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Unemployment Insurance worked, but NC workers who needed it most didn’t see the full benefit

The recent US Census Bureau data released on poverty and income shows the powerful effects of federal aid in reducing hardship across the country, including in North Carolina.

By bolstering the federal side of the federal-state Unemployment Insurance system, members of Congress and President Biden made sure that more workers had what they needed when they couldn’t go to work during the pandemic, keeping them connected to the labor market and spending at businesses.

The result was a jobs recovery that exceeded official projections early in the pandemic of how long it would take to bring unemployment down.

Unemployment Insurance alone kept 2.3 million people, including 525,000 children, from being pushed into poverty by the pandemic and the associated economic downturn from 2020 to 2021.

Yet, North Carolina could have benefited even more if our state’s Unemployment Insurance policies were in line with what is needed to stabilize households and local economies during hard times. In 2013, state policymakers made changes that reduced the ef­fectiveness of the program. Today, North Carolina’s Unemployment Insurance continues to provide too few dollars in wage replacement for too short a time for too few of the workers who have lost their jobs.

Improvements to state Unemployment Insurance must include a specific focus on ensuring that the workers who could most benefit are reached, along with adjusting the amount of wage replacement to better reflect prior earnings and extending the national standard of 26 weeks of access to benefits.

If a growing share of the workforce is excluded from receiving this stabilizing support, the power of Unemployment Insurance will only continue to diminish.

  • Workers who can only find part-time work or have volatile schedules represent a growing share of the labor force since the Great Recession. Several states, including Idaho, Oregon, and Arizona, ensure these workers are able to access critical wage replacement through Unemployment Insurance. In North Carolina, fewer than 5 percent of all Unemployment Insurance claimants access the program as part-time workers, which is among the lowest in the nation.
  • There are 212,000 workers who don’t have immigration documents in the North Carolina labor force. The Century Foundation and the Immigration Research Initiative recently documented a movement in twelve states and a number of additional localities to reach these immigrant workers who otherwise would be ineligible for Unemployment Insurance. Nationally, employers of immigrants pay $1.3 billion in Unemployment Insurance taxes each year, but these workers are barred from accessing the program when they lose a job. In North Carolina, contributions via state Unemployment Insurance taxes from employers of immigrants who are undocumented total an estimated $23.5 million.

North Carolina’s meager Unemployment Insurance program at the state level must be rebuilt to push against the hardship that results from job loss and to support economic recovery that reaches more workers and their families and disrupts the patterns of exclusion that reinforce inequities. This is especially true now that the federal government now has pulled back on the extra support it had provided during the pandemic.

North Carolina’s policymakers have continued to make decisions that benefit employers by keeping their tax rates low.

The only way forward is to rebuild the state’s Unemployment Insurance while centering those workers who are excluded — part-time workers and those in the gig economy as well as certain groups of immigrants. Without aligning Unemployment Insurance to match the economy and workforce of today, the purpose of Unemployment Insurance will only erode with time.

Providing people with wage replacement when they lost their jobs was just one of the ways that policymakers held extreme hardship — and the associated costs to communities — in check during the pandemic downturn.

As the economy continues to provide fewer hours of work for more workers and increasingly relies on the labor of people who have immigrated to this country, it is time to design an Unemployment Insurance system that covers all workers and can stabilize the economy.