Unemployment Insurance Slashed In North Carolina, Hard Times Made Harder

By WideWorldOfWork.com — Hard times for the unemployed in North Carolina will sooner get a lot harder. Republican North Carolina Gov. Pat McCrory signed a bill on Tuesday, Feb. 19, 2013, lowering the maximum amount the state’s jobless workers can receive in unemployment insurance  benefits by 35% from $535 to $350 a week starting July 1.

McCrory also changed the amount of time the unemployed can collect benefits from 26 weeks, to 12 to 20 weeks depending on the state’s unemployment rate.

North Carolina has more than 400,000 jobless workers. Its 9.2% unemployment rate is significantly higher than the national of 7.9% and is the 5^th highest among the states, according to the U.S. Bureau of Labor Statistics.

About 170,000 long-term unemployed workers in North Carolina will lose extra federal funds under the new law, according to the U.S. Department of Labor.

“As a result, families struggling to secure their place in the middle class will suffer a grievous blow, and the state’s economy will lose $780 million in federal funds that are vital to reducing North Carolina’s high unemployment rate,” said acting Secretary of Labor Seth D. Harris.

For every dollar spent on unemployment insurance benefits, nearly two dollars are generated in the local economy, Harris said.

“Unemployed workers and their families spend these benefits in local grocery stores and small businesses, and use them to stay current on mortgage or rent payments and utilities,” Harris said. “For these reasons, UI programs are vital to economic growth in difficult times, particularly in states like North Carolina with high unemployment rates.”

No other state has acted to deny unemployed job seekers this federal assistance.

“Needlessly Harsh” Cut To Unemployment Insurance

“In enacting needlessly harsh cuts to the state’s unemployment insurance program—cuts that will also cause the abrupt loss of Federal Emergency Unemployment Compensation aid on July 1—the North Carolina legislature and Governor Pat McCrory have deliberately and shamelessly chosen to inflict real hardship on unemployed North Carolinians still struggling to find work,” National Employment Law Project executive director Christine L. Owens said in a statement.

“Perhaps unsurprisingly, the governor chose to put his signature to this bill privately, behind closed doors, mirroring the manner in which the legislation was crafted by business groups led by the North Carolina Chamber of Commerce and Republican lawmakers,” Owen said.

North Carolina lawmakers crafted the bill expressly to “shield businesses from paying somewhat higher temporary federal taxes to pay off debts resulting in part from a wave of earlier tax breaks,” Owen said.

But North Carolina’ GOP-led legislature looks at the move as “fixing” the states unemployment insurance system, which has a $2.5 billion debt to the federal government.

“I will not outsource these tough decisions,” said McCrory said in a statement. “This bipartisan solution will protect our small businesses from continued over-taxation, ensure our citizens’ unemployment safety net is secure and financially sound for future generations, and help provide an economic climate that allows job creators to start hiring again.”

Sponsored by state Rep. Julia Howard, the legislation received bipartisan to pay the $2.5 billion unemployment insurance debt North Carolina owes the federal government.

“Faced with North Carolina’s growing $2.5 billion debt, it was necessary and imperative that we pass this powerful and common-sense reform,” Howard said in a statement. “This bill, which brings our state’s benefits in line with our neighbors and does not burden small business to pay a debt they never accrued, is an important step in reconnecting our unemployed workers with jobs and restoring fiscal integrity to our U.I. system.”