70,000 long-term unemployed in NC lose federal benefits July 1

dranii@newsobserver.comJune 8, 2013 

  • Stories of the out of work: Paul Moore

    Paul Moore of Raleigh obviously knows how to find a job.

    Laid off from jobs in 2010 and 2011 with pest control companies that were hit by the economic downturn, he bounced back and landed jobs elsewhere.

    But last November, he was laid off once again from his position at a lawn care company as business slowed in winter.

    Today – more than six months later – he struggles to find yet another job.

    “I’m stressed,” he said. “I’m frustrated. I’m discouraged.”

    Moore, 53, who is divorced and has an 11-year-old daughter who lives with her mom, wonders whether his age hurts his job search.

    “But along with that,” he said, “I thought that experience was good to have.”

    Moore rails against the new state law that will result in the termination of his unemployment benefits at the end of this month.

    With the end of benefits, he worries about paying child support and keeping his home.

    “It’s not right at all,” he said. “It’s going to be hurting a lot of people, and they are going to be stressing government services even more.”

    David Ranii

  • Triangle area unemployed face end of benefits Here’s a county-by-county breakdown of the number of unemployed workers, as of the week ending May 18, who were receiving extended federal benefits that halt at the end of this month:

    Chatham: 321

    Durham: 1,734

    Franklin: 385

    Granville: 365

    Johnston: 938

    Lee: 551

    Orange: 429

    Wake: 4,869

    Source: N.C. Department of Commerce

  • New unemployment law

    Cuts maximum unemployment benefits paid to workers laid off beginning in July by roughly one-third, from $535 a week to $350. Those currently receiving benefits won’t see a change in the amount of benefits they receive.

    Reduces the maximum weeks of benefits from 26 to a sliding scale of between 12 and 20 weeks, depending on the unemployment rate, beginning in July. A higher unemployment rate would increase the number of weeks. Those currently receiving benefits remain eligible for up to 26 weeks.

    Cuts off extended federal benefits for unemployed workers, starting July 1.

    Raises the state unemployment tax rate for employers who pay the maximum rate from 5.7 to 5.76 percent on workers’ wages up to $20,900. Employers who currently pay nothing based on their employment record would pay 0.06 percent on taxable wages. After including the 20 percent surcharge currently assessed, an employer paying the maximum rate of $1,444.61 per employee would pay an increase of $15.05 per worker.

    Employers who currently aren’t required to pay state unemployment tax will pay $15.05 per employee.

  • Stories of the out of work: Antoinette Jones

    Antoinette Jones, 31, who grew up in Raleigh but now lives in Charlotte, has cast her job search far and wide since her last employer went out of business in October.

    “I’ve been applying in Greensboro, Durham, Raleigh, Burlington. Still nothing,” said Jones, a single mother with two children, Shanice, 13, and Aaron, 2.

    Jones, whose last job was making calls for a debt collection company, has by her own count submitted more than 1,000 applications.

    “I’m emailing resumes always, always,” she said. “Unfortunately, I have learned with this tough job market, it’s basically a numbers game. For every 100 applications, you’ll probably have one person ... respond.”

    As the months have passed and Jones has become increasingly exasperated with the job market, she is no longer discriminating with her job applications.

    “I even apply for jobs that I don’t qualify for,” she said. “Because if I apply for jobs that I qualify for and I don’t get (them), I’m of the mentality: Let me apply for jobs I don’t qualify for and maybe I’ll get those.”

    Jones said she has been barely getting by on her $522 a week unemployment check and doesn’t know what she’ll do when her benefits are halted at the end of this month.

    “I have no credit card debt or student loan debt, so I’m blessed,” she said. “I just have monthly expenses.”

    Jones, who was reared in foster homes as a teenager and has no family to rely on, has managed to stay current with the mortgage payments on her three-bedroom house. But she doesn’t see that continuing unless she can land a job.

    “My No. 1 concern is, where are my children and me going to go?” she said. “Are we going to have to go to a shelter? And for how long? Do I need to rent my house out now ... so I can have guaranteed funds so it won’t affect my credit? Because right now jobs are running your credit, and if you’ve got bad credit, you can’t get a job.”

    David Ranii

  • Need help? The N.C. Division of Employment Security has said it is gearing up to help people affected by the law. The agency offers:

    • Free computer and Internet access.

    • Help with resume preparation.

    • Information on the job market.

    • Help searching for a job.

    • Career guidance and assessment.

    • Information on training and education programs.

    • Access to classes, workshops and resources for training.

    • Programs and information for veterans returning to the workforce.

    • Referrals to other state and local organizations that can provide assistance.

    For more information, go to www.ncesc.com or call 888-737-0259, or visit one of the local JobLink centers in the Triangle. Addresses for the centers are at www.nccommerce.com/workforce/job-seekers.

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 he’s 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.

He’s 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.

“We’re 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. They’ll 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 can’t land a job before those benefits expire, there’s 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 don’t pay unemployment taxes, just businesses.

“The fact that we got in this spot, that the program got to the point that it wasn’t sustainable anymore, is a disappointment to everybody,” Salamido said. “It reached a point where we just didn’t 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 legislature’s Joint Revenue Laws Study Committee, citing data from the W. E. Upjohn Institute for Employment Research, found that North Carolina’s 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 don’t know why we were not allowed the same courtesy,” Salamido said.

Some fear eliminating federally funded benefits cold turkey at a time when the state’s 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 week’s 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.

“Who’s 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 don’t 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 won’t 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 don’t match what employers seek.

“A lot of the unemployment we have ... is structural, meaning that people aren’t trained to do many of the new jobs that are coming on,” said James Kleckley, an economist at East Carolina University. “Also, we’re not creating many jobs.”

‘Extra incentive’

The state estimates the extended federal benefits pump about $20 million a week into North Carolina’s 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 Triangle’s 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 aren’t 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 don’t particularly like this job that I see available to me. I think I’m 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 you’re not letting people use their skills in the fields they are best suited for,” he said. “It’s a waste of human potential; it’s a waste of economic potential. It’s 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 won’t 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 Center’s Rowe questions whether forewarned is forearmed.

“If someone told me I’m going to lose all my income in (a few) weeks, I’m not quite sure what I would do,” Rowe said. “Obviously they’re trying to find work, but for some folks, it’s still an awful economy for finding jobs.”

Ranii: 919-829-4877

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