Hat-tip to Rick Glazier and MaryBe McMillan:
In 2013, the North Carolina General Assembly and then-Gov. Pat McCrory approved House Bill 4 with the stated objective of bringing solvency to the state’s Unemployment Insurance Trust Fund, which is funded by taxes on employers and pays unemployment benefits to laid-off workers.
Ultimately, the bill achieved solvency for the trust fund, but only by permanently cutting the amount, duration, and eligibility for benefits for all unemployed workers. All told, the changes enacted in North Carolina amounted to the most severe cuts ever enacted by any state during the 80-plus-year history of American unemployment insurance. At the time, legislators claimed that when the trust fund was solvent, these draconian cuts would be revisited. That time has clearly arrived.
How many North Carolinians have lost their homes since this draconian policy was enacted? How many families have been ripped apart? How many suicides? Republicans in the General Assembly won't be asking those questions, but somebody needs to. We rate our education system by how well it stacks up against other states, and elected officials (from both parties) love to brag about our business climate rankings. But what about workers? Unemployment is not driven by worker behavior; it is driven by business trends, mergers and acquisitions, decisions made in corporate boardrooms often in other states or countries. Those workers produced the profits (and state revenues) diligently, and they deserve better compensation than $264 a week for 8 weeks:
The debt that the state owed to the federal government has been paid off, a temporary tax on employers has been lifted, the Trust Fund balance is now at $3.9 billion, and the system is near the bottom of the national pack in terms of its capacity to assist workers. Even prior to the enactment of HB 4, the conservative Tax Foundation ranked North Carolina’s unemployment insurance program fifth most favorable for businesses in the U.S.
The cuts made in 2013 have resulted in three enormous problems and deficiencies for the state’s program.
First, only 8.6 percent of jobless workers in North Carolina received unemployment insurance in the third quarter of 2019, ranking the state 51st in the country (including the District of Columbia and Puerto Rico).
Second, the average duration of unemployment insurance in North Carolina is just 8.6 weeks, ranking last in the country. This short duration is, in part, a function of the state’s arbitrary sliding scale that ties the number of weeks of benefits to the state unemployment rate.
Finally, North Carolina provides just $264.70 each week on average to jobless workers and a fixed maximum of $350, despite the average weekly wage in the state being $986. The state is replacing just 32 cents for every $1 in lost income, circulating far fewer dollars than recommended by economists who typically seek a replacement rate of at least 50 percent.
Intolerable. And yet, we've been tolerating it for years. It's a rare candidate who even brings up this problem, and it's usually one who hails from a prosperous area. It has become a fringe issue, when it should be front and center. That needs to change between now and November.