Commentary, NC Budget and Tax Center

More evidence of the state’s inadequate, inequitable unemployment insurance system 

The persistent joblessness across North Carolina as evidenced in today’s labor market report, as well as federal inaction are leaving workers without the supports to weather the current public health and economic crisisIn combination with state policy choices in recent years, the result is that North Carolina’s unemployment insurance program is blocked from delivering the critical stabilizing support to families and communities that is necessary for a full and just recovery 

Last week, the U.S. Department of Labor released the latest weekly data on unemployment insurance claims, showing not only that the number of jobless workers remains elevated but also that initial claims increased week over week.  Nationally, initial claims last week were greater than the second worst week of the Great Recession. 

More than 19,000 initial claims in North Carolina were filed the week of Oct. 10, compared to 15,500 initial claims last week and 3,700 initial claims in the same week last year  

Since policy changes in 2013, North Carolina’s unemployment insurance has been designed, to do very little to bolster  workers through job loss and economic crisis. Instead, changes were meant to pay down debt quickly so employers would not have to pay more in taxes after unemployment insurance tax cuts in the 1990s 

The state system is particularly ill-equipped to handle the unique characteristics of this recession, as it excludes many of the workers those who are part-time and earn low wages who have been hit hardest by the COVID-19 recession. 

Indeed, North Carolina’s bad UI policy is putting jobless workers at a greater disadvantage in this recession and pandemic than jobless workers in other states. It means that North Carolina is leaving federal dollars on the table that could be helping jobless workers now.  It will make the pathway to recovery for the state economy steeper overall 

Here are three examples of how features of our state Unemployment Insurance system are blocking jobless workers from the support that is needed to keep consumers spending and economies on the road to recovery. 

  1. The length of time that a jobless worker can receive unemployment insurance in North Carolina is capped at 20 weeks (unlike the national standard of 26 weeks), but it can also drop to as low as 12 weeks based on the unemployment rate averaged over a set of months.This sliding scale that is not based on the immediate experience of the labor market meant, when the pandemic hit, that jobless workers could only receive 12 weeks of unemployment insurance at the start of the pandemic. For many workers who lost their jobs then, state unemployment insurance expired back in June.

    When jobless workers exhaust their state unemployment insurance, they can move to the federal Pandemic Unemployment Compensation program and then the Extended Benefit Program.  The duration of the Extended Benefit program decreased this fall because it too, is tied to the state’s duration.This means North Carolina’s jobless workers will have three and a half fewer weeks of unemployment insurance even if, during this pandemic, there aren’t jobs to go back to.  At a time when many people have been out of work, the duration of Unemployment Insurance is being held down by policy choices, not by need for support.


  1. Another announcement this fall was that the Lost Wages Assistance program has ended in North Carolina, meaning that jobless workers have reverted to the weekly benefit amount that they are eligible for under the state system. In September, the average weekly benefit amount received by jobless workers had dropped to $210. The goal of unemployment insurance is to replace lost wages at a level that keeps workers from being pushed into deeper hardship and stabilizes the economy.  Economists generally agree the goal should be 50% wage replacement. The September average weekly benefit amount represents approximately a 25% wage replacement rate.

  1. Finally, legislative leaders attempted to address the issue of inadequate benefits this fall and loss of the federal $600 per week boost — and enacted a temporary increase of $50/week for jobless workers.  Because of the design of the program and the timing, jobless workers who exhausted state benefits before Sept. 6 and are now on federal benefits are likely to be excluded.

    North Carolina’s exhaustion rate was already high pre-COVID-19 due to the short duration of state unemployment insurance.
     But the number of jobless workers who are losing unemployment insurance without finding new work is higher than the total starting unemployment insurance since June. Nearly 300,000 jobless workers exhausted state unemployment insurance through August 2020.

The issue of too little wage replacement for too short in time for jobless workers matters for the ability of people to pay rent, keep food on the table and keep businesses open that depend on people spending locally. It also means that North Carolina has cut off workers, businesses and the economy from the full benefit of federal unemployment insurance programs at a critical time.   

Commentary, NC Budget and Tax Center

NC’s overall uninsured rate masks stark differences across racial and ethnic groups

The COVID-19 pandemic has highlighted the long-standing inequities in our society, including disparate access to health care among different racial and ethnic groups in North Carolina. Last month, the Census Bureau released 2019 state-level data on health insurance coverage that inform our understanding of the gaps in health care coverage that existed prior to the pandemic.

The North Carolina uninsured rate remains higher than the national uninsured rate of 9 percent, a longstanding gap that has only widened since the state opted not to expand Medicaid — which would have lowered the uninsured rate — following the implementation of the Affordable Care Act’s major provisions in 2014.

The data show that while 11 percent of North Carolinians lacked health insurance, this figure masks the differences across racial and ethnic groups in the state. Except for Asian American and multiracial North Carolinians, the uninsured rate for all non-white racial and ethnic is greater than the state’s overall uninsured rate. The greatest difference can be seen in the 31 percent uninsured rate for Hispanic and Latinx North Carolinians, who represent approximately 10 percent the state’s population.

The uninsured rate for Hispanic and Latinx North Carolinians is substantially higher than both the state uninsured rate and the national uninsured rate for the same group. The high uninsured rate among this group prior to the pandemic, in addition to the essential work that many of them perform that increases risk of exposure, has likely played a role in the higher incidence of COVID-19, with 33 percent of the state’s cases occurring among Hispanic North Carolinians.

Immigrants, including those in the Hispanic and Latinx community, serve vital roles in the fabric of our communities, and yet in many ways have been systematically excluded or marginalized from state and federal actions prior to and in response to the COVID-19 pandemic, as we have written about elsewhere.

Suzy Khachaturyan is a policy analyst wit the N.C. Budget & Tax Center.

Commentary, COVID-19, NC Budget and Tax Center

NC early childcare system is left behind by inadequate COVID relief

As North Carolina parents juggle working, supervising remote learning and providing child care for their youngest kidssurvey data from August shows that our state’s childcare infrastructure needs more support. 

Early childhood educators have provided crucial supports for essential workers during the COVID-19 pandemic. As more people return to work, we’ll need a strong childcare system for a successful economic recovery.  

While many programs are re-opening, those that are currently operating reported serving about 30% fewer children than before the pandemic. Persistent low enrollment threatens the long-term viability of our childcare system. 

Family childcare homes are now serving about 85% of the children who were attending before the pandemic, and enrollment has been fairly steady since May. Childcare centers had steep declines in enrollment, but attendance in open centers has increased since May and now stands at 59%  

 

Early childhood educators depend on parent fees to cover the costs of running a program, which in turn enables them to earn a living and support their own families. This is why declines in enrollment are such a problem. 

For family childcare homes, even relatively small declines in enrollment make it hard to stay open, as they tend to run on razor-thin margins. Even before the pandemic, early childhood educators made less than $11 per hour on average in North Carolina, frequently with no benefits. Low wages make it challenging for program directors to retain staff, an issue that is heightened by the pandemic.  

At a virtual town hall hosted in August by the North Carolina chapter of the National Domestic Workers Alliance and Moms Rising, early childhood educators spoke passionately about their commitment to the youngest North Carolinians and their struggles to stay afloat during COVID-19. 

In the words of Darlene Brannon, a childcare center director with 15 years of experience:  

It was a real honor to come into this field  [but] we’re are not getting paid to do all that we’re doing. A lot of our parents have not been able to come back to the childcare center, because they’re not working yet  Even the parents that are still coming, that are essential workers  they’re not making enough money to pay the parent fee as well as pay for food for their children. 

Darlene’s experience shines a light on the need to build a childcare system that works for parents and educators. Instead, chronic underinvestment coupled with a lack of meaningful COVID response creates false choices between directing assistance to parents of young children or to educators.  

HB 1105, the Coronavirus Relief Act 3.0 passed by the NC General Assembly on Sept. 4, didn’t go nearly far enough to sustain and strengthen our childcare system. The bill provided $35 million for operating grants to early childcare programs, and while this funding is desperately needed, it is a one-time investment unlikely to cover more than one to two months of bonus and retention payments.  

The bill offers $8 million in additional childcare assistance payments for parents, but this is far below what is needed. The money would serve only about 1,300 kids for one year, leaving too many behind.

According to the NC Early Education Coalition, at least 14,000 eligible families are on the waitlist for childcare support The NC Division of Child Development and Early Education had been covering co-pays for parents receiving childcare subsidies during the pandemic, but without any additional funds, that support has now ended.  

In addition, the funding is is limited to support for remote learning opportunities, which creates unnecessary hurdles for families seeking assistance. 

Instead of providing more support to low-income families, HB 1105 allocated $440 million to the poorly designed Extra Credit Grant Program, providing one-time direct cash payments of up to just $335 to North Carolina parents.

These grants are not targeted to the parents who need them most. Because the grants will rely primarily on tax filings to distribute paymentsthey may even exclude many of the state’s lowest-income families who do not earn enough to file taxes but who do contribute through sales and other taxes. 

Furthermore, our current childcare subsidy system does not cover the actual cost of providing quality care. Our state needs to adjust reimbursement rates for the programs that provide care to families receiving subsidies in order to ensure they are adequate, equitable, and offer early childcare educators a living wage. 

North Carolina needs long-term public investment in early childcare. It is necessary to support our recovery from COVID-19, to ensure that programs are open as parents return to work, and to continue for a stronger state.

Childcare providers see the value of their work every day, and comprehensive public funding would show that North Carolina recognizes their value as well, and the value of the children in their care and the families that rely on them. As Stephanie Shell, a family childcare home provider, said at last month’s town hall: 

I ask that our legislators think aboutthe studies that show the first five years of a child’s life are the most critical of their development, and that we are the people helping with those first five years. We would like to see that reflected in theirdecisionmaking in terms of funding and support for us through this crisis.

 

Logan Harris is a Senior Policy Analyst with the Budget & Tax Center, a project of the NC Justice Center.

Commentary, COVID-19, NC Budget and Tax Center

U.S. Senate COVID-19 relief proposal falls far short of need across N.C.

(Photo: Wikimedia Commons)

It is foolhardy to look at the current state of hardship in our country and fail to offer a genuine response. Yet the U.S. Senate did just that yesterday with its failure to pass adequate COVID-19 relief that matches the need facing families, communities, and state and local governments across the country.

North Carolinians can’t afford half measures from Congress as more than a million households are at risk of eviction and more than half a million remain out of work. People — Republicans and Democrats, Black, brown and white — support aid that would keep neighbors from being pushed into poverty and ensure that state and local governments can sustain services and the jobs of so many North Carolinians.

So long as our leaders delay their response or offer half-measures such as Presidential Executive Orders and paltry Senate bills, the response to the pandemic will be drawn out and recovery delayed.

The fundamental reality that policymakers have failed to fully grasp is that helping people helps the economy. Allowing hardship and uncertainty to persist is not only cruel but bad economics.

People and the economy need the strong foundation that direct aid and public institutions can uniquely provide as we all await the containment and mitigation of the public health crisis.

We may have gotten used to politics as usual, but the situation facing North Carolinians is anything but. As this once in a generation crisis continues, Republicans and Democrats must work together to make sure people can keep a roof over their head, put food on the table, and support their children, families and neighbors.

We demand a public response that is worthy of the lives unnecessarily lost in this pandemic, and the lives devastated by the economic fallout. Future generations will not forgive us for anything less.

Commentary, NC Budget and Tax Center, Trump Administration

Federal eviction moratorium merely kicks the can down the road

Last week, the Centers for Disease Control and Prevention announced that it would place a “temporary halt in residential evictions to prevent the further spread of COVID-19” through Dec. 31, 2020.

This action, although needed, leaves gaping holes in the Trump administration’s response to the pre-existing and current pandemic-impacted housing crisis.

People need a home to stay at home, but an estimated 30 million to 40 million people in the U.S. were at risk of eviction prior to the moratorium announcement.

The CDC order took effect last Friday, Sept. 4, and might bring much-needed relief to renters. Unfortunately, onerous eligibility requirements are likely to cause many people to fall through the gaps. According to Legal Aid of North Carolina (LANC), tenants will have to submit a signed declaration to their landlord and bring that signed declaration to court if they have an eviction hearing.

In addition, the order does not apply to foreclosures and, importantly, it will merely postpone evictions, not prevent them.

(Note: LANC also advises that tenants can still appeal if they are ordered to be evicted. Tenants with questions about eligibility and in need of assistance should call LANC at 1-866-219-5262. Tenants should also call 211 to see if there is any help available to them with their back rent.)

Without the rental and utility assistance people need to pay their bills, the federal eviction moratorium is merely further delaying the financial cliff renters will face once it expires. Come Jan. 1, 2021, rent will be due, and now additional months of back rent will also be due, as well.

People who have been most impacted by the pandemic are familiar with what happens when poorly designed policies fail to accomplish their objectives. Housing vouchers are a clear example of how well-intended policy can fall short of meeting its objective. Anyone who has ever tried to use a housing voucher will tell you just how difficult it is to find a landlord who will take them.

In short, the CDC’s federal eviction moratorium will not solve the persistent lack of available and affordable housing, especially for people with extremely low incomes. To ensure that people can stay in their homes, policymakers at every level of government must provide more than public statements. Dedicated resources are needed to help people pay rent who do not have adequate income due to the pandemic and administrative capacity must be built to help direct dollars to families that need them most. People also need transparent information and legal support to exercise their rights.

Housing ought to be a human right, especially during a public health and economic crisis. A federal moratorium on evictions is essentially an unfunded mandate that can only be effective if supported with public resources and additional capacity at every level of government. The National Low Income Housing Coalition will host a tweetstorm today at 1pm ET. Follow #GetBackToWork for more information.

Leila Pedersen is a policy analyst at the N.C. Budget & Tax Center.