RALEIGH (July 17, 2020) — Job gains in May and June have not pulled North Carolina out of a deep economic crisis. More than a million North Carolinians have filed unemployment insurance claims since March 15, and the majority of jobs lost during this pandemic have not been recovered.
“We’re headed for even more economic harm if Congress doesn’t extend supplementary Unemployment Insurance benefits before they run out at the end of this month,” said Alexandra Sirota, Director with the North Carolina Budget & Tax Center. “North Carolina can’t afford the loss of this federal boost because the General Assembly has thus far failed to fix the meager state benefits.”
Research into the economic effects of the loss of the $600 per week boost in Unemployment Insurance provided under the federal program shows that North Carolina will lose $364 million each week in income for the state’s economy, and jobless workers would see a 70 percent reduction in wage replacement that would push more people into economic hardship.
“Things have certainly improved somewhat since the beginning of the pandemic, but we’re a long way from being out of the woods,” said Patrick McHugh, Research Manager with the North Carolina Budget & Tax Center. “One particularly troubling trend is that some of what were originally expected to be temporary job losses are turning into prolonged layoffs, and people who lost their jobs now are less likely to have a position to go back to than people who were furloughed at the beginning of the pandemic.”
Economic challenges facing North Carolina include:
- More job losses likely becoming permanent. As the COVID-19 pandemic drags out, more and more of the job losses once seen as temporary are becoming permanent. National data indicate the share of unemployed people who reported being on temporary layoff dropped from 73 percent in May to 59 percent in June. In the same one-month timeframe, the number of people nationwide who reported a permanent job loss increased by nearly 590,000. We don’t have data specific to North Carolina, but given the ongoing public health crisis here, this national trend is not likely to spare our state.
- Most jobs gained since the Great Recession still eliminated: Even after factoring in the jobs added in June, there are still nearly 380,000 fewer jobs in North Carolina than there were in February before the pandemic started. That means that more than 80 percent of all of the jobs added since the Great Recession have been lost in the past few months.
- Weekly initial weekly unemployment claims still elevated: After declining from the record-shattering few weeks at the beginning of the COVID-19 outbreak, the weekly tally of new unemployment claims has leveled out at still alarming levels over the past month. Each of the past four weeks saw more than 25,000 new claims, and the total number of North Carolinians who have filed since March 15 is now past 1.1 million. Unlike the bulk of claims filed at the beginning of this pandemic that were originally expected to be temporary, many of the claims filed in the past several weeks are likely to be longer-term losses as businesses adjust to a sustained decrease in economic activity.
- Headline unemployment doesn’t fully show how bad things are: 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. Even after bouncing back somewhat in the past two months, only 53 percent of North Carolinians were working in June, far below historical levels. 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.
For charts showing the most recent labor data, including the context of COVID-19 effects, visit the Budget & Tax Center’s Labor Market page.
For more context on the economic choices facing North Carolina, check out the Budget & Tax Center’s monthly Prosperity Watch report.
The nonpartisan Budget & Tax Center is a project of the NC Justice Center, which works to eliminate poverty in North Carolina by ensuring every household in the state has access to the resources, services and fair treatment it needs to achieve economic security.
FOR MORE INFORMATION, CONTACT Patrick McHugh, Budget & Tax Center Research Manager, at firstname.lastname@example.org or 919-856-2183; or Alexandra Sirota, Budget & Tax Center Director, at email@example.com.