More government stimulus needed to contend with the COVID-19 recession
RALEIGH (April 17, 2020) — Labor market data for N.C. for March was released today, and the headline unemployment rate is only the tip of the iceberg when it comes to how COVID-19 is affecting N.C. workers.
“State and national elected leaders can’t impose a pre-ordained timeline on the COVID-19 recession,” said Patrick McHugh, Senior Economic Analyst with the North Carolina Budget & Tax Center. “We need to keep supporting people as long as the economic storm lasts instead of setting arbitrary end dates like the CARES Act did with enhanced Unemployment Insurance payments. If we repeat the mistakes of the Great Recession and pull back on government stimulus just because some macro-economic measures like the unemployment rate and the Dow Jones index showed modest improvement, the economic pain will linger in many communities long after Wall Street is raking it in again.”
For daily updates on the number of Unemployment Insurance claims and ongoing analysis of the economic impact of COVID-19, visit NCJustice.org/labormarket.
Economic challenges facing North Carolina include:
- Unprecedented spike in unemployment claims: Over 635,000 North Carolinians have filed Unemployment Insurance claims since March 15, when the COVID-19 outbreak began causing major job losses in North Carolina. That means over 13 percent of the people working before the COVID-19 recession began have submitted unemployment insurance claims, the fastest mass loss of jobs on record.
- Headline unemployment rate won’t tell the full story of this recession: The headline unemployment rate jumped to 4.4 percent in March, but this measure doesn’t fully capture the economic harm of the COVID-19 outbreak. The headline rate only captures people who are actively looking for work, so it won’t reveal the true extent of job and income losses for North Carolina families. Particularly during an event like this, when many people are being furloughed from work, are caring for children or other family members, or aren’t looking for work simply because there are no jobs to be found, the headline unemployment rate only reveals the tip of the iceberg.
- The labor force participation rate fell more than the official unemployment increased: While the headline unemployment rate increased by 0.8 percent, the labor force participation rate declined by almost 2 percent. Over 145,000 North Carolinians dropped out of the labor market entirely in March, a clear signal of how bad things became in just the first few weeks of the outbreak.
For charts showing the most recent labor data, including the context of COVID-19 effects, visit the Budget & Tax Center’s Labor Market page at NCJustice.org/labormarket.
For more context on the economic choices facing North Carolina, check out the Budget & Tax Center’s Prosperity Watch report.
The Budget and Tax Center conducts non-partisan analysis of state budget and tax policy and monitors economic conditions in the state. We produce timely and accessible research that contributes to policy discussions and public debate, with the goal of building a broader understanding of the role of policy in supporting economic opportunity for all.
FOR MORE INFORMATION, CONTACT Patrick McHugh, Budget & Tax Center Senior Economic Analyst, at Patrick.McHugh@ncjustice.org or 919-856-2183; or Mel Umbarger, Senior Communications Specialist, at firstname.lastname@example.org.