South By North Strategies, Ltd.

The economic fallout of the COVID-19 crisis has driven record numbers of people across North Carolina to apply for unemployment insurance.

In the benefit week ending on March 7, 2020 (filing week ending March 14), the last one before the onset of the COVID-19 recession, the Division of Employment Security received 3,533 initial claims for unemployment insurance compensation. The next week, the number of claims jumped to 94,083, and ever since then, the state has received an average of 92,712 new claims each week, based on data reported to the US Department of Labor (USDOL).

In recent weeks, observers have asked a seemingly simple question: How many people in North Carolina are receiving unemployment insurance? Answering that question, however, is not so simple due to the idiosyncratic ways in which unemployment insurance data are tabulated and reported, the crushing volume of claims filed, and the rapid establishment by the US Congress of three supplemental emergency programs.

As of the benefit week ending on May 23 (filing week ending May 30), the most recent with data, 815,889 people in North Carolina either i) were receiving unemployment insurance or ii) had applied recently for benefits and were waiting to receive them.

Put differently, 18 of every 100 workers in North Carolina were receiving or were waiting to receive unemployment insurance compensation at the end of May

To arrive at this estimate, South by North Strategies, Ltd. adapted a methodology from the Economic Policy Institute for use with state-specific data (not seasonally adjusted) reported weekly by USDOL. (Note: these figures differ from the daily ones posted by the NC Department of Commerce; those numbers cover a longer time span and have not been processed yet to meet federal reporting standards.)

What Is Unemployment Insurance?

Established in 1935, unemployment insurance is a federal-state partnership that shields workers from the risk of losing a job through no fault of their own by replacing a portion of lost wages. While the federal government establishes the general framework, states have broad latitude when it comes to levying the payroll taxes that fund normal benefits, establishing monetary and non-monetary eligibility criteria, & setting benefit amounts. All of North Carolina’s employment security laws are found in Chapter 96 of the General Statutes.

Which Insurance Programs Currently Exist?

In North Carolina, eligible claimants of regular state-funded insurance can receive no more than $350/week in benefits, with the exact amount determined by a formula linked to the person’s earnings history. Currently, a claimant can receive insurance for no more than 12 weeks, which is the shortest maximum duration periods in the country (tied with FL).

As part of the CARES Act, Congress established three temporary, supplemental insurance programs funded fully by the federal government:

• Pandemic Unemployment Insurance Compensation (PUC): This program adds an extra $600/week to the regular state-funded benefits received by claimants. The program began on March 29 and is set to expire on July 31.
• Pandemic Unemployment Unemployment Compensation (PEUC): This program provides claimants who exhaust their regular state-funded benefits with an additional 13 weeks of insurance payments. The program runs through Dec. 31, and for weeks ending on or behalf July 31, claimants also receive PUC.
• Pandemic Unemployment Assistance (PUA): This program provides unemployment insurance benefits to individuals normally ineligible for regular state-funded benefits, such as independent contractors, the self employed, and “gig” workers. The program runs through Dec. 31, and for weeks ending before July 31, claimants also receive PUC. They also may be eligible for PEUC.

Lastly, an existing feature of federal and state unemployment insurance law is the Extended Benefits (EB) program. In states experiencing high unemployment, individuals who have exhausted their regular state benefits may receive up to 13 more weeks of benefits (in some cases, 20 weeks). Normally, the program’s costs are split between the federal government and the states, but currently, the federal government is paying all the costs. North Carolina triggered “on” to the program as of May 17.

How Many People in North Carolina Are Receiving Benefits?

In recent weeks, observers and journalists have attempted to estimate how many people in North Carolina are receiving benefits by looking at the number of claims reported each week by the state to the US Department of Labor. That approach is problematic for several reasons, including the fact that the top-line number only shows claims for regular state-funded claims and excludes claims related to the PUA and PEUC programs. At the other end of the range, there may be double-counting of people if someone applied for both regular benefits and PUA, either by mistake or before the state stood up PUA processing.

Focusing instead on the number of people who are receiving benefits or have applied and are waiting for a benefit determination can better isolate the number of people in North Carolina turning to the unemployment insurance system. Applying the methodology noted above to USDOL claims data (not seasonally adjusted) for the benefit week ending on May 23 (meaning claims were filed in the week of May 30) yields the following estimates:

• 543,011 North Carolinians were receiving regular state-funded benefits as of May 23. (USDOL calls these “continuing claims.”)
• 80,602 North Carolinians had filed for regular state-funded benefits and were awaiting benefit determinations as of May 23. (USDOL calls these “initial claims.”)
• 72,422 North Carolinians were receiving PUA benefits as of May 23. (Continuing claims)
• 119,854 North Carolinians had filed for PUA benefits and were awaiting benefit determinations as of May 23. (Initial claims.)
• No claims (initial or continuing) were reported for PEUC, EB or certain other smaller programs as of May 23.

When added together, some 815,889 people in North Carolina either i) were receiving unemployment insurance or ii) had applied recently for benefits and were waiting to receive them as of May 23, the last week with data. The regular state program was serving 76 percent of those people, with PUA serving 24 percent. (Note that the high number of PUA claims relative to the number of regular claims illustrates just how many people currently are left out of the regular state-funded insurance program.)

Even more importantly, 75 of every 100 claims for regular state-funded benefits and PUA were in paid status as of May 23.

How Can Those Numbers Be Contextualized?

To place the proceeding estimate in useful context, consider how the state’s labor force (not seasonally adjusted) was estimated at 4,675,542 people in April, the last month with data from the NC Department of Commerce. The 815,889 people in North Carolina either receiving unemployment insurance or waiting for an application to be processed equaled 18 percent of the state’s labor force.

Put differently, approximately 18 of every 100 workers in the state were drawing or were waiting to draw unemployment insurance benefits as of the end of May.

For additional context, consider that the City of Charlotte, which was North Carolina’s most populous municipality as of 2018, had some 853,000 residents. If all the people drawing or waiting to draw unemployment insurance in North Carolina as of May 23 were to gather in one place, they would form a city almost as large as Charlotte and one larger than any other city in the state.

Who Is Receiving Unemployment Insurance?

Although the weekly claims report released by USDOL contains no information on the demographic characteristics of claimants, other data tabulated by the North Carolina Department of Commerce offer insights.

In April, the last month with complete data, 547,212 people in North Carolina filed continuing claims. Women accounted for 58 percent of the total, men 42 percent. In terms of race, 61 of every 100 continuing claimants identified as white, 25 of every 100 as African American. In total, 27 percent of continuing claimants were between the ages of 25-34, and altogether, 40 percent of claimants were between the ages of 16 and 34.

In terms of industry, two thirds of all continuing claims were linked to the following four sectors: 23 percent to the leisure and hospitality sector; 16 percent to the trade, transportation and utilities sector (which includes retail trade); 14 percent to the education and health services sector; and 14 percent to manufacturing.

What Financial Impact Is Unemployment Insurance Having?

Although the weekly claims report from USDOL contains no financial data, the financial support provided by unemployment insurance currently is serving as a lifeline for more than 800,000 North Carolinians. That income replacement, in turn, allows those beneficiaries to maintain their spending on essential goods and services like groceries.

According to the North Carolina Department of Commerce, the state paid out 1.7 million weeks of continuing benefits in April. If each week of benefits received the $600/week PUC supplement, that one program alone would have placed $1 billion in the hands of North Carolina workers.

Meanwhile, if each of those 1.7 million weeks in continuing benefits was for the average state-funded weekly benefit of $270, which is the most recent figure available, then that program would have boosted the resources available to unemployed North Carolinians by $459 million. (Note that actual weekly benefit amounts vary by earnings, with lower-paid workers receiving less than higher-paid workers, up to the statewide benefit cap of $350/week. )

While the available numbers for April do not break out PUA benefits, North Carolina did not start processing such claims until the end of the month, which suggests that the financial impact of that program only will begin to appear meaningfully when the May data are released.

Take together, these admittedly back-of-the-envelope financial estimates point to the importance of extended unemployment insurance benefits to people across the state. The funds, especially the PUC supplement of $600/week, are providing financial support to households across the state, which is allowing them to continue to support local economies. Absent those funds, the recession stemming from the COVID-19 crisis would be worse, with joblessness being even more pronounced than the crisis levels it already has reached. ##