemployment rate for Gulf War II-era veterans at 6.5 percent as of 2013.

For those veterans in North Carolina who are working, median income is $35,080 higher than that the income of nonveterans ($23,193) but still nearly $15,000 short of what it takes for a family of four to make ends meet according to the Living Income Standard. One in thirteen veterans in North Carolina live in poverty compared to one in five North Carolinians overall.

Absent public policies targeted at increasing access to opportunity for veterans it is likely that economic hardship would be far greater for these Americans. Read More

NC Budget and Tax Center

This week’s Prosperity Watch uses newly available data from the Economic Policy Institute to shed light on the experience of unemployment for different groups in North Carolina.  While the state performs better than the nation by having a lower barrier to employment for African-American and Latino workers in particular, the unemployment rate for these groups still remains far above where it was before the Great Recession started and is still greater than that for white workers. You can check out the full Prosperity Watch here.

The Economic Policy Institute data is presented in this interactive map that shows North Carolina’s better than average performance in the race to recovery for all groups but the continued need to focus public policies that would reduce barriers for workers of color in our state.

 

Missing Workers, NC Budget and Tax Center

The official unemployment rate ticked down in September slightly to 6.7 percent but if you count the number of workers missing from the labor force–those who would be looking for work if employment opportunities were stronger–that rate would be 12.8 percent.

As Patrick Conway, an economist at UNC Chapel Hill, shared in the News & Observer this week, the untold story of the state’s labor market is the story of these missing workers and the inefficiency in the economy that must be addressed when the state does not ensure those who want to work have job opportunities.

Our September update to the number of missing workers in North Carolina demonstrates the failure of the unemployment rate alone to signal this very real problem in the labor market and the need for sound public policy responsesMissing Workers September 2014.