Unkindest cut

Workers must not bear the brunt of repaying a debt to the federal government.

November 25, 2012 

If ever there was a group that deserved the compassionate label of “innocent bystanders,” it is the unemployed in North Carolina – victims of a downturn in manufacturing followed by the Great Recession, during which the state’s unemployment rate rose sharply.

But now there are rumblings among lawmakers in the General Assembly, stirred by the N.C. Chamber, a powerful business lobbying group, that unemployment compensation for workers should be cut.

The maximum weekly benefit in a proposal from the chamber would drop from $506 to $350, and the maximum length of benefits paid by the state would go from 26 weeks to 20. These actions would help the state pay a debt to the federal government of $2.4 billion, money borrowed to pay unemployment claims.

This would hit many families hard when they already were making do on much less than their pay when employed. And this despite the fact that these have been hard-working people who were brought down by the wild-and-woolly ways of Wall Street and other forces beyond their control.

There was another factor: In the 1990s, good times, the state cut unemployment taxes paid by employers several times. Hence the state’s shortage of funds to pay benefits when times went bad.

It wasn’t smart, in painful hindsight, to make such cuts, at least not without automatic increases in the tax, tied to economic indicators, that would have kicked in if the economy dipped.

The business lobby contends that raising state unemployment taxes, when the federal government has raised its own taxes on employers to help pay the debt, would be a job-killing action. In fact, however, the state’s average weekly benefit of $294 is in the middle of all the states.

Working families have suffered through this recession, not that businesses large and small have not. But there are strong signs that the national economy is coming back to life. Helping people get back on their feet is part of what a “recovery” is all about.

Some reduction in benefits, along with a boost in state taxes, might be appropriate, even though payments are hardly extravagant now.

But cutting those payments substantially – payments that are a lifeline for many people trying desperately to find work, sometimes even taking on retraining to help themselves – would be a self-defeating action.

North Carolina has consistently ranked in the top three or four states, and often as the top state, for being “business friendly.” A boost in unemployment taxes to repay this debt won’t change that. How about a little “worker friendly” for a change?

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