With weekly $600 gone, NC unemployment benefits alone are not enough, workers say
Sherry Lawrence was working at the salad bar at North Carolina Central University’s cafeteria, making $11 an hour, when the COVID-19 pandemic hit.
Lawrence, who is 46 and lives in the Durham Housing Authority’s Hoover Road community, lost her first full-time job with benefits. The most she had made before that was $8.47 an hour.
“I came into work. They gave me a letter saying that due to the pandemic that we were going to be out of work, and they didn’t know how long we were going to be out of work,” Lawrence said in an interview with The News & Observer.
Lawrence was laid off on March 19, and filed for unemployment the same day — one of almost 1.2 million North Carolinians who have applied for unemployment benefits since the start of the coronavirus pandemic. Her first unemployment check didn’t arrive until mid-May.
“By this time, rent was due,” Lawrence said. “By the time I got unemployment, I was so overwhelmed because now my bills are behind. I’m struggling, going from food bank to food bank.”
Lawrence’s husband owns a landscaping business, but his income has been significantly reduced due to the pandemic. They also provide for their 10-year-old granddaughter and their 22-year-old daughter, who has autism.
Since mid-May, Lawrence said, she has relied on the extra $600 in federal unemployment benefits that was legislated through the CARES Act in late March. Her unemployment pay from North Carolina came to just $125 a week.
“It was a big help,” Lawrence said. “When I started getting the $600, it was a big help because I got a chance to catch up on all my rent.”
Those extra benefits have now expired in North Carolina, with the last payment going out this past weekend. Their future is in doubt as the Democrat-controlled House of Representatives and Republican-controlled U.S. Senate are considering very different economic stimulus proposals.
The White House and Republicans in Congress do not want the $600 payments to be extended. Instead, they’ve proposed a new stimulus package — the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act — which would pay laid-off workers an extra $200 a week until states can determine how to provide 70% of pre-pandemic wages to laid-off workers.
Senate Republicans are also proposing another round of $1,200 stimulus checks. Everyone who received checks in the first round would receive them this time as well along with an additional $500 for each dependent in the family.
House Democrats have already passed a bill extending the $600 unemployment benefits into the new year.
In interviews with The News & Observer, laid-off workers, employers and advocates for more extensive aid in North Carolina said any reduction in unemployment benefits puts workers and the economy at risk.
“This extra $600 was the difference between having a home and being homeless for thousands of North Carolinians who are facing unemployment due to this COVID pandemic. Any reduction in benefits is going to put thousands, or tens of thousands even, of tenants in North Carolina at greater risk of homelessness,” said Peter Gilbert with Legal Aid of North Carolina.
“Seventy percent for a family who was already spending half or more of their income in rent doesn’t leave anything for food and other essentials for life.”
That’s the situation Lawrence and her family are facing. She’s returning to her position at NCCU on Thursday, but she said she’s worried about what will happen if there’s another shutdown at schools and universities.
“I don’t think I can handle another shutdown, because I think I’m going to shut down,” Lawrence said.
She said she has some money saved from the federal unemployment benefits, but after that, she doesn’t know what she will do.
NC’s low-ranking benefits
Without the extra $600 in unemployment benefits, North Carolinians are left with one the lowest-ranked unemployment insurance systems in the country in terms of amount paid and payment duration, according to data from the Department of Labor.
It started in 2013 when, just after securing the governorship on top of both houses, the GOP supermajority passed HB4, a bill that made unprecedented cuts to unemployment compensation.
The bill lowered the maximum weekly payment amount from $535 to $350 and completely eliminated state appropriations for unemployment program administration, forcing the program to rely on declining federal funds.
As a result, staff time designated to processing initial claims dropped by more than half from 2005 to 2020. The 2013 legislation also shifted to calculating the benefit amount based on earnings in the most recent two quarters rather than the highest quarter of earnings. That caused the replacement rate to drop to 37 cents for every $1 in wages, the lowest rate in the Southeast, according to a recent report from the North Carolina Justice Center, a nonprofit organization whose stated mission is to eliminate poverty in the state.
The state lags behind the recommended standard of replacing half of lost wages. In North Carolina, the average weekly benefit was $264.70 in the 3rd quarter of 2019, the 10th lowest in the country, according to the National Employment Law Project, a nonprofit organization that advocates for economic security for low-wage workers.
The percentage of North Carolina’s unemployed workers receiving unemployment benefits plummeted to 9.1% in 2019 — the lowest in the United States, dropping as low as 8.3% in the third quarter.
HB4 also cut the benefit duration from the previous standard of 26 weeks to a range of 12 to 20 weeks, depending on the unemployment rate, with the 20-week maximum only kicking in when the rate reaches 9%. The typical worker’s unemployment period is 21.4 weeks nationally.
And the bill disqualified some factors, such as following a spouse who has to relocate for work or taking care of a family member, as “good-cause” reasons to receive unemployment.
This year, House Bill 1075 in the North Carolina General Assembly would have overturned much of the 2013 legislation, but legislators entered recess in mid-July with no hearing on the bill.
The bill, sponsored by several Democrats in the House and Senate, would increase unemployment eligibility from 20 weeks to 26 weeks, and would increase the state’s maximum unemployment benefit from the current $350 to $400 a week. It would change the unemployment calculation so that it’s based on the applicant’s two highest-paid quarters, rather than the current calculation of the last two quarters; and would allow people who left jobs for spousal relocation, health reasons, and family hardship to claim benefits.
In May, in its COVID-19 relief bill, the North Carolina State Senate tried to include a maximum benefit increase, but the increase was nixed in the final bill.
Employees and employers are concerned
Lorenzo Mack Jr., 35, did freelance work in the Charlotte area as an audio engineer in the entertainment industry before the pandemic hit.
In mid-March, all of the shows that Mack had planned were canceled and he filed for unemployment on March 23. He didn’t receive his first unemployment check until May 1.
“It was a scary six weeks. The savings I had got depleted,” Mack said.
To get by, Mack and his wife bought on-sale meat in bulk, shrink wrapping it and freezing it.
“We weren’t ordering takeout in any way, shape or form,” Mack said. “We were not eating anything besides the essentials — no snacks, not anything like that.”
Once his unemployment check came in, Mack said, he was able to live less frugally because of the extra $600 from the federal government. Without it, he would have been left with $202 after taxes from North Carolina.
Mack’s wife is still employed, working logistics at a shipping company, but he said if the $600 a week is significantly reduced, he doesn’t know how long they can make it with their year-old mortgage and other homeowner expenses.
“I have no idea how long we could sustain it. We could probably, based on my wife’s income, we would probably be all right for a while, but if we have any emergency, like a health emergency, anything that requires extra funds is money that we just don’t have right now,” Mack said.
“It’s scary to think about.”
Some employers say the expiration of benefits has put them in a difficult position, with their employees desperate to return to work despite the health risks of doing so.
“We feel an immense pressure to do something that we feel is not safe and is not right and puts us in economic jeopardy,” said Cheetie Kumar, owner of Garland restaurant in Raleigh. As the date of the final federal payment approached, Kumar received a stream of anxious calls and messages from her employees.
“But [reopening] perhaps jeopardizes our ability to employ them in the future because if we reopen and there’s a case in our staff, which is inevitable, we have to shut down, we have to pay for everyone to get tested, we have to quarantine for two weeks and then we lose all of our perishable inventory again.”
But workers in North Carolina have few options.
Michael Bugge, 22, is a full-time student at Appalachian State University in Boone and lives off federal subsidized loans and wages he makes at a bar in town.
Bugge was laid off from his position at the bar in March and has been unemployed since, relying on the extra $600 a week.
“If it’s a significant reduction,” Bugge said of the proposal to cut federal benefits, “that definitely puts my ability to pay basic living expenses in jeopardy.”
Bugge said that he would have to take another job in Boone that pays less than $10 an hour.
“Even if I was to work 40 hours a week as a full-time student, I wouldn’t be pulling in biweekly enough to even make rent, let alone other expenses,” Bugge said. “Other daily, weekly monthly expenses.”
Bugge said he’s also concerned that the coronavirus would spread if many people were forced back to work.
“If we expect people to stay home, if you’re not going to give unemployed people benefits, they’re going to have to go out and look for work. It just seems like a very logical, a-plus-b conclusion,” Bugge said. “More people are going to interact with one another and it’s just simply going to cause the numbers to continue to rise.”
Paid to stay home?
For President Donald Trump and other Republicans in Washington, D.C., one concern is that workers could make more on unemployment than they did while working. For that reason, Senate Republicans tried to lower the $600 amount before the CARES Act passed.
“We want to have people go back and want to go back to work as opposed to be sort of forced into a position where they’re making more money than they expected to make, and the employers are having a hard time getting them back to work,” Trump told reporters last week.
U.S. Secretary of Treasury Steve Mnuchin said he shared that concern when speaking with reporters on Saturday.
“The American public understands,” Mnuchin said. “We’re not going to use taxpayer money to pay people more to stay home.”
Some North Carolina workers who spoke with The News & Observer said that these comments are a threat to their and others’ livelihoods.
“It’s pretty black-and-white what this is going to do to people. If you’re willing to essentially look your constituents in the eyes and tell them that their financial stability, their well-being doesn’t matter,” Bugge said.
Rita Blalock, who spoke with The News & Observer in March, said in a follow-up interview that her hours have remained cut in half since then, making $10 an hour at a McDonald’s that she takes the bus to for every shift.
“I’m just barely making it with the unemployment and the work that I am doing at McDonald’s,” Blalock, 54, said.
If federal unemployment benefits are cut, Blalock said, she will do what she can to get by. But she hopes they stay in place for the sake of everyone in her neighborhood.
“I hope they don’t cut unemployment all the way off,” Blalock said. “People out here need it. Some people still haven’t gotten their money. People are struggling.”
This story was originally published July 28, 2020 at 2:20 PM.
