Business favors comprehensive unemployment insurance reform
The N.C. Chamber is disappointed at the one-sided, unfair viewpoint taken in your Nov. 25 editorial “Unkindest cut.” The Unemployment Insurance (UI) system was established as a safeguard for individuals against distress for a short period of time after becoming unemployed. Today, North Carolina’s UI system is facing a $2.4 billion debt crisis and is failing those who have lost their job at no fault of their own.
It is true that when the Trust Fund was solvent in good economic times, UI taxes we reduced. However, you omitted the fact that benefits have also been consistently expanded. The combination of these factors resulted in an unsustainable system that was not prepared for the severity of the recession. Neither the tax rates nor the benefit structure single-handedly led to the debt crisis and, similarly, fixing just one of these factors is not a viable solution to creating a solvent and effective UI system for the future.
The editorial also misses the bigger picture that the responsibility to repay this debt falls squarely on North Carolina employers. Employees do not pay UI taxes. On Nov. 10, North Carolina missed another deadline to repay the federal UI loan, which leads to additional tax increases on businesses. This translates into a tax increase on every job from $63 to $84 per employee, and will continue to rise annually until the debt is paid. Making North Carolina jobs cost more, especially when our unemployment rate is higher than the national average, is certainly not an ideal solution.
While tax adjustments are an appropriate part of a comprehensive solution, it would be irresponsible not to address the problem as a whole, which includes ensuring that employer taxes are managed efficiently and inserting accountability measures. A lack of fiduciary responsibility and effective leadership in the past helped add to the debt significantly.
The business community recognizes that the state's UI system faces challenges in addition to the $2.4 billion debt and is calling for balanced solutions that address solvency, affordability, integrity and re-employment. The most integral piece of the solution is to shift the focus of the system from unemployment to re-employment. The system should improve alignment of workforce training programs through a streamlined and increased use of technology among agencies. A robust worker retraining and placement program is essential to establishing and maintaining a stable UI trust fund.
Ultimately, the N.C. Chamber is advocating for balanced recommendations that address all parts of the UI system. Anything less than comprehensive reforms will only produce marginal results. Looking at one aspect of the crisis in isolation, as done in “Unkindest cuts,” is shortsighted and unsustainable, especially in this economy. The N.C. Chamber is fully committed to working toward a plan that solves our state’s UI crisis and protects the jobs we have, as well as our ability to create and attract more jobs in order to get North Carolinians back to work.
President and CEO
The length limit was waived to permit a fuller response to the editorial.