Breaking down alternatives to NC ending $300 federal unemployment benefit boost

North Carolina news

RALEIGH, N.C. (WNCN) — Business and economic experts say there might be more effective ways to encourage unemployed people to rejoin the workforce than by simply cutting off the $300 weekly boost in federal aid.

Lawmakers in the state’s House of Representatives on Thursday voted to pass a bill that would remove the state from the program that provides payments adding more than $70 million each week to the state economy. It now goes to the Senate.

“How do we encourage folks to get back into the job market, but at the same time not putting their financial situation, having their financial situation go the other way, go down?” asked Michael Walden, an economist at North Carolina State University.

One solution he proposed: A compromise that, along with ending the weekly $300 payments, would give a bonus to people who look for work and are hired, though he acknowledged questions about the source of those funds.

“I think that would be a good compromise because it would … give the additional motivation for folks to go into the labor force,” Walden said. “But if they do find a job … they get this upfront supplement of money, which in some sense would take the place of what they would be losing from the federal unemployment compensation.”

Dr. Victor Bennett, a professor at Duke University’s Fuqua School of Business, says his idea is to subsidize dependent care “to allow the people who need that flexibility to come back into the labor force.”

Department of Commerce spokeswoman Kerry McComber says the state has up to 245,000 people receiving unemployment benefits each week and all of them receive the $300 from the Federal Pandemic Unemployment Compensation program — an infusion of about $74 million each week to the state economy.

“The state’s potentially looking at less money coming in, less money to be spent, less money to go into coffers of stores and shops. So that is an additional trade off,” Walden said.

Roughly half of the 50 states have withdrawn from the program.

“For those supporting this move … the upside that they say would be that this would encourage more people to look for work, which gets them back into the workforce, which is good for them long run, as well as it helps the economy recover, helps businesses recover, helps businesses produce more,” Walden added.

Republicans say those checks are the reason businesses are struggling to hire workers.

And Walden cited a study from the nonpartisan National Bureau of Economic Research, which says there’s a link between higher levels of benefits and a drop in job-seekers.

“Now, that’s not enough to cover, obviously, everyone who’s unemployed, but it does indicate that there is something here to be concerned about,” Walden said.

But Bennett says he doesn’t expect dropping the benefit to bring more people back into the work force.

“I think, really, it’s just going to make the lives of caregivers and families much harder a month sooner than it would have otherwise,” he said.

It could lead to other problems, he said.

“In the long term, $300 might be the difference between people being able to pay their rent and not,” Bennett said. “And if this leads to evictions, that has a lot of knock-on effects on local communities.”

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