NC Budget and Tax Center

Another Policy Proposal Ignores Reality of Today’s Job Market

Leaders in the General Assembly appear poised to take health care away from parents with low income through a change to Medicaid,  and they plan to do it using a budget process where no amendments can be offered.

The change would likely take the form of what some other states have proposed, requiring a certain number of hours each month in order to maintain health care access.  This plan ignores the reality facing more and more working North Carolinians who don’t control their schedules and are often at the mercy of economic forces beyond their control.

For this reason, and given what we know about what has happened when implemented in other areas, rigid work requirements will not deliver on the intended goal of increasing employment.  Indeed, researchers have documented the ways in which this could actually reduce employment in the long-term and grow poverty.  It may also be too harsh to receive federal approval.

Here are key facts about today’s labor market that legislators should consider as they seek to take health care away from parents with low income:

  1. There are too few jobs for those who want to work. Despite the state’s employment growth since the national recovery began in 2009,  there are still 87 counties where there are more jobless workers than job openings. In many communities, finding work is still a challenge, regardless of whether elected leaders in Raleigh accept that fact or not.
  2. Work is increasingly unstable resulting in a lack of consistent work hours each month. Research by the Center on Budget & Policy Priorities finds that of low-income adults who have worked in the past year, at least 1 in 4 have less than 80 hours of work in at least month.  This threshold is the one used by Kansas to determine eligibility on a month by month basis and failure to meet it means the loss of health insurance for a period. The issue of unpredictable hours is prevalent in the labor market and has created increased income volatility and economic hardship.
  3. Temporary and contingent work means despite working in a year, many workers face unpredictable employment. Temporary work has grown by 52 percent in North Carolina compared to 32 percent growth in the national economy.  Temp workers in North Carolina earn well below the national average. Temporary workers have little control over how many hours they work in a given month, which could put their healthcare coverage at risk through no fault of their own.
  4. Work at minimum wage doesn’t pay enough to make ends meet. A minimum age worker in North Carolina with one child who works just below the 80 hour a month threshold or 20 hours a week would qualify for Medicaid.  The annual income limit for Medicaid is 43 percent of the Federal Poverty level for an adult.
  5. Our labor market depends on public policies that make sure people can get by in low-wage work. One in five North Carolinians can’t afford to make ends meet in North Carolina based on work alone.  Food assistance and housing support, health insurance and child care subsidies aim to ensure people meet their basic needs and stay connected to the workforce.  Restricting access to these supports hurts employment outcomes and the well-being of families.  It also creates the wrong incentives by creating “cliffs” for working people where adding hours and income push them out of eligibility without ensuring that they can secure the needed benefit through work.  This is clear in North Carolina where those receiving Medicaid who could be subject to a new requirement to work a certain number of hours in the month and can’t meet it would be pushed into the coverage gap.  As a non-expansion state, North Carolina would be driving people out of a pathway to self-sufficiency.

On the heels of hundreds of business leaders, workers and advocates gathered in Raleigh on Tuesday to ask legislators to raise the state’s minimum wage from the current federal level of $7.25, it is clear our legislative leaders continue to miss the opportunity to advance policies that address the most pressing issues in today’s labor market.

Now they could consider a policy proposal that would actually make things worse for North Carolinians.

Let’s hope they reject including work requirements in the budget bill and taking health care away from low-income parents.

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