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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

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

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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Commentary

As this week’s edition of The Weekly Briefing made plain, state leaders remain absurdly out of touch with the economic reality on the ground in North Carolina. The following announcement from colleagues at the N.C. Justice Center highlights this problem once more

Jobless workers struggle even as Division of Employment Security announces $600 million in tax cuts to employers
Employment remains more than 4 percentage points below pre-recession levels, according to October data 

Jobless workers continue to struggle with an economy that fails to provide enough jobs and an unemployment insurance system that is ill-equipped to deliver partial wage replacement to stabilize the economy, even as North Carolina’s Division of Employment Security announced $600 million in tax cuts to employers.

Employment levels as a share of the population remains more than 4 percentage points below pre-recession levels, according to today’s announcement on labor market conditions for October 2015.

Last month’s state employment rate was 5.7 percent, the same level as one year ago. However, the number of unemployed North Carolinians has increased over that period by 11,591 jobless workers. The national unemployment rate was 5.0 percent in October, dropping by 0.7 percentage points over the year.

“North Carolina should not be issuing tax cuts for employers when we have failed to reach what are generally agreed to be safe levels for our state’s Unemployment Insurance Trust Fund,” said Alexandra Forter Sirota, Director of the Budget & Tax Center, a project of the North Carolina Justice Center. “Instead, our state policymakers need to re-balance their approach to ensure the system can deliver partial wage replacement to jobless workers and in so doing serve as a stabilizing force in the economy.”

Important trends in the October data also include:

  • The percent of North Carolinians employed is still near historic lows, and below the nation. October numbers showed 57.5 percent of North Carolinians were employed, leaving the state well below employment levels commonplace before the Great Recession. In the mid-2000s, employment levels reached a peak of about 63 percent. The percent of North Carolinians with a job remains below the national average, as it has been since the Great Recession.
  • There are still more North Carolinians out of work than before the Great Recession. There were more than 270,000 North Carolinians looking for work in October, almost 50,000 more than before the Great Recession.
  • North Carolina’s unemployment insurance system only provided temporary wage replacement to 22,545 North Carolinians. The number of jobless North Carolinians receiving unemployment insurance has dropped precipitously since 2013, ranking us 49th in the country on this measure and hindering the ability of the program to serve as a stabilizing force in the economy.

“North Carolina’s labor market is still too weak to ensure jobs are available for all those who seek employment,” Sirota said. “This affects all of us, as wages are falling short of the growth needed to boost the economy in the immediate and long-term.”

For more context on the economic choices facing North Carolina, check out the Budget & Tax Center’s weekly Prosperity Watch platform.

Commentary

unemploymentThere was a fine op-ed in this morning’s edition of Raleigh’s News & Observer by an unemployed man from Salemburg named Bobby Parker about the sorry state of North Carolina’s bottom-of-the-barrel unemployment insurance system. And make no mistake; it is sorry. As a result of legislation passed in 2013, North Carolina’s once middle-of-the-pack system is now near the bottom in the nation in just about every category.

Consider the following stats from the U.S Department of Labor:

• Only 15% of the unemployed received benefits for the first quarter of 2015. This was 47th in the country.
• NC has an average weekly benefit amount of $231.30/week which ranks us 47th in the country.
• The average duration of benefits is 12.9 weeks, which ranks us 45th in the country.

Here is where things stood before the changes contained in House Bill 4 hit:

• 39% of the unemployed received benefits during the second quarter of 2013. This placed 24th in the country.
• NC had average weekly benefit amount of $301.06 which ranked 25th
• The average duration of benefits was 15.9 weeks, which ranked us 31st.

But wait, as Mr. Parker (and yesterday’s Progressive Voices contributor Steve Ford) explain, things are about to get worse. It turns out that even with the precipitous fall documented above, state lawmakers want to demand more from the unemployed by increasing their work search requirements. Here’s Mr. Parker:

“Now, state leaders want to make sure that you’re not sitting on your duff lapping up that $350 to lavish on, say, utilities to power your Internet job search, gas to get you to an interview or … food?

So they’re ready to require the unemployed to make and record at least five contacts per week with potential employers. Currently, the state requires two such contacts per week.

Simple and reasonable enough? Well, yes, it would be if those contacts were likely to be productive. But even with the current mandate of two, I find myself applying for jobs that I know I’m not going to get because I don’t have the experience or skills that match the available work.”

As Ford explains, the bill to make this all happen now sits on Governor McCrory’s desk awaiting his signature. He has until next Thursday to decide what to do — thus making it almost certain that not only will North Carolina make its scrooge-like system even stingier, it will do so during the week that is designed to honor workers of the nation. All in all, it’s an apt gesture from a group of politicians who almost never miss a chance to remind average workers of how little they are valued.