DURHAM — Teresa Vales falls into a deep funk each time she inspects her budget and sees how her weekly $522 unemployment check stacks up against her financial obligations.
Vales, 45, isn’t a lavish spender. As a single woman, she says her life’s pretty simple. She owns a home in North Durham, a 2003 Corolla long since paid off and a wardrobe that has not been updated in years. Still, Vales needs to take in about $2,800 a month to maintain her foothold.
Already, she has depleted most of the $10,000 savings she had squirreled away before being laid off from a biotechnology firm last January. Her job search stretched from weeks to months without success. More than 150 applications have yielded 20 interviews with no offers.
“If I had kids or anyone dependent on me, this would be an absolute disaster,” Vales said.
Disaster is what worker advocates forecast for the next round of higher-wage earners laid off as the state struggles to recover from recession. Legislators return this week and are expected to reduce maximum weekly benefits by about 35 percent, from $535 to $350. The length of eligibility for benefits would shrink from 26 weeks to as little as 12 weeks, depending on the state’s jobless rate.
The state’s change to weekly benefits would jeopardize a federal extension to those currently unemployed; 85,000 of those currently receiving benefits would lose them July 1 instead of Dec. 31. Vales is among them.
The cuts come as legislators wrestle with a $2.5 billion debt owed to the federal government, which covered North Carolina’s unemployment obligations through much of the recession. The debt is the third-largest owed by any state, and until it is settled, federal unemployment taxes will continue to increase on business owners.
The plan to reshape the unemployment system also calls for slight tax increases to businesses, about 0.06 percent.
Although the changes to weekly amounts wouldn’t affect anyone now drawing benefits, worker advocates say that the likely cuts would be devastating to workers sent packing in the near future. They predict the cuts will hamper the economy by taking money out of circulation and forcing another glut of houses to go up for sale as workers can’t make payments.
“It’s very frustrating to watch the debate ignore the lives of the people affected,” said Harry Payne, former state labor commissioner and worker advocate at the N.C. Justice Center. “It’s in total denial of their real lives.”
‘A dependent welfare program’
Rep. Julia Howard, a Mocksville Republican who chairs the House Finance Committee, agrees that the proposed changes to unemployment taxes and benefits aren’t pretty. But neither is the state’s predicament, she said. The reduction of maximum benefits puts the state more in line with its Southern neighbors and will help the state compete when recruiting new companies, she said.
“It’s supposed to be a bridge from unemployment to re-employment, but it’s quickly becoming a dependent welfare program,” she said.
Howard said the cuts will only really affect laid-off workers who were once executives making six-figure salaries. The Division of Employment Security says that in fiscal 2012, about 17 unemployed workers received the maximum benefit; 21 percent received $350 or more a week.
According to an analysis by the N.C. Justice Center, a nonprofit that advocates for worker rights, those earning above $55,000 typically earn the maximum weekly amount. Workers who earned more than $37,000 – which currently triggers about $350 a week in benefits – would see some cut in their benefits if the measure is passed.
The bill will have a huge bearing on workers laid off after July 1, but it also would affect those currently receiving federal emergency unemployment benefits. The federal government extended benefits for those currently unemployed through December of this year, but the state’s anticipated reduction in weekly benefits jeopardizes that. Those recipients would be cut off from federal aid July 1.
Leaders also hope that a reduction in benefits will get workers back to work more quickly, regardless of the job’s pay. The bill includes a provision that will require workers to accept jobs that offer as little as 20 percent more than their weekly unemployment benefits. Even that won’t be easy, said Payne, the worker advocate.
“There’s one job for every three unemployed people,” he said. “You can’t will yourself out of that situation.”
A surprising setback
Vales, 45, is part of a growing group: the highly educated, formerly well-paid, long-term unemployed worker.
A few times a month, she joins hundreds of others for a pep talk at an area church. Congregations such as White Memorial Presbyterian in Raleigh and Colonial Baptist in Cary have crafted programs since the recession to help unemployed workers network, vent and hear guidance that may put them one step ahead in the job search.
Among those who come are managers, information technology specialists, marketing gurus, engineers and lawyers. The least educated among them have bachelor’s degrees. Many in the crowd are graying. Most own homes, and many are supporting children bound for or already enrolled in college.
The job market has been bleak for many. Those who gather at these meetings describe futile efforts to confirm that their applications arrived at companies posting jobs. Some postings warn against unemployed workers even applying.
This recession had created more workers unemployed for longer than a year than any since World War II. At the height of the recession, about 3 percent of the country’s workforce had been searching for work for more than a year, according to a report by the Brookings Institution.
Vales was mystified years ago when she heard the term “long-term unemployed.”
“I wondered: How could anyone have that much trouble getting a job? Were they lazy? Unemployable?” Vales said.
She never imagined she would become one of them.
Vales is a science guru, with a master’s degree in biology and biomedical sciences from Emory University. She moved to the Triangle in 2006 to work in a laboratory at Duke University. She joined a Durham biotech firm in 2010 and earned $56,000 annually until being laid off in January 2012.
Vales is luckier than some. Each week, she sees jobs posted in the area that she’s qualified for and eager to do. Though the salaries are far less than what she had earned, she applies for all of them. Vales came close enough 20 times to have earned an interview, but as each opportunity passes her by, doubt overwhelms her. She figures someone younger or more outgoing beat her out of a job.
Vales has taken some classes in clinical research at Durham Tech in the past year to try to make herself more appealing for more jobs. She has rewritten her resume a dozen times and taken workshops on interviewing skills and networking.
Now, she worries that the stigma of “long-term unemployed” is a stink that won’t wash off.
According to the Brookings Institution, long-term unemployed workers have only a 16 percent chance of snagging a job in the coming month.
Vales has considered selling her home, but it wouldn’t be a quick fix. Houses in her neighborhood have been lingering on the market for a year or more. Her mortgage, taxes and insurance cost about $1,000 a month, not much more than rent in the area. The leasing offices she has called to ask about rental rates tell her that employment is a requirement to rent.
Vales’ next step is to talk to a financial adviser about liquidating her 401(k).
“I’m stuck,” Vales said. “I cannot believe that I’m having such a huge setback. This will affect the rest of my life.”