Politics & Government

NC has country’s smallest unemployment benefits – but a $3 billion fund

People walk by the recruiters at a jobs fair in Green Tree, Pa., in 2012.
People walk by the recruiters at a jobs fair in Green Tree, Pa., in 2012. AP

People without jobs in North Carolina receive some of the lowest unemployment benefits in the country and receive payments for a shorter time than in nearly every other state, according to a new report.

A 2013 state law cut both the size and duration of unemployment benefits in North Carolina. Lawmakers said they made the change because the trust fund that pays for the program had a $2 billion deficit.

The fund has recovered and had $3.17 billion in the bank as of December, but that was a result of “a radical reduction in the generosity of your program to the claimants,” said Wayne Vroman of The Urban Institute, a Washington-based economic think tank that studied the state’s unemployment insurance program.

Vroman presented his findings Wednesday to the Joint Legislative Oversight Committee on Unemployment Insurance. The left-leaning N.C. Justice Center wrote to the committee chairs in December to ask that Vroman be invited to speak.

Unemployed North Carolinians received an average of 9.3 weeks of benefits in 2016, which was the second shortest period in the country. That was down from 16.2 weeks in 2012, which was the 24th longest period at the time, according to The Urban Institute.

In 2016, the national average length of unemployment benefits was 14.7 weeks.

The study found that 47.5 percent of people who receive unemployment benefits in North Carolina use the maximum amount, the highest percentage in the country and well above the national average of 33.5 percent.

The unemployment checks are smaller, too. North Carolina’s average weekly benefit in 2016 was $247, down from $298 in 2012 and ranked lowest in the country. The national average in 2016 was $332.

Vroman said that figure is partly due to North Carolina’s use of someone’s last few months of wages to calculate their benefit amount; other states use a different time period.

“For many workers who become unemployed ... the companies they’re with are experiencing difficulties and weekly work hours are reduced before the layoffs,” Vroman said.

Legislators on the committee did not express any concerns about The Urban Institute’s findings.

“I think where we are is a good thing,” said Rep. Dana Bumgardner, a Gaston County Republican. “What is the point of your presentation?”

Sen. Andy Wells, a Catawba County Republican, said he’s concerned that any future declines in the unemployment trust funds would mean tax hikes on businesses.

“I understand that people are being laid off, but they’re being laid off because businesses are being crushed, and that is the absolute worst time to raise taxes on business,” Wells said. “Looking at this from a business point of view, we were ratcheting up taxes to pay off that federal debt. I would like to see us look at this as an insurance trust.”

But Justice Center lobbyist Bill Rowe told committee members that the 2013 benefit cuts need to be revisited.

“The federal debt is now re-paid and employers’ UI taxes have been reduced and about to go lower, while the benefit cuts are permanent,” he said in an email.