NC's jobless can expect fewer weeks of unemployment checks

dranii@newsobserver.comApril 8, 2014 

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Job seekers gather for a career fair in Charlotte last year. The unemployment rate in North Carolina has declined 2.2 percentage points over the past 12 months. That could increase pressure on the jobless if their benefits run out several weeks sooner.

DIEDRA LAIRD — 2013 CHARLOTTE OBSERVER FILE PHOTO

  • How jobless rate alters benefits

    North Carolina’s new unemployment system, adopted last year, links the state’s unemployment rate and the maximum number of weeks that an unemployed worker can receive benefit checks. The rates are adjusted twice each year: on Jan. 1, based on the average unemployment rate for the months of July through September; and on July 1, based on the average rate for the months of January through March.

    Below is the maximum weeks of unemployment benefits for different unemployment rates.

    • Less than or equal to 5.5% – 12 weeks

    • Greater than 5.5% up to 6% – 13 weeks

    • Greater than 6% up to 6.5% –14 weeks

    • Greater than 6.5% up to 7% – 15 weeks

    • Greater than 7% up to 7.5% – 16 weeks

    • Greater than 7.5% up to 8% – 17 weeks

    • Greater than 8% up to 8.5% – 18 weeks

    • Greater than 8.5% up to 9% – 19 weeks

    • Greater than 9% – 20 weeks

    David Ranii

  • The basics of North Carolina’s unemployment law

    Q Who funds unemployment benefits?

    A Unemployment benefits are funded by state and federal unemployment taxes paid by employers, which pay on a per-employee basis.

    Contrary to popular belief, employees don’t pay unemployment taxes.

    Q What did North Carolina’s unemployment law do?

    A It reduced the maximum amount of benefit checks by roughly one-third to $350. It cut the maximum weeks of unemployment benefits from 26 to 20 weeks when it went into effect on July 1, 2013. Going forward it links the number of weeks of benefits to the unemployment rate.

    It also triggered the end of federal extended benefits that kicked in when state benefits expired.

    Q Why did the state owe the federal government?

    A The state borrowed money to be able to pay state-funded benefits because there wasn’t enough in reserve when the recession hit. Critics said that was because during good economic times the state had lowered the amount companies had to pay into the unemployment fund.

    Q Has the state paid off its debt to the federal government yet?

    A Not yet, but the law is accelerating the payback. The debt is on track to be paid off before the end of 2015. As of April 3, the state still owed $1.68 billion, down from a peak of $2.8 billion.

    David Ranii

Correction: This story listed the incorrect date for the next release of state unemployment data. The state unemployment rate for March is scheduled to be released April 21.

The maximum number of weeks that North Carolina’s jobless can receive unemployment checks is expected to decline significantly again in July because state law ties the benefits to the state’s declining unemployment rate.

The prospect of four or five fewer weeks of unemployment checks for workers who lose their jobs through no fault of their own is bemoaned by advocates for the poor. They argue that the job market remains quite challenging.

“The fact that we are seeing a decline in the unemployment rate is really masking the persistent and high joblessness in our state,” said Alexandra Forter Sirota, director of the Budget & Tax Center at the N.C. Justice Center, an advocacy group for the poor and working class. “Many workers do not have employment opportunities despite wanting to work.”

The Justice Center contends that the 64,000 workers who dropped out of the state’s labor force over the past 12 months are a sign that the jobless are so discouraged that they have given up looking for a job. The labor force includes people with jobs plus unemployed workers who are seeking work.

Supporters of the state law passed last year that overhauled the state’s unemployment system contend a cutback in the duration of benefits is justified given that the state’s economy has been adding jobs.

“There has been a fairly significant increase in the number of employed, any way you measure it,” said Brian Balfour, policy director of the Civitas Institute, a Raleigh organization that supports most of the state Republicans’ legislative agenda. “There are tens of thousands of more people working in North Carolina than there were in the summer of 2013. That is undeniable.”

A total of 4.1 million North Carolinians were employed in February, according to the employer survey conducted by the Bureau of Labor Statistics, up 32,500 from June 2013.

Benefits linked to rate

The law was designed to accelerate the state’s ability to pay back the massive debt it accumulated in order to pay unemployment benefits in the wake of the recession.

It did so by reducing the maximum amount of benefit checks and cutting the maximum weeks of unemployment benefits when it went into effect last July. The provision that cut the benefit checks triggered the end of federally funded unemployment benefits that kicked in when state-funded benefits were exhausted.

The law also created a sliding scale that linked the number of weeks of benefits to the unemployment rate moving forward. As the unemployment rate rises or falls, the maximum weeks of benefits rises or falls in tandem, with 20 weeks being the ceiling and 12 weeks being the floor. The jobless are eligible for up to 20 weeks of benefits when the unemployment rate exceeds 9 percent; an unemployment rate of 5.5 percent or less calls for 12 weeks of benefits.

The state’s seasonally adjusted unemployment rate has been declining significantly. It stood at 6.4 percent in February, down from 6.9 percent in December and 8.1 percent in July. The rate has declined 2.2 percentage points over the past 12 months, faster than any state except South Carolina.

Gov. Pat McCrory has hailed the improvement as evidence of a “Great Carolina Comeback.” But critics argue that the unemployment rate is misleading because unemployed workers who have given up finding a new job aren’t included when government unemployment statistics are calculated.

Congress is wild card

Under the law, North Carolina workers who have filed for unemployment claims since the beginning of the year have been eligible for a maximum of 19 weeks of benefits. But early indications are that the next reset of benefits scheduled to go into effect July 1 could shave at least four additional weeks of benefits. Workers who file for benefits before July 1 wouldn’t be affected by the reset.

Today there’s no way of knowing for sure what the change will be, because the duration of benefits is tied to the average state unemployment rate for the first three months of this year – and unemployment rates for March won’t be released until April 21. Moreover, the rates that are released can be revised the following month.

So far, the average of January’s 6.4 percent unemployment rate of 6.7 percent and February’s 6.4 percent is 6.55 percent, which under the state’s schedule would reduce the number of benefit weeks to 15. If the March unemployment rate declines one-tenth of a percent, it would push the three-month average to below 6.5 percent, which would translate into 14 weeks of benefits.

That’s four or five fewer weeks that the unemployed would receive checks to pay for essentials – not only groceries and mortgage payments but also to fill up gas tanks to drive to job interviews, said Sirota of the Justice Center.

One wild card in this scenario is the U.S. Congress. The Senate on Monday passed a bill that would revive extended, federally funded employment benefits – the benefits that North Carolina’s unemployment law halted last July and which expired nationwide at the end of 2013.

The Senate bill includes a provision from Sen. Kay Hagan, a Greensboro Democrat, that would restore those benefits to North Carolina. The bill’s future in the House is uncertain. It’s also unclear whether McCrory would agree to let the state accept those benefits.

If it clears those hurdles, those federal benefits would kick in for North Carolinians at whatever week state-funded unemployment benefits expire.

Some counties worse off

Last week the Justice Center issued a report that estimated the state has 250,000 “missing workers” – that is, unemployed people who would either be seeking a job or have a job if the job market wasn’t so lackluster. If those people were included in the unemployment rate, the report asserts, the rate would be much higher – 11.9 percent.

In addition, linking the weeks of benefits and the state unemployment rate is “not representative of local labor market conditions across the state,” Sirota said. “In some communities ... there are still very high levels of unemployment that have persisted.”

Ten North Carolina counties had unemployment rates that exceeded 10 percent in January. Those unemployment rates aren’t seasonally adjusted.

“I think one of the big things – and this should upset people – is just how unfair this new system can be,” said John Quinterno of South by North Strategies, a Chapel Hill firm specializing in economic and social policy. “Why is it that someone who loses a job in July is going to be treated differently from someone who lost a job in June?”

Balfour of Civitas said critics of the law are sacrificing consistency for political expediency.

“I find it kind of ironic that folks on the left are now suddenly deciding to look below the headlines of the unemployment rate,” he said. “These are the same people that were trying to tout the decreases in the unemployment rate a couple of years after the federal stimulus kicked in as signs the stimulus was working.”

Sen. Bob Rucho, a Matthews Republican who co-sponsored the law that revamped the unemployment system, defended the decision to link the unemployment rate and the weeks of benefits.

“As the unemployment rate goes down and we are creating more jobs, the time necessary (to find a job) should be reduced,” he said.

Rucho contended that the new requirement that unemployed workers must attend a one-on-one counseling session about their job search, which went into effect earlier this month, will help the unemployed find jobs faster.

“For the first time, we are reaching in and trying to solve their unemployment problem, not just saying, take another week of benefits,” Rucho said.

Ranii: 919-829-4877

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