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More cuts coming to NC unemployment benefits

Jobs unemployment

RALEIGH, N.C. — It’s official. The number of state unemployment benefit weeks will be reduced significantly for people who begin their claims after July 6.

A calculation formula used in the state law covering UI benefits drops the number of weeks available on July 6 from a maximum of 19 weeks to 14 weeks and a minimum of 12 weeks to seven weeks.

House Bill 1069 introduced Thursday into the state House, co-sponsored by Rep. Julia Howard, R-Davie, would eliminate the minimum week criteria.

The bill also sets a standard weekly benefit that operates on a sliding scale, but the benefits would not drop below 12 weeks even if the state jobless rate fell below 5.5 percent.

Because Bill 1069 would become law July 1 if passed, it could replace the existing sliding-scale provision before the next changes takes effect.

Howard could not be reached for comment Friday on her sponsorship of Bill 1069, which contains six sections of proposed changes to the state’s UI law.

She championed the sliding scale for weekly benefits contained in House Bill 4 that became law July 1, 2013. That bill also cut the maximum weekly benefit amount from $535 to $350.

Rep. Harry Warren, R-Rowan and a co-sponsor of Bill 1069, said Friday the main factor in the proposed change is that the calculation formula used in Bill 4 “proved not to be compatible with the goals of the sliding scale.”

Proposed bill is short-term fix

Bill 1069 provides what Warren calls a “short-term fix” to the sliding scale formula he believes will require the 2015 long session to fully resolve. “We don’t have enough staff time to devote to this issue given the priorities of coal ash, teacher pay, Common Core,” Warren said.

The sliding scale doesn’t take into account factors contributing to the rate decline, such as discouraged workers exiting the labor force. Because those individuals aren’t counted as unemployed by federal and state labor officials, it lowers the rate.

When Gov. Pat McCrory signed Bill 4 into law, he provided the first measuring stick for whether his conservative approach to running the state economy would create jobs. McCrory said the benefit reductions would “protect our small businesses from continued over-taxation and help provide an economic climate that allows job creators to start hiring again.”

Bill 4 supporters said they were trying to bring the N.C. jobless benefits, which some considered too generous, in line with the maximum provided in eight Southeastern states.

Before Bill 4 was passed, the maximum benefit amount was 26 weeks — the same level that 44 states still maintain. The lowest current maximum benefit limit is 18 weeks in Georgia, while Florida also is at 19.

The sliding scale aspect of the law works like this. The law allows for the number of benefit weeks to be adjusted every Jan. 1 and July 1, based on the average jobless rate of the first three months of the previous six-month period: July, August and September for the first six months of the year and January, February and March for the second half.

Every half-percentage point drop in the rate lowers the maximum and minimum week levels by one week.

With the average rate in January, February and March being 6.47 percent, the sliding scale takes the maximum and minimum benefit weeks down by five weeks beginning the week of July 6.

McCrory and Republican legislative leaders say the tough-love UI benefits approach has made individuals more willing to take available jobs, even at lower wages and potentially below their skill level, because their benefits run out.

Howard said in February 2013 that Bill 4 represented “the best fix I can come up with for an ugly scenario we have to resolve.” She said the benefit reduction will spur some claimants to take whatever job they can find now, and “hopefully find a better job as the economy improves.”

“This (unemployment insurance) is becoming a welfare-dependent program in a lot of cases,” Howard said at that time.

John Quinterno, a principal with research firm South by North Strategies Ltd., said the reasons the jobless rate is declining and the reforms initiated by the legislature “have effectively decoupled the unemployment insurance system from actual conditions in the labor market.”

Debt reduction a factor, too

Dale Folwell, assistant secretary for the N.C. Division of Employment Security, has stressed that the sizable reduction in the state’s debt to the U.S. Labor Department shouldn’t be overlooked in discussing factors behind the recent drop in the unemployment rate.

States with high jobless rates, such as North Carolina, have borrowed money from the federal agency over the past 12 years to pay for state unemployment insurance benefits as their own UI trust funds were depleted.

The state’s borrowing reached a peak of $2.8 billion in April 2012.

Since then, the state has paid down more than $1.7 billion to a debt level of $1.1 billion as of Wednesday.

But North Carolina still has the fourth-largest debt of the 18 states with outstanding debt.

The debt to the federal government was created in part because N.C. employers received a series of UI tax cuts in the 1990s when the state jobless rate was well below 5 percent, which economists consider full employment.

Legislators in 2011 not only rescinded the tax rate cut, but began raising it by $21 per employee per year. The per-employee rate currently stands at $104, and will go up to $125 in 2015.

The goal of Folwell and the legislature is to repay the federal loan debt by November 2015 to keep the tax rate from increasing another $21 in 2016.

If that goal is achieved, then the rate drops back to $42.

19 comments

  • theydon'tcare

    So, McCrory thinks it’s a good thing that people are more willing to take low-paying jobs, below their skill set, because their unemployment runs out? So if he got laid off, he’d take a job flipping a stop-sign at a construction site? This is so stupid. People have to take jobs where they earn $5 less an hour, and then can’t pay their bills. Ignorant.

  • JWS

    This will make the numbers look real good for McCrory and Thom Tillis will use these numbers to brag on how much they have cut unemployment in this state when he debates Kay Hagan this fall. They fail to mention how it hurts those who deserve unemployment insurance and how many real jobs they have brought to the state. By the way it is called unemployment insurance for a reason, it’s not welfare like they want you to believe.

    • SickandTired

      Exactly! The jobs that are here, are low-paying, short-hours, no-benefits, temp jobs. My husband got laid off in March, and it seems like the only jobs are through temp agencies… you should see the papers they expected him to sign, to get an $11 an hour job! They papers said, that he would have no rights to any benefits from the employer, and that he agreed to sign away those rights irrevocably. Also, it said he would agree to take minimum wage if for some reason the company didn’t pay the temp agency. Stuff like that…. that’s the kind of jobs McCrory is proud of?! It’s a disgrace what they are doing to hard-working people, who lose their jobs through no fault of their own!

  • Cookthebooks

    Many people who voted for these guys have to realize now they were voting against their own self-interests.

  • Margaret Rogers

    I hope Julia Howard is proud of herself for not protecting the citizens of North Carolina! And once again, she is not available for comment!!!

    • whatdidIread

      I tried to go to her website to send her an email. Handy for her, for some reason the email does not go through when you try to send it.

  • battsman

    Difficult but good decisions. The goal is to get people working and get the state out of debt. The plan is working. It is unfortunate some will have to take lower paying jobs but the government can’t float everyone until they find the job that was like their old one partly because most of those jobs are gone. I have had the same dilemma and I am making less than before I was laid off, but I’m working not sitting on the public dole.

  • just wondering if NC is the place to be?

    Ok, you have to provide jobs… for everyone! What about someone like myself who has over 15 years experience. No one is ringing my phone off the hook.Yes, I send resumes and make calls… I can’t even get an interview. So how is this good again?

    • Jim

      No one has to provide you with a job. NO ONE is entitled to a job. Broaden your horizons. Just because you have experience in a field does not mean you are required to stay in that field. People like you who are unable to change with the tide is the problem with this country. Stop looking at it the way the average Joe looks at it – You are making yourself just a number.

      • just wondering if NC is the place to be?

        That is just it you are a number. You have to have a number when your born before you leave the hospital or an application for one. This is a right to work state. (or did you miss that part?) That benefits the employer and they can do what they want. They can let you go without a reason. Change in legislature would be a start to where they have to tell you why your let go at the end of the day. What about the people who have worked at a job for 20 years and then they walk in and say your fired two weeks or days before they are to retire? Really? Happens more often than not these days.

      • whatdidIread

        I think it’s a bit of a stretch to say that people like him are “what is the problem with this country”. How about people who send work overseas, to find the cheapest labor possible? How about the fact that wages for furniture workers used to be $14 an hour in 1999, but they’re $10 an hour now? Did the cost of living go down? I don’t think so. How about if you blame the people who are running things, who give big tax breaks to corporations, and tax working people into the ground? How about the people who own 13 houses, who condemn someone for getting $80 a month worth of food stamps, or $10 a month worth of minutes on an “Obamaphone”, (which is an offshoot of a reagan-era program). People like this poster have job skills that they acquired through years of hard work. Now companies want to hire a 19 year old to do the job, and pay them minimum wage.

  • B

    Full time work is out of the question. It’s all part time or seasonal. We have to depend on our parents income and housing more and more just to get by on a low pay. Community colleges should teach courses that are related to a job field and get away from teaching algebra. This holds a lot of students back from receiving a degree because they can’t pass Spanish.

  • same ole story

    This is what ALOT of you people voted for..its STILL Obama’s fault huh? Well he didn’t vote to stop your living, Your governor did..along with putting coal ash in your backyard…Go ahead, keep voting Dems AND Reps..loss loss situation UNTIL WE THE PEOPLE make the change..think about it.

  • rebecca

    What idiots!!! I will take my 3 college degrees & 20 years of experience to another state, I bet I can find a job there. No one is going to hire mid level managers for a low level position. Hopefully at the next election we can ensue our fine governor & his buddy Sharon Decker from duke energy the opportunity to apply for a $7.75 an hour job cleaning up coal ash.

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