Point of View

NC shoving our friends and neighbors off the financial cliff

June 28, 2013 

  • By the numbers

    4 million The number of unemployed workers in the South

    1.4 million The number of available jobs

    1 The number of states getting out of the Federal Emergency Unemployment Compensation Program: North Carolina

On Sunday, 70,000 jobless workers will lose access to federal unemployment benefits. By the end of the year, 100,000 additional jobless workers will be cut off, leaving a total of 170,000 jobless workers and their families in crisis. North Carolina’s unemployment insurance cliff has arrived.

Where will our friends and neighbors – workers who have been looking for jobs for so long that they have exhausted their state benefits – turn to keep the lights on and put food on the table? How will our economy fare with high numbers of jobless workers who lack the means to make basic purchases at local businesses?

Those going over the cliff are jobseekers, first and foremost, but the job market remains grim. Despite a small improvement in the state’s unemployment rate over the last three months, jobseekers are looking for work in a state with a record number of unemployed workers who have been out of work for a record length of time. There are 4 million unemployed workers chasing just 1.4 million jobs in the entire U.S. South.

Even before Sunday, these jobless workers qualifying for unemployment insurance were struggling to hold together a semblance of their lives. With just half the dollars coming in each week that they had earned previously, unemployment insurance covered just the basics – food, rent, transportation and childcare – while they looked for work.

And many went without or relied on credit, putting at risk their long-term health – physical, emotional and financial.

For many jobseekers and their families, even this modest support will be gone now. Surely, there must be a good reason that our state leaders rushed through an unemployment insurance overhaul in the first two weeks of the session and turned down 100 percent federally funded benefits guaranteed to North Carolina’s jobless workers until January.

The reason given is that it was necessary to quickly get rid of the $2.5 billion debt to the federal government and unburden employers.

Maybe it wasn’t obvious that turning down federal funds for benefits would have a significant effect on the state’s economy. The benefit loss alone is valued at about $600 million with an estimated $1.2 billion decline in economic activity.

Perhaps it seemed easier to pretend that those jobless workers now paying for the irresponsible tax cuts on employers during good times are not our friends and neighbors.

All of this would be slightly easier to swallow if there were a back-up plan, a safety net for those getting cut off – an effort like the one Connecticut Gov. Dan Malloy announced in 2012 to help long-term jobless workers in his state access social services after benefits expired.

“We’re trying to make sure these folks are OK, to get the services they are entitled to,” Malloy said. The state departments of Labor and Social Services, United Way, the state’s Workforce Investment Boards and Community Action Agencies combined forces to provide crisis intervention, job training, job recruiting and other services.

In stark contrast, Gov. Pat McCrory said this week that he’s “taking a risk … [and planning] to put more people into jobs as opposed to on government payrolls.”

United Way and many service providers are stepping up. NC 211, United Way’s free and confidential resource line, is available to help state residents look for local services. But this is far from a combined public-private effort to address the aftermath of a cliff that lawmakers knew was coming.

In fact, unlike in Connecticut, this cliff was created by state lawmakers. And so North Carolina will have the distinction of becoming the only state to lose the Federal Emergency Unemployment Compensation Program.

There was a time when unemployment insurance was understood as a tool to support the economy, businesses and workers alike. And there is the reality that government must have a role to play when families and the economy face tough times.

Such ideas may seem too old school. After all, this is the new North Carolina.

Sabine Schoenbach is a policy analyst with the Worker’s Rights Project at the NC Justice Center.

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