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

The best op-ed of the weekend: NC’s disastrous lab experiment gone awry

unemploymentIn case you missed it, there was a great op-ed in Raleigh’s News & Observer over the weekend by Kevin Rogers of the group Action NC. In it Rogers explores the disastrous folly of North Carolina’s three-year-old experiment with a decimated unemployment insurance system.

After documenting some of the destruction the changes have inflicted on the state’s workers and its workforce, Rogers put it this way:

“This is all to say that the drastic and draconian unemployment insurance cuts North Carolina made in 2013 were a complete failure. The share of people with jobs in North Carolina did not grow nearly as quickly as it did in states that did not make these cuts, and there was no discernible increase in the share of the population with a job. Instead, tens of thousands of job seekers were forced into part-time jobs, forced into underemployment or fell out of the job market completely. In all cases, these people would not show up in the official unemployment numbers but are certainly still unemployed by any sensible measure.

Moreover, the most vulnerable of our population fared even worse than the average. While the official unemployment rate for whites in the state was 4.1 percent in the second quarter of 2015, the unemployment rate for blacks and Hispanics was 9.3 percent and 10.1 percent, respectively. That means the cuts to unemployment benefits hit minority households more than twice as hard as white households.

But the story doesn’t end there. Women, who already face across-the-board wage disparity, also face an unemployment disparity. While it is true that women have regained a large number of the jobs they lost during the Great Recession, their gains are highly concentrated in low-wage occupations. Sixty percent of the increase in employment for women between 2009 and 2012 was in the 10 largest occupations that typically pay less than $10.10 per hour. In contrast, these 10 low-wage occupations accounted for only 20 percent of men’s employment growth over the same period.

If the states are truly laboratories of democracy, then North Carolina is surely the domain of mad scientists. When the goal of a policy is to get more people employed quickly, and the result is more people without jobs, it matters little with what catchy term the results are branded. For those still unemployed and without assistance, it’s easy to see where the experiment has failed.

The mad scientists in the General Assembly still have time to fix their creation before it becomes full-fledged Frankenpolicy. They should.”

You can read Rogers’ entire essay by clicking here.

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

Treading water: McCrory job announcements running up against a tide of plant closures

jobs adAnyone who follows state government has grown used to the regular press statements from politicians celebrating new private industry job creation announcements. For Governor McCrory, it’s almost a ritual. Scarcely a week goes by these days in which the Guv isn’t announcing (and taking credit) for the creation of jobs in one community or another.

A few (like this December announcement of the expansion of a home appliances outfit in New Bern that could create 460 jobs over five years) are relatively impressive, while many others (like this November announcement of the creation of 27 jobs over three years) are, well, not so exciting. At times, one is led to wonder whether the Guv will take to issuing a press statement every time a new Starbucks opens somewhere.

That said, one can hardly blame McCrory for trying. The man clearly sees himself as the state’s head cheerleader and that is no doubt an important part of his role.

It’s important, however, for North Carolinians not to get too swept up in (or impressed by) the apparent drumbeat of successes emanating from the administration. As recent news headlines remind us, there is a powerful current of job losses flowing in the opposite direction.

Consider the following: During the final quarter of 2015, the Governor issued nine press statements celebrating new job announcements that would create quite a few jobs over three and five-year periods. All told, it was one of the better three month periods in recent memory. Even so, when one pro rates the job claims over the specified time periods, the numbers are fairly modest, with roughly a total of 650 jobs to be created in 2016. And, of course, all of those numbers are just projections.

Now contrast that number with just two hard and fast recent announcements on the other side of the job ledger: the announced MillerCoors plant closing in Eden and the planned Freightliner layoff in Rowan County. Between those two events, that’s a loss of 1,456 jobs right way. What’s more, thanks to the disastrous unemployment insurance cuts imposed by Gov. McCrory and the General Assembly in recent years, the help for the newly jobless and their communities will be minimal-to-non-existent.

The take away: Neither the recent plant closures nor McCrory’s sunny announcements present a complete picture of the economy of course. Moreover, it’s certainly okay for the Guv to play cheerleader and hold lots of ribbon cutting events. Ultimately, however, as was explained in yesterday’s Weekly Briefing, no amount of positive spin or cheer leading can make up for a lousy overall situation.

In 2016, North Carolina desperately needs a comprehensive approach to growing an economy that works for everyone and leadership from elected officials on a host of fronts to make it happen. As the numbers above indicate, merely slashing taxes to help the well-off and repeatedly declaring victory is nowhere near enough.

Commentary

Some uncomfortable questions about Eden’s looming brewery closure

State Senate Leader Phil Berger has some questions about the news that MillerCoors is going to close its long-time facility in Eden, Rockingham County, laying off 520 people in the process. Last night, he and fellow Rockingham legislator Bert Jones sent a letter to the U.S. Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights with a list of questions they urged the panel to pursue in an effort to determine whether the Eden brewery closure falls afoul of federal anti-monopoly regulations.

The Senator’s efforts are admirable given the enormously negative impact the plant’s closure would have on the rural community, which already has one of the state’s highest unemployment rates. And we sincerely hope that the brewery remains open, staving off the kind of mass layoffs that proved so disastrous to the human and economic fabric in rural communities like Kannapolis.

But after years of watching the legislature systematically dismantle the very state investments that protect jobless workers and promote community resiliency in times of high unemployment, workers in Rockingham and across North Carolina have some questions for Senator Berger as well:

  1. Why should Rockingham workers lose their unemployment benefits if they can’t find a job after 12 weeks ? If the brewery closes, 520 workers will lose their jobs through no fault of their own. Given that there are already twice as many unemployed workers as available job openings in Rockingham County (according to NCWorks), it will be mathematically very difficult for most these laid off workers to find new jobs. Thanks to the policies enacted by the General Assembly in 2013, Rockingham County workers will only have 12 weeks to find a job before they lose their unemployment benefits—the lowest duration offered for temporary wage replacement in the nation.
  1. Why should these laid off workers in Rockingham County lose food assistance after just three months if they can’t find employment in a job market without enough jobs? Since welfare reform in 1990s, the federal government has required able-bodied adults with no dependents to find a job, be engaged in skills training, or participate in other qualifying activities after three months of receiving food assistance or lose this assistance altogether. At the same time, federal law allows states to request waivers from this time limit in economically distressed counties where jobs are not available. Unfortunately, the General Assembly banned the state from offering this waiver in 2015, despite the 77 counties that qualified due to weak labor markets. In effect this move will significantly reduce access to food assistance for workers living in those counties, including Rockingham, after July 1 when the prohibition goes into effect.

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