Commentary

NC lawmakers all but destroy a critical safety net program — and brag about it

A legislative oversight committee met yesterday at the General Assembly to discuss the state of one of North Carolina’s most critical safety net programs — its unemployment insurance system. And while conservative lawmakers driving the committee used the event as an opportunity  to crow about their supposed success in replenishing the trust fund that’s used to pay unemployed workers, the truth of the matter is that they have all but wrecked a once effective system. This is because they have gotten almost all of the money to replenish the fund by slashing benefits to jobless workers. The following is from a fact sheet prepared by the N.C. Budget and Tax Center:

“Unemployment insurance changes made in 2013 continue to play out poorly in communities across the state. Jobless workers have lost access to a system designed to provide temporary support while they seek new jobs, and communities facing significant job loss and persistently high unemployment have lost a stabilizing resource in their local economies.

A review of performance metrics collected by the U.S. Department of Labor for the Second Quarter of 2016 shows changes made to the state unemployment system in 2013 have led to a stark new reality. North Carolina’s unemployment insurance now reaches too few jobless workers for too short a time period and provides too little in payments to stabilize their spending in the economy.

Too Few     

One in 10 jobless workers in North Carolina received unemployment insurance in the Second Quarter of 2016, ranking North Carolina last in the country. Prior to changes made in the Second Quarter of 2013, North Carolina ranked 24th, with 4 out of 10 jobless workers receiving unemployment insurance.

North Carolina now has the second highest exhaustion rate in the country, with half of those receiving unemployment insurance losing benefits before they find a job.

Too Short

The average duration of unemployment insurance in North Carolina is just 10 weeks, ranking North Carolina last in the country. This short duration is, in part, a function of the state’s arbitrary sliding scale that ties the number of weeks of benefits to the state unemployment rate. Even as the state unemployment rate falls there are still more unemployed workers than prior to the recession and the majority of counties have more jobless workers than job openings.

Too Little

North Carolina ranks 46th in average weekly benefits, providing just $241 each week on average to jobless workers and a fixed maximum of $350. This is despite the fact that the average weekly wage in the state is $888. The state is therefore roughly providing just 25 cents for every $1 earned, circulating far fewer dollars than recommended by economists who typically seek a replacement rate of at least 50 percent. Prior to the 2013 changes, North Carolina ranked 25th with a wage replacement rate of 36.5 percent.”

This is a tragic state of affairs that is playing out in the form of mortgage foreclosures, bankruptcies, avoided doctor visits and hungry children throughout our state. Rather than crowing about them, lawmakers ought to be ashamed of their destructive and mean-spirited actions.

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