In recent months, Governor McCrory and his supporters have pointed to a number of controversial steps lawmakers took in 2013, like cutting unemployment insurance, as being the catalyst for a “Carolina Comeback.” A look at the evidence, however, reveals no such benefits and, indeed, points to very real harm being done to jobless workers and their families as a result of unemployment insurance changes.
A more accurate description of the current situation is that North Carolina is simply riding on the coattails of the painfully slow national economic recovery, while failing to create enough good-paying jobs to improve the lives of working families and those looking for work. Moreover, unemployment insurance changes are actually making it more difficult for many jobless workers to meet basic needs as they seek work in an economy that has too few jobs to go around.
Yes, the state’s official unemployment rate has dropped. However, it is actually the decline in North Carolina’s labor force that is primarily driving the drop. Only one in 10 North Carolinians who left the ranks of the unemployed found a job over the past year; the rest simply gave up looking for work and left the labor force. There simply aren’t enough jobs for jobseekers. North Carolina’s employment level relative to the state’s population is well-below the national average, and job creation in 2013 was below that of 2012.
Changes to North Carolina’s unemployment insurance were implemented last summer, and with the passage of time, we now know what they have meant to jobless workers. We know, for instance, that the combined effect of the 2013 policy changes (to the way payments are calculated, the weeks available, and the maximum benefit amounts) has produced a dramatic fall in the average weekly benefit. Last June, the average unemployed worker received a modest benefit of $301 per week. By December of 2013, that average had plummeted to $248.
Even at the $301 level, North Carolina’s average benefit ranked 25th in the country and was clearly insufficient for a family of three to meet their most basic needs. Today, however, such families are bringing in $224 less each month (enough, according to the U.S. Department of Agriculture, to meet a bare bones, thrifty food budget) — a reality that makes it even more difficult for them to survive.
We also know that workers are waiting longer for their first-time benefits and thereby, in turn, going without any income despite the fact that they are qualified for unemployment insurance. In a recent news article in Raleigh’s News & Observer, state unemployment insurance chief Dale Folwell stated that the backlog is to blame, in part, on the increased attention his office is devoting to preventing to overpayments. It seems certain, however, that the longer waits are also the result of cuts to administrative dollars and staffing at local unemployment offices. Right now, roughly one-third of unemployed workers living without a paycheck are also doing without unemployment insurance payments for at least two weeks. Stories abound of folks waiting much longer to receive notification of their claims being approved.
The unemployment insurance system was designed to work, and works best, when jobless workers receive a temporary and partial replacement of their prior wages so that they can continue to meet basic needs, spend money in their local communities and search for work. The reduction in benefit amounts combined with the delay in processing claims not only creates hardship for families but negatively impact the economy.
Without unemployment insurance dollars circulating in the economy and without the state’s labor force growing as the population grows, North Carolina is losing economic activity at a critical time.
Clearly, there is nothing to celebrate in the harm that the unemployment insurance changes have caused for jobless workers and their families. The reality for too many North Carolinians is that what little job creation is happening isn’t enough to meet their desire to work and to give the state’s economy the boost it so desperately needs.
Sadly, cuts to unemployment insurance are just magnifying the misery.
Alexandra Sirota is the Director of the North Carolina Budget and Tax Center.