NC now facing its own cliff for unemployment benefits

Safety net could be pulled out from under 100,000 out-of-work Tar Heels

dranii@newsobserver.comDecember 10, 2012 

More than half of the people in North Carolina who receive unemployment benefits – an estimated 100,000 people – could lose those benefits at the end of this month.

The extended benefits provided by the federal government – which kick in for most unemployed workers after their state-funded 26 weeks of unemployment are exhausted – will stop the week ending Dec. 29 unless Congress acts.

While the extended benefits offered to unemployed workers in recent years haven’t been limitless, the state has never faced the prospect of so many people losing their benefits all at once. The unemployed workers who would see the end of payments receive about $29 million in benefits a week, and represent more than half of the North Carolinians who received benefits for the week ending Nov. 24.

“It is unprecedented,” said Bill Rowe, general counsel and director of advocacy for the N.C. Justice Center. “I’m assuming the hurt and difficulties that occur are going to be unprecedented as well.”

Federal benefits have been on the verge of expiring before – and have even been allowed to expire for a few weeks before being extended – but the current situation differs in two important respects.

In the past the federal benefits were scheduled to phase out gradually. But when Congress last extended the Emergency Unemployment Compensation program in February, the customary phase-out wasn’t included.

“The program just flat-out ends,” said Larry Parker, a spokesman for the state Division of Employment Security.

This time around the EUC extension is also caught up in the so-called fiscal cliff that the gridlocked Congress is wrestling with.

A combination of major spending cuts and tax increases will go into effect unless Congress can come up with a plan that Democrats and Republicans can agree on. President Barack Obama and Senate Democrats have proposed extending federal unemployment benefits in their broader proposals to steer clear of the fiscal cliff.

“All I can do is hope and urge the representatives in Washington that there is a tremendous need out there,” Rowe said. “Not dealing with the situation won’t make the problem go away.”

Others argue that continually extending the federal unemployment benefits could be a disincentive for people looking for a job. .

A looming deadline “really kicks people into gear for finding a job,” said Mitch Kokai, a spokesman for the John Locke Foundation, a conservative Raleigh think tank. “When you have the unemployment benefits continue to be extended, that gives people more time to procrastinate … They basically can say, ‘I have more time to hold out for something I really want.’”

The expiration of federal unemployment benefits would have repercussions in every state – affecting more than 2 million people nationwide. But North Carolina would be hit particularly hard because of its high unemployment rate. The statewide jobless rate in October was 9.3 percent, higher than all but four states.

Molly Stone, 68, of Willow Springs, is despondent about possibly losing the $270-a-week unemployment checks that she has relied on since she lost her job as a bus driver in March.

“I can’t pay my bills if they don’t keep this going,” said Stone, who noted she’s already behind on her bills. “I don’t know what I’m going to do.”

Stone said her inability to find work is not for a lack of effort.

“Every day I’m looking for a job,” she said. “Nobody is hiring. I leave applications everywhere.”

Lorraine Kimble, 61, of Raleigh, attended a job fair in Research Triangle Park on Monday. Kimble, who has a master’s degree in health education, lost her job as a wellness program specialist when the YWCA of the Greater Triangle closed in February.

Kimble said she was “devastated” when she learned last week that her unemployment checks could soon end.

“I’m worried about being homeless if I don’t get a job,” said Kimble, who nonetheless remains confident that she’ll land a job soon. She added that her daughter, a high school English teacher, has offered to help her financially – but Kimble doesn’t want to go there.

The estimated $29 million in weekly benefits across North Carolina that would end if the federal unemployment benefits aren’t extended represents “a significant (amount of money) not coming into the state,” said Mike Walden, an economist at N.C. State University. “That will set us back just a little bit in terms of less spending power in the state.”

The impact would be more pronounced in the most vulnerable parts of the state plagued by high unemployment rates, said John Quinterno of South by North Strategies, a Chapel Hill firm specializing in economic and social policy.

The 100,000 estimate is based on two distinct groups of people currently receiving unemployment benefits in North Carolina: 88,500 receiving federal benefits, plus 12,000 whose 26 weeks of state-funded benefits are set to expire this month. Most of those exhausting state-funded benefits in the past could look forward to moving on to federal benefits.

Although the state currently provides up to 26 weeks of unemployment benefits, that could change.

A bill recently unveiled in the state legislature by a Republican-controlled committee calls for reducing the maximum weeks of benefits to no more than 20 – and as few as 12 weeks when the unemployment rate is low. The bill also calls for reducing the maximum weekly benefits from $506 to $350.

“In the U.S. and in North Carolina, we have traditionally assumed that we don’t have long durations of unemployment, that unemployment is a very short phenomenon,” Quinterno said. “One of the things we have seen in the ‘great recession’ is that long-term joblessness has become an entrenched part of our labor market. We are dealing with large numbers of people who have been out of work for very long periods of time.”

And, he added, the longer people are out of work, the harder it is for them to find a job.

Ranii: 919-829-4877

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