Commentary

Is this the worst thing North Carolina has done to vulnerable people in modern times?

Unemployment insuranceThere are clearly a lot of strong contenders in the dark contest mentioned in the headline above. The state’s ongoing decision to deny healthcare to hundreds of thousands of struggling people is a tough one to beat. So are the decisions to underfund and privatize our public schools, demolish our state environmental protection agency, enact laws to institutionalize discrimination against LGBT North Carolinians, spur the spread of deadly weapons, disenfranchise tens of thousands of people, further erode the reproductive freedom of women, target and demonize immigrants and a dozen others.

As a press conference that took place across the street from the General Assembly made clear yesterday, however, there has been no attack on people in need that has been more direct and devastating in its impact in recent years than the 2013 decision by Gov. McCrory and state lawmakers to raze the state’s largest and most important middle class safety net program — its unemployment insurance system.

Senator Bob Rucho

Senator Bob Rucho

The numbers highlighted at yesterday’s event were truly stunning. Since the massive cuts were approved early in 2013 (cuts that a national expert has described as the most devastating unemployment cuts enacted by any U.S. state in the 80 year history of unemployment insurance) the programs has all but ceased to exist.

Consider the following:

  • Only 1 out of 10 unemployed workers in the state is now collecting unemployment insurance. Prior to 2013, the number was 1 out of 3.
  • The average benefit for those lucky enough to be amongst the 10% has plummeted to $235. This represents just 27% of the state’s average weekly wage.
  • The maximum benefit period has been slashed from 26 to 13 weeks. It may be cut further in the coming months. Despite this, nearly a third of all unemployed workers in the state have been unemployed for more than 26 weeks.
  • In 2005 — the last year North Carolina had comparable unemployment rates to the present —  the state paid out $867 million to unemployed workers to help keep their heads above water. Last year, the state paid out about 25% of that amount.
  • North Carolina is now last in the nation in the time it takes for unemployment benefits to start flowing.

When asked by reporters about these data yesterday, one of the chief legislative architects of the cuts, Senator Bob Rucho of Charlotte, rejected out of hand the idea of revisiting the 2013 changes. Perhaps this is because Rucho, the chair of the Joint Legislative Oversight Committee on Unemployment Insurance, has never once allowed his committee to even hear from an unemployed worker in any of the committee’s 16 meetings it has held since October of 2013.

The bottom line: North Carolina has paid off the debt to the federal government it ran up during the great recession and amassed a surplus in its unemployment insurance trust fund. Having done this, it has cut already low taxes on employers, but not made any changes at all to its bottom-of-the-barrel benefits. At some point, the state would probably be better off it is just got down to brass tacks and had an honest discussion about whether it even wants to have an unemployment insurance system at all. As things stand now, it is mostly just pretending.

Commentary

Powerful new data from UNC prof: No “Carolina Comeback” for unemployed state workers (Updated)

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

Veteran reporter blasts Guv, lawmakers over unemployment insurance cuts

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

Poverty rate still high, with safety-net offsetting some of the economic pain

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

Economist takes local conservative to school again on unemployment insurance

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