As the latest issue of Prosperity Watch explains, the fundamental challenge facing the state’s labor market is the absence of enough available job openings to make a meaningful dent in the state’s jobs deficit and to bring down the state’s persistently high unemployment rate. This reality has tremendous implications for the state’s unemployed workers if the benefits cuts contained in the recently-passed unemployment insurance reform bill are enacted. See the latest issue of Prosperity Watch for details.
Senate President Pro Tem Phil Berger sent an email response to a constituent yesterday on the subejct of the proposed legislation to slash unemployment insurance benefits. Sadly, the email is riddled with misinformation to the degree that one wonders whether the senator truly understands what he is doing to the unemployment insurance system. Here is a point-by-point refutation crafted by Alexandra Sirota of the NC Budget and Tax Center:
Berger: “North Carolina owes the federal government more than $2 billion, because of previous leaders mismanagement for several years.”
The truth: Job loss and tax cuts drove trust fund debt not mismanagement. The cause of North Carolina’s unemployment trust fund crisis was a series of tax cuts enacted in the 1990s and the historic job loss from the two recessions of the 2000s. The trust fund was already well-below agreed upon safe levels before the 2001 recession. Improper payments represent just 2.4% of the UI Trust Fund balance. Read More…
The North Carolina Bar Association’s Labor & Employment Law Council — a group whose members represent both employees and employers delivered a letter to Senate President Pro Tem Phil Berger this morning asking him to slow down the legislation that would slash the state’s unemployment insurance system. According to the letter:
“We understand that these changes will result in a loss of approximately $225,000,000 in unemployment benefits from July 1, 2013 through December 1, 2013 and an additional loss of $350,000,000 in federal funds that would otherwise flow into the State for extended benefits during the same period.
We are concerned that the loss of these funds will not only seriously impact the families of workers who remain unemployed through no fault of their own, but also the local businesses that would inevitably suffer as citizens fail to pay their mortgage/rent, utilities, and transportation costs, and are unable to purchase food and other necessaries for themselves and their families.
We believe that there has not been adequate time for public comment or study of the full (and possibly unintended) consequences of these changes.”
The Obama Administration’s federal labor department says the plan to overhaul North Carolina’s unemployment insurance system would kick 170,000 jobless off of benefits this summer, and have the state’s economy miss out on $780 million in federal funds.
Previous estimates put the number of those immediately affected at 80,000.
Acting U.S. Labor Secretary Seth Harris released a statement late Monday saying that the federal agency doesn’t have the power to stop the Rebublican-led N.C. General Assembly from moving forward with the plan, but cautioned that families stand to be hurt by it.
The N.C. Senate is ready to move this week on House Bill 4, which proposes to pay off debt the state took on during the height of the Recession by reducing the amount of unemployment benefits workers receive and raising the amount employers pay. Critics of the plan, including the N.C. Justice Center, say the reform unfairly puts the burden on the backs of workers, while businesses that enjoyed years of tax cuts that led to the crisis in the system will walk away bearing a fraction of the cost of righting the system.
Here’s the full text of Harris’ statement:
The North Carolina legislature is considering legislation that would reduce state Unemployment Insurance benefits. If enacted, the legislation also would cut off all federally funded Emergency Unemployment Compensation — that is, benefits after 26 weeks of unemployment — to 170,000 unemployed North Carolinians. This cutoff is automatic under federal law. I have no discretion to stop it. As a result, families struggling to secure their place in the middle class will suffer a grievous blow, and the state’s economy will lose $780 million in federal funds that are vital to reducing North Carolina’s high unemployment rate.
We know that for every dollar spent on Unemployment Insurance benefits, nearly two dollars are generated in the local economy. Unemployed workers and their families spend these benefits in local grocery stores and small businesses, and use them to stay current on mortgage or rent payments and utilities. For these reasons, UI programs are vital to economic growth in difficult times, particularly in states like North Carolina with high unemployment rates.
Just in case the question occurred to you in recent days as you pondered the plan of conservative legislators to slash the state’s maximum weekly unemployment benefit to $350 (and the average benefit to around $250), these amounts aount to about one-third and one-quarter, respectively, of what the lowest paid state legislator takes home.
Right now, a freshman member of the General Assembly with no special status gets paid around $996 per week when the legislature is in session ($268 in salary and $728 ($104/day) in per diem). Along with the salary, lawmakers also receive an additional year-round allotment of $129 per week in “expenses” and free health insurance.
For Speaker of the House Thom Tillis and Senate President Pro Tem Phil Berger, the totals are significantly higher: each receives $1,461 per week in salary and per diem plus another $326 in expenses and health insurance.
None of this is to say that the lawmakers are overpaid. There’s a strong argument that we ought to pay legislators significantly more so that more average folks without additional income would seek office. Again, the per diem allotment only runs while the legislature is in session.
Still, there’s something rather striking about men and women who are currently bringing home much larger amounts in public funds and benefits for what is supposedly part-time work (many of them hold down other jobs while serving), begrudging average unemployed people the already rather pitiful sums that they get. Remember, in addition to slashing the maximum weekly benefit to $350, the bill in question would cut the average benefit from the $29o range to the $250-$260 range. Perhaps even more importantly, the bill also dramatically cuts the length of time an unemployed person can remain eligible and makes it harder to obtain benefits in the first place.
The bottom line: I guess we know why none of the legislators behind the bill (or Governor McCrory) is willing to take the $350 challenge.