NC House tentatively backs overhaul to state's unemployment system

dranii@newsobserver.comFebruary 4, 2013 

— The state House on Monday night tentatively approved an overhaul of the state’s unemployment system along partisan lines after voting down a series of amendments offered by Democrats.

The bill cuts the maximum benefits paid to unemployed workers by roughly one-third, from $535 a week to $350. It also would reduce the maximum weeks of benefits from 26 to a sliding scale of between 12 and 20 weeks, depending on the unemployment rate.

Rep. Julia Howard, a senior Republican lawmaker from Mocksville and a bill sponsor, argued that passage of the bill is needed to curb benefits that have gotten out of whack and to make the state competitive in competing for industry

The current system “puts North Carolina at a severe disadvantage with respect to trying to recruit jobs and bring in new industry to North Carolina,” she said.

The impetus for the bill is the $2.58 billion the state owes the federal government, money it was forced to borrow to cover the first 26 weeks of jobless benefits in recent years because of the state’s high unemployment rate. The state continues to borrow about $25 million a week to cover unemployment benefits.

The debt has triggered higher federal unemployment taxes for businesses, which have been howling for relief and arguing that it makes it tougher for them to create jobs. Their federal unemployment taxes are rising $21 per employee each year until the debt is erased. Individuals don’t pay unemployment taxes; businesses pay both federal and state unemployment taxes.

But Democrats argued that the bill unfairly hurts the unemployed by significantly curtailing their benefits while barely increasing the state unemployment tax paid by employers.

“This is an unbalanced bill,” said Rep. Paul Luebke, a Durham Democrat. “The unemployed had no advocate at the table as this bill was being drafted.”

Luebke also noted that when the federal debt is repaid employers will no longer have to pay higher unemployment taxes.

“That extra tax is going away but the benefit cuts are permanent,” he said.

The bill also would end extra federal benefits for unemployed workers that kick in after state benefits expire. That’s because a recent federal relief package cuts off the extra benefits to states that don’t maintain their weekly benefit amounts.

One of the amendments offered by Democrats was to make the effective date Jan. 1, 2014, to protect the federal extended benefits. In its current form, the bill’s cuts are expected to begin in July at the start of the new fiscal year.

The bill has not yet been considered by the Senate. But Gov. Pat McCrory indicated last week that he would sign the bill into law if it makes it to his desk.

Earlier Monday, organizations opposed to the bill, the N.C. Justice Center, AFL-CIO, NC Moms Rising and AARP, urged legislators to reconfigure the legislation in light of the harmful effects it would have on the lives of the unemployed and their families.

Robert Riggins, a benefits administrator at the Freightliner plant in Mount Holly, urged legislators to try living on the lower weekly unemployment checks called for in the bill.

“That bill is devastating to North Carolina families and North Carolina workers,” Riggins said. Last week, Freightliner’s corporate parent, Daimler Trucks North America, announced that it could lay off up to 1,200 workers at its North Carolina plants in Gastonia, Mount Holly and the Rowan County town of Cleveland.

A centerpiece of the press conference was a 10-minute video that featured interviews with six North Carolina workers who had to rely on unemployment benefits for an extended period of time when they were laid off from their jobs. They stressed that they barely scraped by on the unemployment checks they had received and that cutting benefit amounts was unfathomable.

“Everything was used for bills,” Stacey Hinson, 50, of Denver, who received $500-a-week unemployment checks for nine months, said in the video. “There was no fun money. Everything was used to survive.”

“There are tens of thousands of stories like that all across North Carolina,” said Jeff Shaw, spokesman for the N.C. Justice Center.

Bob Friedman, owner of the East Coast Wings and Grill franchise in Cary, said Monday that when he recently received his higher federal unemployment tax notice, “it was just a kick in the chops.”

“In this economy, every penny is important,” Friedman said. “I don’t begrudge that we pay unemployment insurance (but) the way it hit us was so surprising.”

Cutting benefits would accelerate repayment of the debt by reducing the amount of future payouts. At the same time, it would slightly increase most employers’ state unemployment taxes and require state and local government employers, which currently don’t pay state unemployment taxes but reimburse the state for benefits collected by their laid-off workers, to contribute to the state unemployment trust fund.

Some Republicans and business leaders have argued that the state’s unemployment benefits, which are more generous than surrounding states but in line with the nation as a whole, are at a level that deters people from seeking work.

But Beth Messersmith, the state campaign director for N.C. MomsRising, an advocacy group for children and families, said there just aren’t enough jobs to go around.

In North Carolina, “there are three unemployed workers for every job opening,” she said.

Ranii: 919-829-4877

News & Observer is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service