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Unemployment insurance[This post has been updated to include the link to Conway’s research paper at the bottom.]

This morning’s “must read” is Professor Patrick Conway’s op-ed in this morning’s edition of Raleigh’s News & Observer: “Not exactly a Carolina Comeback.” As Conway, who is Chairman of the Department of Economics At UNC Chapel Hill, explains, the the supposed economic revival for the state’s unemployed workers touted by Gov. McCrory, legislative leaders and their cheerleaders in the Pope/Koch empire simply hasn’t happened:

“Evidence from the Current Population Survey conducted by the U.S. Census Bureau indicates that the average working-age unemployed individual in North Carolina is actually less likely than an unemployed worker in the rest of the U.S. to be re-employed in the following month.

At the beginning of 2011, North Carolina unemployed workers were equally likely to find a job in the next month when compared with other states’ unemployed workers. From 2011 through mid-2015, unemployed workers in North Carolina were less likely to find a job.

It was February 2013 when state lawmakers approved unemployment insurance reform, which reduced the average payment and reduced the maximum number of weeks that the involuntarily unemployed could collect those payments. When Gov. Pat McCrory signed the legislation, he said this reform ‘will help provide an economic climate that allows job creators to start hiring again.’ About 170,000 North Carolina workers receiving insurance payments when the law took effect in July 2013 lost $780 million because of the reform.”

But that’s not all. Again, here’s Prof. Conway:

“There is one area in which North Carolina’s experience is significantly different from that of the rest of the country. Beginning in 2013, North Carolina’s unemployed workers were significantly more likely on average to leave the labor force rather than continue searching for jobs. By the middle of 2015, an individual unemployed worker in North Carolina was 30 percent more likely not to search for jobs in the next month than the average unemployed worker in the rest of the U.S. Those leaving the labor force are the “discouraged workers,” and the reform seems to have given them a strong push toward leaving.

To ensure that those results are not caused by North Carolina’s abundance of college students and individuals past retirement age, I redid the calculations using only individuals between the ages of 25 and 60. The specific percentages differ a bit, but the general findings are the same. The likelihood that an unemployed individual will find a job in the next month in North Carolina has been below that of the average for the rest of the U.S. throughout the insurance reform period.”

Conway’s bottom line:

“The reform has not had the effect on job creators that McCrory forecast. If there is to be a Carolina Comeback, it will begin by bringing our residents back into the labor force and providing our youth with the skills necessary to compete for and win available jobs. A policy that discourages workers should be reformulated or scrapped. Left in place, it creates an economy in which only some gain and many others are left behind.”

You can read the background paper on which Conway’s op-ed is based by clicking here.

Commentary

unemploymentVeteran Raleigh News & Observer political reporter Rob Christensen, a confirmed centrist who has sometimes frustrated progressives down through the years with his extremely high tolerance for conservative policy blather, is right on the money this morning with a new and powerful takedown of the state’s Scrooge-like unemployment insurance policies.

In addition to explaining and dissecting the state’s U.I. system and the recent conservative-designed changes that have made it the “stingiest…in the country” in succinct terms, Christensen takes an important  extra step and speaks from the heart in the conclusion to his essay:

“So why are our political leaders behaving this way when most of their constituents punch a clock or fill out a time card?

Here are several thoughts. Businesses bankroll most of the legislator’s campaigns and finance a battery of lobbyists on Jones Street. There is almost no one to speak for people who get laid off.

There is also a view among some conservatives that unemployment insurance is, in the words of the Civitas Institute, “paying people not to work.’’

This view, I might add, is contrary to my life experience. Three of my grandparents worked in a textile mill. My father was a factory worker. I worked in a textile mill and other manufacturing plants in my early years.

I have known lots of hard working people – family, friends, neighbors, and colleagues – who have been laid off. It is a terrifying experience. You don’t know how you will take care of your family or meet your mortgage payments. Often your self-esteem takes a beating. The modest amount of unemployment insurance doesn’t even begin to cover living expenses.

There are apparently some people who believe the American worker is a slug just waiting for a chance to sit on his or her duff. I think they are wrong. I believe most Americans just want a chance to earn a decent living.”

Click here to read and share the entire column. It deserves it.

NC Budget and Tax Center

Economic hardship persisted at high levels in the nation and North Carolina in 2013, according to new figures released today from the Census Bureau’s Current Population Survey (CPS). The 2013 national poverty rate was 14.5 percent, down from 15 percent in 2012 but still well-above pre-recession levels four years into the official economic recovery. There were 45.3 million Americans living below the official federal poverty line, which was $11,490 for an individual and $23,550 for a family of four in 2013.

There is broad consensus that poverty rates will not drop to pre-recession levels anytime soon. And, two economic factors suggested that poverty rates would remain elevated in 2013, as the Center on Budget and Policy Priorities explains. First, the economy is growing but those gains continue to bypass middle- and lower-income families and are mostly benefitting the wealthy. Second, lawmakers enacted austerity measures in 2013 that reduced public contributions to the economy and failed to put children, families, and communities on a better path forward. Read More

Uncategorized

Dean BakerEarlier this week, we cross-posted a brief essay by one of the nation’s best economists, Dr. Dean Baker of the Center for Economic and Policy Research, in which he thoughtfully and professionally dissected and demolished the claims made by a Raleigh conservative think tanker in a Wall Street Journal piece. The think tanker’s central claim was that the state’s harshest-in-the-nation cuts to unemployment insurance had spurred all kinds of wonderful economic results in North Carolina.

Apparently not content to be put in his place just once, the think tanker posted a fairly snarky attempt at a response yesterday and today, with an almost audible virtual sigh, Baker took to his keypad (and the CEPR blog) to provide a few more lessons in basic economics. We’ve cross-posted his addendum below:

Addendum:

I see John Hood has replied to my post. Apparently he thinks that if we play games with the start and end dates we can say cutting benefits worked.

Okay, I don’t know what games they play in North Carolina, but let’s just remember what is at issue. The argument for cutting benefits was that if the state pushed people off unemployment insurance (UI) they would be motivated to get a job. We know that North Carolina pushed lots of people off UI. The question is whether there is any evidence this led more people to get jobs.

That gives us two numbers to focus on, Read More

NC Budget and Tax Center

Last week, the folks at five thirty eight, a non-partisan website dedicated to statistically robust analyses of social, political and economic phenomena led by Nate Silver, released an analysis of claims that unemployment insurance cuts at the national level have been good for the country’s economy and jobless workers.

The claims sound eerily familiar to those in North Carolina of a Carolina Comeback. But similar to those claims, the folks at five thirty eight find these national claims to lack support from available evidence.

First from their findings specific to those who have lost unemployment benefits: “Of the roughly 1.3 million Americans whose benefits disappeared with the end of the program, only about a quarter had found jobs as of March, about the same success rate as when the program was still in effect; roughly another quarter had given up searching.”

Second, jobless workers, particularly the long-term unemployed, are not moving to employment. From the article: “Only about 10 percent of the long-term unemployed find jobs each month, a metric known as the job-finding rate. Among those unemployed six months or less, the finding rate is nearly 25 percent….”

Cutting off unemployment benefits have not delivered improved job prospects for the hundreds of thousands still seeking work across the country and in North Carolina. A different approach is needed.