A crisis looms for NC and the nation as federal relief and eviction bans come to an end.

North Carolina, along with the rest of the nation, is a week away from going over a cliff.

Since April, the CARES Act has provided $600 a week in supplemental federal unemployment benefits to workers who lost jobs because of the COVID-19 lockdown.

This week, those benefits end.

Congress is haggling over another relief package but the negotiations could bog down, forcing many of the nation’s newly unemployed to struggle to pay for housing and food.

The trouble ahead isn’t limited to unemployment benefits. Cities and towns have received aid equal to only a small fraction of their lost revenues. Moratoriums on evictions and utility cutoffs have ended or will soon expire. A rising trend in COVID-19 cases could cause a renewed lockdown and even more job losses.

“If we do see an effective end (to benefits), in August you will see serious delinquencies on mortgages, people not paying rents, businesses folding,” said Greg Brown, executive director of the Kenan Institute of Private Enterprise at UNC’s Kenan-Flagler Business School. “The economy is not robust enough to withstand the benefits ending.”

The shock would be especially strong in North Carolina, where more than 600,000 individuals are receiving unemployment benefits. Without the federal subsidy, the unemployed will have to rely solely on the state’s unemployment insurance program – one of the stingiest in the nation. The state program pays a maximum of $350 a week, the equivalent of earning about $9 per hour. The average payment is $277 a week.

State Sen. Wiley Nickel, a Wake County Democrat, has called for restoring some of the cuts to unemployment benefits that Republicans made in 2013. Last week he wrote to the Republican co-chairs of the legislature’s Joint Committee on Unemployment Insurance urging them to boost state benefits before federal unemployment benefits expire.

In his letter to Sen. Andy Wells and Rep. Julia Howard – who led the drive to cut unemployment benefits in 2013 – Wiley wrote: “Not only will our unemployed workers suffer should we fail to act, but our economy will be hit hard when jobless workers can’t pay their bills. People want to work, but demand for employees is low and will likely stay low as long as this disease continues to spread unabated.”

Wiley proposes basing benefits on a worker’s highest earning quarter, rather than his or her last two quarters, when paychecks often shrink as layoffs near. He also wants the maximum benefit raised to $450.

The legislature adjourned last month without taking up the Democratic call to increase unemployment benefits. Despite a record spike in unemployment claims, Wiley wrote that the state still has close to $3 billion “sitting unused” in its unemployment insurance reserve fund.

Republican lawmakers cut benefits saying they wanted to spur the unemployed to find work. That showed a misunderstanding of unemployment insurance. It doesn’t just help those who have lost their jobs. It helps support the economy during a recession – or a pandemic.

Congress rose to meet the crisis with more than $2 trillion in spending through the pandemic relief CARES Act. But partisan gridlock has returned.

In April, when COVID-19 infections were concentrated in New York, New Jersey and southern New England, Republican Senate leader Mitch McConnell’s office issued a press release dismissing a second relief package as a “blue state bailout.” Now, with red states aflame with COVID-19, McConnell says he will consider about $1 trillion in additional aid, though he wants the money more closely targeted. Democratic House Speaker Nancy Pelosi says the necessary amount of relief is closer to $3 trillion.

Whatever relief Congress agrees on, it must come quickly. There’s a cliff ahead.

This story was originally published July 20, 2020 at 12:00 AM.