A recent opinion piece in Forbes Magazine wrongly claims that steps North Carolina took to reduce how much unemployment insurance provides to jobless men and women – and make it harder to collect – are somehow helping North Carolina’s economy.
Nothing could be further from the truth.
The article, written by North Carolina’s rightwing Civitas Institute and one of its business partners, heralds the underreported tax cut bonanza in the unemployment insurance as driving workers into employment and employers to create jobs.
In reality, North Carolina’s overhaul of unemployment insurance devastated a system meant to protect the economy from lower consumer demand that happens when job losses mount through no fault of workers.
As policymakers sought to pay down the debt incurred because of historic job loss during the Great Recession and an insufficient Trust Fund resulting from years of tax cuts, they pursued a lopsided approach. They called on jobless workers to pay far more through cuts to their unemployment insurance payments, reducing the number of weeks they could collect UI, making the system harder to access, and limiting job training or workforce development opportunities.
The result: North Carolina went from being not particularly generous _ the middle of the pack among all states _ to downright stingy, at the bottom.
In the third quarter of 2015 (the latest data available):
- Just 11% of the state’s unemployed receive unemployment insurance which ranks us last in the country
- The state’s average weekly benefit was $233.69 — 46th in the country. Average weekly benefit as a percent of average weekly wage was 27 percent — 44th in the country.
- The average duration for collecting UI was 11.5 weeks – dead last in the country.
Before the changes went into effect, the story wasn’t nearly so bad. The measures:
- The state had a 39% of unemployed workers receiving unemployment insurance in the second quarter of 2013 which ranked us 24th
- The state average weekly benefit was $301.06 – 25th in the country.
- The state average benefit duration was 15.9 weeks – ranking us 31st.
In 2013, the Tax Foundation, a conservative organization that policymakers often quote, ranked North Carolina’s UI system fifth most favorable to business in the nation. Only Arizona, Oklahoma, Delaware and Louisiana scored higher. That was BEFORE the unemployment insurance changes.
Today, employers contribute to the system just one penny for every $100 of wages paid and the average tax rate of 2.2 percent is below what the US Department of Labor determines to be adequate.
Perhaps most troubling in the arguments of those inclined to ignore economic realities is the suggestion that the system was rife with fraud and was discouraging people from seeking jobs. The facts are otherwise. Read More