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NC Budget and Tax Center

In remarks at Monday’s economic forecast forum, a number of speakers sought to take credit for enacting policies in 2013 that they believe have contributed to big drops in the unemployment rate since last January, an idea that has been repeated in recent business news reports. Unfortunately, as much as we all want to make progress reducing North Carolina’s persistent joblessness, we’re still waiting for a jobs recovery to actually happen.

The unfortunate reality is that the unemployment rate may have fallen due to mathematical quirk in how it’s calculated, but unemployment itself still remains high due to anemic job creation and a contracting labor force.

Perhaps the most problematic claim involves the mistaken notion that the General Assembly’s deep cuts to unemployment benefits that took effect in June somehow spurred an impressive reduction in unemployment in the following months. According to this view, the “employment effect” associated with cutting unemployment benefits forces workers to find jobs that they otherwise would not have accepted because the wages of those new jobs pay less than what their old jobs paid. And since the unemployment rate has gone down, proponents of these cuts have argued that the employment effect must have worked in just this way.

There is a serious problem with this idea—it assumes that unemployed workers who lost their benefits in June went out and found jobs in August through November, a claim that just doesn’t bear up under serious scrutiny.

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Traditionally, official press releases issued from the offices of high public officials carry some imprimatur of solemnity and seriousness. While one realizes at some level that they’re ultimately just a way of the official in question to communicate with the media and the public, the releases still typically come with (and convey) an air of officialdom — i.e. that they are public documents issued by the public official in his or her official government capacity.

With this as background, check out a couple of recent “press releases” from Gov. Pat McCrory that sound and look more like dashed-off blog posts.

On Tuesday of this week, the Governor of North Carolina issued an official press release that was simply a reprinted Wall Street Journal editorial about the evils of extended unemployment benefits. It even included the social media abbreviation “ICYMI” in the headline – as in “ICYMI: Wall Street Journal: How to Keep Workers Unemployed.”

Then, just yesterday, the Governor issued another “official” press release. It said the following: Read More

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As we wrote yesterday, the implementation of HB4 – the radical restructuring of North Carolina’s unemployment insurance system – is just around the corner. Next Monday, on July 1st, North Carolina will set itself apart. Our state will have the dubious distinction of being the ONLY state in the nation to:

  • Reject participation in the 100% federally-funded emergency unemployment compensation (EUC) program. Due to the implementation date of July 1, North Carolina breaks a non-reduction rule prohibiting states from making benefit cuts while participating in the federal EUC program. As a result of the decision to implement changes in July 3013 instead of January 2014, 70,000 jobless workers in North Carolina will abruptly lose benefits next week. No other state has rejected federal participation in order to pursue benefit cuts.
  • Have a sliding scale for the minimum number of weeks available. Read More
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The 8th Moral Monday protest brought an estimated 2,000 demonstrators to N.C. General Assembly. Many in this week’s crowd questioned the wisdom of state lawmakers to reject extended federal unemployment benefits, allowing 70,000 North Carolinians to fall off an unemployment cliff July 1st.

Click below to hear from some of the protesters in their own words:

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As Sarah Ovaska details in the post below, in less than a week and a half, more than 70,000 North Carolinians will see their extended federal unemployment benefits dry-up as major changes take effect with the state’s employment security law.

Lawmakers, who fast-tracked this legislation earlier in the session, believe it will improve the state’s business outlook to repay the federal government more quickly the $2.5 billion borrowed at the height of the Great Recession.

But Bill Rowe with the NC Justice Center points out that the federal emergency extension of benefits is already drawing to an end for states at the end of the year. By prematurely making these changes to the state system now, North Carolina is rejecting $600 million to $700 million dollars in federal money over the next six-months that would be pumped directly into local communities:

“When unemployed folks get those dollars, they are going to pay their landlords, they are going to pay their banks, they are going to pay their utility companies, they are going to buy the necessities for their families. And in some communities that are really hard hit by unemployment,those dollars are going to make a big difference for those small businesses,” explains Rowe. “It’s a two hit here, we’re going to hurt some families, but we’re also going to hurt some families that run some businesses.”

Rowe believes legislative leaders with the political will could add a provision to the state budget changing the effective date of the new law from July 1 to January 1, 2014 and allow the emergency benefits to remain in effect through December.

So far, neither budget negotiators nor Gov. Pat McCrory have expressed an interest in doing that.

For a preview of Rowe’s weekend radio interview with Chris Fitzsimon, click below. Also be sure to read Friday’s Fitzsimon File, which has more on the unemployment cliff.

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