NC Budget and Tax Center

FiveThirtyEight: Cutting off federal unemployment insurance benefits hasn’t pushed people back to work

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.

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Editorial: NC should reverse course, help the unemployed

The lead editorial in this morning’s edition of Raleigh’s News & Observer tells it like it is with respect to the issue of unemployment insurance and North Carolina’s harshest-in-the-nation decision to cut off benefits to folks in need:

“It was one of the more shameful moments in the not-exactly-illustrious rule of Republicans in the General Assembly and the governor’s mansion. Last summer, GOP lawmakers cut state unemployment benefits knowing it would mean that jobless North Carolinians, many of them innocent victims of the Great Recession, would lose emergency federal benefits.

North Carolina was the only state to reduce unemployment benefits even though federal law required states to maintain benefit amounts to qualify for the extended federal payments. Gov. Pat McCrory and Republican lawmakers justified leaving thousands and thousands of families in the cold by saying that extended unemployment benefits discouraged people from going back to work. Read more

NC Budget and Tax Center

Different town, same inaccurate claims about the unemployment rate

Governor McCrory is at it again—incorrectly claiming that his decision to dramatically cut unemployment benefits is responsible for turning around the state’s job market. During a visit to Morganton over the weekend, the Governor stated:

 “There’s nothing worse than if you have a job opening and someone decides to take a government check instead. So we had to bring the two together,” he said. “We made a decision [to cut unemployment benefits]. And that decision alone is the one lone factor, in comparison to any other state, which I think has helped North Carolina lower its unemployment rate drastically in the last five months.”

While the Governor is correct that the state’s unemployment rate has dropped over the last year (from a revised 8.8 percent in January 2013 to 6.7 percent a year later), he couldn’t be more wrong about why the rate has dropped—and what it means for the state’s economy. The unemployment rate is falling because the labor force is contracting, not because jobless workers are moving into jobs.

Let’s take these one at a time.

Read more

NC Budget and Tax Center, Uncategorized

Ask the jobless if cutting unemployment insurance has helped their job prospects

Jim Lind is a decorated US Air Force vet and a software development professional who’s done it all over a 39-year career: managing and developing for commercial industries, for the military, for education systems, for space systems, you name it.

He’s also been unemployed since early 2009 when the Great Recession resulted in major layoffs at his and so many other workplaces. When Jim finally found work for a contractor for Amtrak, the sequester cut that short just 10 weeks into the job.WP_20140220_005-edit-600-web

Jim was one of eight unemployed professionals who met with U.S. Rep. David Price and Wake Tech President Stephen Scott last week to explain the human toll exacted by North Carolina’s reckless changes to its unemployment insurance program, detailed by a recent Budget and Tax Center report on the issue. They also spoke about how important the programs at the community college have been for them.

“The reason I am here is to talk about who the unemployed are. Who are we really. Myths are not helpful for becoming re-employed,” he said.

Jim explained that the federal extensions of unemployment at a higher weekly rate than is available now were a life saver for him, providing the most basic assistance to eat and pay some bills.

“I had to count slices of bread, eggs in the fridge, measure things in ounces, plan when to wash my clothes in order to be able to pay the rent where I was living,” he said. Plus, even looking for work in today’s world requires expensive tools like a cell phone, an Internet connection and computer, a car. “I don’t know how cutting people off…is helpful for people finding work.” Read more

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New and damning report: NC’s unemployment insurance cuts have harmed families and the state’s economy

The fiscal policy wonks at the Budget and Tax Center are out with a new and detailed analysis of the impact of last year’s harshest-in-the-nation cuts to unemployment insurance that were imposed by Gov. McCrory and the General Assembly. The findings? They ain’t pretty:

“Cuts to unemployment insurance in North Carolina have made it harder for jobless families to make ends meet and get back on their feet in an economy that is still providing too few jobs to go around. Contrary to what proponents of the cuts claim, a recent decline in unemployment in North Carolina is largely driven by people leaving the workforce because they cannot find jobs, not due to employment growth. And far from helping the state’s economy, the cuts have left thousands of North Carolinians with less money to spend on food, clothing and other necessities, which also harms local businesses.

Specifically:

• The average weekly benefit for unemployed North Carolinians plunged Read more