Man fills in Unemployment benefits application form.

Unemployment Benefits: Inefficient or Unappealing?

In the wake of the coronavirus outbreak, North Carolina has seen a massive influx of unemployment claims. That large influx has been exceptionally difficult to handle, but even before this surge, North Carolina’s unemployment benefits system was doling out fewer benefits than any other state. JLF’s Dominic Coletti writes in a recent research brief on the subject:

North Carolina has the lowest recipiency rate – the share of unemployed workers receiving benefits from state programs – in the country.  Only around 10% of all unemployed North Carolinians received unemployment benefits in 2019.

Some have tried to write this off as a sign of inefficiencies at the Department of Employment Security (DES), however, the data suggests something else. Coletti explains:

In March, NC Justice Center Executive Director Rick Glazier and President of the North Carolina State AFL-CIO MaryBe McMillan wrote, “the system is near the bottom of the national pack in terms of its capacity to assist workers.” National unemployment data suggest they incorrectly interpreted the state’s low recipiency rate as an inability to provide benefits to people. Instead, it seems North Carolinians simply did not see the value in applying in the first place…

The Employment & Training Administration (ETA) of the U.S. Department of Labor publishes data on the processing time for non-monetary determinations, that is, determinations regarding overall eligibility rather than the amount of benefits. This can be used as a proxy for the system’s efficiency. There is no relationship between the percentage of determinations a state makes within 21 days (the standard timeframe used to measure timeliness for determinations) and its overall recipiency rate.

However, data does show that when unemployment benefits increase, the recipiency rate does as well. Coletti writes:

As benefit amounts increase, recipiency increases. It is, therefore, likely that North Carolina’s system is not harmed by its inefficiency. Indeed, the system has grown more efficient, even as recipiency has declined. Instead, the state has led would-be unemployment recipients to decline applying in the first place.

Read Dominic Coletti’s full brief here. Get up-to-date breakdowns on North Carolina’s economic conditions here.

Brenee Goforth / Marketing and Communications Associate

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