COVID-19 damage will worsen and linger without quick, robust policies from state leaders

By
May 14, 2020
In Commentary, NC Budget and Tax Center

The speed and strength of our economic recovery from COVID-19 will depend on the timeliness and inclusivity of our state’s policy response.

If we wait to deploy dollars and connect more people and businesses to the necessary supports for health, housing, and income, North Carolina’s recovery will take longer. It will also result in costly long-term damage to the wealth, stability, and health of our neighbors. As researchers at the New York Fed have found the importance of timely and adequate early policy interventions during a public health crisis can make a significant difference in the trajectory of a community’s  recovery.

Already, the Congressional Budget Office is projecting that unemployment rates will remain as high in 2021 as they were during the highest points in the Great Recession — 10%.

Nationally, the scope of need is staggering and unlike any economic event in modern history.

Yesterday, 100 county snapshots for North Carolina were released to show the barriers that persisted through the last economic expansion for too many communities and people in our state. This data — along with emerging measures of need in light of COVID-19 — should signal the urgency of a robust response that seeks to secure recovery for everyone and all communities.

It’s worth repeating: Quick deployment of dollars and policies to minimize the harm to people will strengthen the state’s recovery and ensure that the new rules of the game better support our collective well-being.

The needs are stark and make clear the wide-reaching effects of the virus on every person. For example, there have been nearly 15,000 confirmed cases of COVID-19 and more than 500 deaths in North Carolina since the start of the pandemic, adding to the already high numbers of people without health insurance.

With reopening underway and people returning to their jobs, too many workers are at greater risk for infection because protections are not in place. Personal protective equipment is available at varying levels, with just 31 days’ worth of supply for N95 masks and no gowns.

And since our last economic expansion kept too many people living paycheck to paycheck, many families are struggling even more now to meet basic needs. Food and housing insecurity were already high before COVID-19, and evidence of missed meals and missed rent payments is mounting. Read more

Failure of NC relief package to adequately fund early childhood education was a big mistake

By
May 12, 2020
In Commentary, NC Budget and Tax Center

For years North Carolina legislators on both sides of the aisle, business leaders, and early childhood advocates have emphasized the powerful role that quality, affordable preschool education plays in supporting healthy development, family stability, and community economic well-being.

Yet, too often, the rhetoric has not translated into the investment necessary to build an early childhood education system that supports children, families and educators.

The first legislative response to the COVID-19 pandemic provides another example of this problem. Rather than tap into available federal Coronavirus Relief Funds to fully support early childhood education, North Carolina legislators allocated federal funds only from the Child Care and Development Block Grant, which limited their reach and fell short of addressing the need.

The first legislative package provides $166 million to child care and child care response (an initiative to help families frontline workers) from federal funds dedicated to this purpose. But only an additional fraction of a $19 million line item for multiple services providers will likely be allocated in the child-care response.

This figure is unlikely to sustain even the existing commitments by the Department of Health and Human Services — important efforts to provide hazard pay and support to families — through Phase 3 of reopening the state. This amount is insufficient to meet the full need for investments in health and sanitation measures, and for stabilization grants and small business supports to child care providers whose reopening is critical to ensuring access to early childhood education in many communities.

One third of child-care centers in North Carolina have reported that it will be difficult for them to reopen — even when it is safe to do so — without public support. Closures of child care providers risk increasing the state’s already real limits on access to early childhood programs. Estimates suggest that 144,000 child-care slots are at risk in North Carolina alone.

Even as another federal boost to child care funding is being considered, the North Carolina General Assembly should commit available federal and state funds at a higher level to the explicit purpose of strengthening the early education system in the state. After all, our state’s early childhood system will be essential to the strength of our economic recovery.

The failure to invest doesn’t just jeopardize the health and safety of early childhood educators, particularly in the near-term, as Phase 1 of reopening will immediately affect child care centers. It also puts at risk the quality and accessibility of our state’s nationally recognized early childhood system and the ability for the state to secure a strong recovery that supports the resiliency of families and communities.

North Carolina’s second legislative package to address the COVID-19 outbreak must begin to recognize that our early childhood system’s successful recovery requires focusing on the fact that those who care for our youngest children earn some of the lowest wages and must often make do without health care insurance or paid sick days.

It should be clear now that we cannot revert to an early education system built on parent-paid tuition and low wages and benefits for early childhood educators.

It also should be a priority to stabilize high quality child care centers and family-home centers that are operating in child care deserts and serving families with financial need. These providers should be supported with grants that allow them to stay in business as children slowly return to child care and as the economic recovery takes hold.

But our legislators shouldn’t be content to merely patch the holes through the initial crisis; they should embrace solutions that strengthen the system for the long-term. That means envisioning an early childhood system that delivers services and commits public funding to maintain an infrastructure of early childhood education in every community that is accessible to all children, regardless of their family’s income.

The General Assembly’s COVID-19 bill: what you need to know

By
May 2, 2020
In Commentary, COVID-19, NC Budget and Tax Center

Lawmakers include some important elements in initial COVID-19 response, but glaring omissions leave need for lots of additional action to build a truly resilient and inclusive North Carolina

The House and Senate agreement on the first legislation to respond to COVID-19 is an important first step that signals the potential for policymaking in a way that we haven’t seen in the past year: an acknowledgement that leadership and service to the public must transcend politics and has a critical role to play in the protection of our collective well-being.

And yet, the scope and focus of the final legislation will fall far short of meeting the needs of the people across North Carolina who are struggling with job loss or working in unsafe conditions doing essential work, and with limited resources, caring for families and educating children.

The bill spends just $1.6 billion of the $3.6 billion provided in federal funds to the state via the Coronavirus Relief Fund. It will provide only minimal support to North Carolina’s public systems and local governments that are strained to respond to the need for health care, information and income supports.

A preliminary analysis of the final agreement approved Saturday morning suggests many important items will be missing; critical provisions from one chamber’s bill were omitted, even as modest progress was made primarily on first-order public health and economic impacts of the coronavirus. It is hard to imagine a justification for the General Assembly’s stinginess given documented needs, as these federal funds must be spent by Dec. 30, or forfeited back to the federal government.

The final provisions that in some way will protect public health and minimize economic harm include a higher amount of funding for small business supports, as was included in the Senate proposal. However, they will still likely fall short of the need and funding for testing, vaccine research and emergency health care coverage. Nor will these provisions fully cover the Division of Employment Security’s need to increase its ability deal with historic numbers of claims, to schools for nutrition programs and to local governments for COVID-19 related expenses.

Critical provisions that were in earlier versions are not in the final bill, however. Most notably, changes to the state’s unemployment insurance system that would increase the maximum benefit amount from the low $350 (which represents a third of average weekly wages) to $400 and changes to how weekly benefit levels are calculated included in the Senate proposal were left out of the final bill.

When more than 950,000 North Carolinians have claimed unemployment insurance benefits, North Carolina needs a system that adequately replaces lost wages and allows workers to cope should federal programs expire before the economic recovery is secured.

Additionally, in the face of a public health crisis and the loss of employer-provided health care, policymakers failed to advance a proposal to close the coverage gap so that North Carolinians could access affordable health care and ensure that people can get necessary treatment.

We know that expanding Medicaid isn’t just good policy for our state, it’s also is a key tool in meeting the immediate and disparate public health impacts of COVID-19. Absent Medicaid expansion, emergency health insurance coverage or increases in funding to hospitals to cover uncompensated care will fail to maximize federal funds and provide the health care people need over the long-term.

In education, several key investments were included that were omitted the Senate proposal, but at levels that will likely be inadequate to address the challenges faced by schools (see funding details here). A number of problematic provisions remain in the final bill, including limited flexibility for school districts to move funds to meet urgent needs, as well as a number of unfunded mandates that could hamper the delivery of education. Meanwhile, key stabilization funding for child care providers was missing Also missing was funding to ensure child care remains affordable for working parents and early childhood educators and can receive protections and hazard pay.

House and Senate leaders should immediately turn to work on the issues not addressed in this proposal. Their second package should adequately respond to communities’ needs in a way that reaches those most in harm’s way. It should build the necessary public systems for our communities to respond to public health and economic crises and serve the people of this state in need.

These missed opportunities include, along with those detailed above, Read more

Latest federal aid package falls short in helping small businesses

By
April 23, 2020
In Commentary, COVID-19, NC Budget and Tax Center

Image: AdobeStock

New legislation also missed the opportunity to provide state and local governments with much-needed aid

The latest federal package to address the ripple effects of COVID-19 in our communities won’t do the work necessary to ensure people can put food on the table and stay in their homes, or that state and local governments will have the resources to respond to community needs.

Our North Carolina Congressional delegation should return to work immediately on a bolder, more comprehensive package that allows our state to fully recover from the public health and economic challenges we are facing.

The latest legislation narrowly focuses on increasing investments in small business programs established under the CARES Act and boosting the capacity for testing. All of that is important, but it’s already clear that we need a more effective way to support all businesses and people experiencing financial harm.

As has been well-documented in the national media, Black-owned businesses face greater barriers in accessing the existing small business supports because they are too often unable to access bank loans. Immigrant-owned businesses are also facing barriers to access, despite efforts to provide information about supports in multiple languages, because of similar issues in accessing financial institutions.

Many small businesses, which often have the least financial cushion, were pushed to the back of the line and didn’t receive aid from the CARES Act. The most recent bill uses the same broken infrastructure, so there’s little reason to expect that this time will be any different.

To make matters worse, many large businesses can tap into the Paycheck Protection Program.  Many financial institutions have put wealthier business customers at the front of the line, which has diverted funds from the smaller local shops that are hit hardest by stay-at-home orders. This flaw in the design was a major reason the first installment of funds was depleted so quickly, and this flaw isn’t addressed by the most recent bill.

Small business organizations are weighing in with concerns about the proposal on the table for its continued flaws, which threaten to exclude businesses owned by people of color and truly small businesses.

Small Business Majority writes:

“Our recent polling found a vast 9 in 10 small businesses have been harmed by the spread of COVID-19, but we know only a small fraction of those have received the help they were promised. While providing more funds to these assistance programs is necessary, we’ve already seen that they do not provide the quick relief that would help small businesses now and in the future. Equally troubling, this legislation fails to address a critical carve-out that allowed publicly traded companies, large restaurant groups, and hedge funds to apply for and deplete the PPP fund. Meanwhile, true small business owners were left behind, and now they are fearful that help may never arrive.”

The Main Street Alliance writes:

“For small business owners facing increasingly dire circumstances, additional funding for the existing Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) is necessary but not nearly sufficient. The serious design flaws of the PPP will not be solved by throwing more money at these programs. Even the new inclusion of Community Development Financial Institutions and other dedicated funding for smaller lending institutions to meet the needs of minority-owned, unbanked, and rural businesses around the country will not go far enough to secure our small business economy.”

Many changes are necessary to make this program more effective: Read more

Recovery from historic unemployment claims will take time

By
April 18, 2020
In Commentary, COVID-19, NC Budget and Tax Center

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.

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