Want to help North Carolinians left jobless because of COVID-19? Improve the state’s unemployment insurance system.

It’s an astonishing number.

Source: NCDES

More than 423,000 workers in the Tar Heel state have filed for unemployment in the last three weeks. Nearly 370,000 of those cases list COVID-19 as the reason for their loss of work.

But many are finding that the state’s unemployment insurance system is far from generous. Benefits last for a shorter period and are smaller now than before the Great Recession.

Today’s must read opinion piece comes from economic analyst John Quinterno, a principal with South by North Strategies, Ltd. in Chapel Hill.

Quinterno explains in an op-ed for Capitol Broadcasting:

First, many individuals will discover that they simply do not qualify for regular state unemployment insurance benefits. Self-employed persons, independent contractors and “gig economy” workers generally are ineligible, while other workers will not satisfy the existing non-monetary and monetary criteria. That is especially likely for low-wage workers with erratic schedules and uneven earnings histories.

Second, those who do qualify will receive modest benefits — the maximum benefit is $350 a week — for no more than 12 weeks. Finally, successful claimants will benefit less from the expansions authorized by the federal CARES Act.

For workers who qualify for unemployment insurance, the CARES Act allows them to draw their regular payment plus a $600-per-week supplement; for the average claimant in North Carolina, that should yield a benefit of about $877 a week, with the maximum benefit reaching $950 a week. The CARES Act also extends benefits for 13 weeks beyond the normal maximum benefit period. Yet since North Carolina currently caps duration at 12 weeks, as opposed to the 26 weeks standard in most other states, an unemployed Tar Heel will receive no more than 25 weeks of benefits instead of the 39 weeks available most elsewhere.

In short, unemployed North Carolinians lucky enough to qualify for insurance will receive far less for far shorter periods than their counterparts in much of the country.

A positive aspect of the CARES Act is that it temporarily allows for people normally ineligible for unemployment insurance, such as the self-employed, independent contractors, and “gig economy” workers, to draw benefits and a $600-per-week supplement. Should such workers qualify, they still will receive less in North Carolina than in other states due to the current 12-week cap on duration and the low average weekly payment amount. (At a minimum, these workers will receive $734 a week.)

Recently, Gov. Roy Cooper has used executive authority to implement positive reforms, such as waving the waiting week required before a first check is sent to eligible claimants, suspending work search requirements, and certifying that payments will not be charged back to employers. Those steps will preserve eligibility for people and enable the state to claim as much as $30 million in federal funds to help administer the surge of claims in a timely manner.

Legislative action ultimately will be needed if the unemployment insurance system is to meet the COVID-19 crisis.

  • Eligibility criteria should be loosened to make the system more responsive to the needs of an increasingly low-wage, part-time, and contingent labor force.
  • Benefit formulas and amounts must be redesigned to provide adequate wage replacement that grows with the economy
  • North Carolina also should restore maximum benefit duration to 26 weeks, as is standard in most states.
  • Finally, the state should strengthen its mechanism for handling partial claims and establish a work-sharing program.

The COVID-19 crisis has confronted North Carolina’s unemployment insurance system with a moment of truth. It is time to admit that the 2013 “reform” was an ideologically inspired effort to effectively eliminate unemployment insurance. Absent change, the system will prove incapable of providing meaningful assistance on a scale commensurate with the wave of joblessness sweeping across the state alongside the coronavirus.

Read Quinterno’s full column here.

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