A blog post at the American Enterprise Institute, a DC-based conservative think tank, took a look at North Carolina’s decision to curtail unemployment insurance this year and found that it hasn’t worked all that well.
From James Pethokoukis’ blog post:
Earlier this year, as The New York Times reported, the North Carolina legislature cut unemployment benefits, reducing (a) the maximum payout by a third and (b) the number of weeks residents can receive jobless aid. As a result, starting in July the state lost its eligibility for the federal Emergency Unemployment Compensation program. (This is the extended benefits program scheduled to expire nationally at year end.)
So how’s that worked out in the Tar Heel State?
Well, if you listen to Republicans, it’s worked out pretty well. The state’s unemployment rate has dropped to 8.0% in October from 8.8% in June. So clearly cutting jobless benefits creates jobs and gets residents back in the workforce, right?
When you dig a bit deeper, things look less bright.
In other words, it looks like the cut in unemployment benefits moved people out of the labor force rather than into employment. Likewise, the state employment rate — the share of adults with jobs — declined from 56.7% in June to 56.5% in October. Did reducing the number of North Carolina residents eligible for federal extended unemployment benefits boost employment? These data suggest it did not, a reality Washington policymakers might want to consider.
To read the entire post, complete with lots of numbers provided by Pethokoukis, click here.