Paul Moore is one of tens of thousands of jobless North Carolinians whose unemployment benefits will be terminated at the end of this month.
Advocacy groups call it the unemployment cliff and Moore, 53, a divorced dad who was laid off from his job as a lawn care worker in November, fears hes headed for a long, hard fall when his weekly benefits end. He receives $302 in benefits each week, $75 of which is earmarked for child support.
Hes particularly worried about losing his home if he falls behind on his mortgage payments, which he fears is inevitable if he fails to find a job soon.
I think there are going to be a lot of people on the street as of July 1, Moore said. There are just not enough jobs out here yet.
About 70,000 people will stop receiving federal extended unemployment benefits June 30 the result of a state law that goes into effect July 1. (See the state and Triangle jobless rates, and the rates for all 100 counties, in the interactive graphics at the bottom of this story.)
The law, one of the first passed by the legislature this year, reduces the maximum state benefits a laid-off worker can receive by roughly one-third. It also reduces the maximum weeks of benefits funded by the state.
Those changes triggered the end of the federal extended benefits because federal law requires states to maintain current benefit levels. Extended benefits, which kicked in after the unemployed had exhausted their 26 weeks of state-funded benefits, have provided as many as 47 additional weeks of benefits for those unable to find a job.
Were the only state that is doing this, said Bill Rowe, director of advocacy for the N.C. Justice Center, a group that champions issues on behalf of the poor. People will have less money to pay their rent or mortgage payment or utility bills and all the other necessities their families need. Theyll have less money or, in some cases, no money.
Workers who started receiving unemployment benefits before Jan. 1 will be immediately affected by the change. But on the horizon is a second wave the 91,000 workers now receiving state-funded benefits. If they cant land a job before those benefits expire, theres no federal safety net for them.
Cuts help pay state debt
The new law is a response to the more than $2 billion the state owes the federal government, money that was borrowed to cover state-funded unemployment benefits after unemployment soared beginning in 2008. Scaling back the benefits will accelerate paying off the debt, which triggered higher federal unemployment taxes for businesses an increase of $21 per employee per year until the debt is erased.
Gary Salamido, a lobbyist for the N.C. Chamber, which pushed hard for the new law, said North Carolina businesses ended up paying $395 million in additional federal and state taxes last year because of the situation. Individuals dont pay unemployment taxes, just businesses.
The fact that we got in this spot, that the program got to the point that it wasnt sustainable anymore, is a disappointment to everybody, Salamido said. It reached a point where we just didnt have any choices. ...You have to fix the system.
Business leaders acknowledge a series of reductions in the state unemployment taxes paid by businesses in the 1990s contributed to the situation. But they also complain that unemployment benefits in North Carolina have been more generous than in surrounding states.
Last year, the legislatures Joint Revenue Laws Study Committee, citing data from the W. E. Upjohn Institute for Employment Research, found that North Carolinas then-maximum weekly benefit was the highest in the Southeast and $91 more than the No. 2 state in the region, Kentucky. However, the data also showed the average weekly benefits paid out by the state were below the national average and just a few dollars more than Virginia and Kentucky.
An effort by Democrats to delay implementing the new unemployment system until next year a move that would have kept the federal benefits in place was rebuffed when the Republican-controlled legislature approved the new structure in February. The AFL-CIO and the Justice Center have continued to push for such a delay but so far have come up empty.
Salamido said that in the past, Congress passed a law that grandfathered in four states Arkansas, Indiana, Pennsylvania and Rhode Island so they could reduce the amount of unemployment they offer without losing their federally funded benefits. But this year, the chamber struck out in its efforts to gain a similar concession for North Carolina.
We dont know why we were not allowed the same courtesy, Salamido said.
Some fear eliminating federally funded benefits cold turkey at a time when the states unemployment rate is 8.9 percent fifth-highest in the nation will further strain social services.
At Catholic Charities of the Diocese of Raleigh, which runs what it touts as the largest food pantry for the poor in the eastern half of the state, regional director Rick Miller-Haraway expects a surge in demand.
His organization provides a weeks worth of groceries to 11,000 people a month, up from 4,600 in 2007. Thanks to the largess of donors, Catholic Charities manages this despite a 62 percent cut in its federal funding since 2010.
Whos to know if they will be able to continue? Miller-Haraway said.
Halting benefits for so many people in one fell swoop puts the state in uncharted territory.
We are about to run an experiment on families all over the state, and we really dont know how it is going to turn out, said John Quinterno of South by North Strategies, a Chapel Hill firm specializing in economic and social policy.
Compounding the issue is that these workers already have been out of a job for at least six months. Some employers wont even consider hiring someone who has been unemployed for more than six months.
The long-term unemployed are the ones having the hardest time getting back in the labor force, Quinterno said.
The skills of many jobless workers often dont match what employers seek.
A lot of the unemployment we have ... is structural, meaning that people arent trained to do many of the new jobs that are coming on, said James Kleckley, an economist at East Carolina University. Also, were not creating many jobs.
The state estimates the extended federal benefits pump about $20 million a week into North Carolinas economy.
Although not an insignificant number, Kleckley said the economy will absorb the demise of those federal funds.
The people who depend on those benefits, those are the ones who are going to get hurt, Kleckley said. But he said the effect on rural counties, where unemployment can be considerably higher, will be greater than in urban areas such as the Triangle. The Triangles unemployment rate is 7.1 percent after adjusting for seasonal fluctuations. Many rural counties suffer from double-digit unemployment.
Supporters of the new law contend the end of extended benefits provides an extra incentive for people to find work.
It would be wrong to say that folks arent having a hard time finding a job and they are just living comfortably on unemployment, said Mitch Kokai, a spokesman for the John Locke Foundation, a Raleigh think tank that advocates for limited government. However, he said, having unemployment benefits to fall back on gives people a little bit more breathing room to say, You know, I dont particularly like this job that I see available to me. I think Im going to hold out a little bit longer and maybe find something better.
Quinterno agrees that jobless workers who lose their benefits are more likely to lower their job sights, but he takes a dim view of the prospect of a throng of workers joining the underemployed..
That is actually a loss for the individual and ... a loss for the economy because youre not letting people use their skills in the fields they are best suited for, he said. Its a waste of human potential; its a waste of economic potential. Its very short-sighted.
In late May, the state first alerted unemployed workers when they filed their weekly claims online or by phone that the extended federal benefits will cease at the end of June. But some advocates for the poor fear the message wont sink through to everybody especially because some who collect unemployment benefits may not know whether the state or federal government picks up the tab for them.
In this situation, however, the N.C. Justice Centers Rowe questions whether forewarned is forearmed.
If someone told me Im going to lose all my income in (a few) weeks, Im not quite sure what I would do, Rowe said. Obviously theyre trying to find work, but for some folks, its still an awful economy for finding jobs.