North Carolina has the stingiest unemployment insurance benefits in the country.
How stingy? If your plant closes or your company gets downsized, you are now eligible for a maximum of 12 weeks of unemployment insurance. Most states offer 26 weeks. Alabama offers 26 weeks. So does Mississippi, Texas, Tennessee and so forth.
But the legislature last week was worried that the state’s unemployment insurance program was too soft on laid off workers.
The House passed a bill that would require a person collecting unemployment benefits to make five weekly contacts per week with employers in order to receive benefits, instead of the current two contacts. It also adopted stricter identification requirements.
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“Short of telling them ‘you can sleep all week,’ how much more reasonable can it get?” said Rep. Michael Speciale, a New Bern Republican. “That’s hardly putting a burden on the people who are getting checks to survive.’’
The only concern expressed by Republican lawmakers was that the new requirements might be a hassle for employers if they are inundated with large numbers of unqualified job applicants.
The unemployment insurance system, which is paid for by business taxes, helps people who lose their jobs by temporarily replacing part of their wages. It is not welfare. It is a program designed to help people who work for a living.
During the Great Recession, the state’s unemployment program was forced to borrow money from the federal government, totaling $2.8 billion, to pay the claims of the unemployed. While 30 states borrowed money, North Carolina’s was the third highest in the nation.
The large borrowing was the result of several factors: the state’s economy was particularly hard hit and so North Carolina had one of the nation’s highest unemployment rates.
Also, the state legislature had gone overboard in trying to please business during flush times. It cut unemployment insurance taxes multiple times in the last two decades. A 23 percent cut in 2005 gave North Carolina the lowest unemployment insurance rate in the country. So there was insufficient reserve when bad times hit.
It was clear that the legislature had to do something to fix the problem. In February 2013, Gov. Pat McCrory signed a bill that was hailed as an effort to “reform’’ the unemployment system in North Carolina and pay back the debt to the federal government.
The way the legislature fixed the program was to put two-thirds of the costs of the changes on the backs of laid-off workers. The maximum weekly benefit was reduced by 35 percent from $535 per week to $350 per week – making it one of the lowest in the nation.
The new law also reduced the maximum number of weeks that will be paid, from 26 weeks to between 12 and 20 weeks, based on various economic conditions.
In the 1949 legislative session, the legislature, at the urging of Gov. Kerr Scott, increased unemployment benefits from 16 weeks to 20 weeks. So we have slipped back 66 years.
The only people alive today who can remember when North Carolina’s unemployment benefits were so paltry are senior citizens.
The other third of the $2.8 billion debt was paid for by employers through a 20 percent surtax and an increase in the taxable rate increase from 5.7 percent to 5.76 percent.
The legislature made the benefit cuts to workers permanent and the tax increases to business owners temporary.
With the $2.8 billion debt paid off in May, the legislature had a choice. It could repeal the business surcharge taxes or restore some of the benefit cuts. Of course it decided to repeal the business taxes. The legislature last week moved to suspend the 20 percent surcharge on businesses for the year 2016.
So why are our political leaders behaving this way when most of their constituents punch a clock or fill out a time card?
Here are several thoughts. Businesses bankroll most of the legislator’s campaigns and finance a battery of lobbyists on Jones Street. There is almost no one to speak for people who get laid off.
There is also a view among some conservatives that unemployment insurance is, in the words of the Civitas Institute, “paying people not to work.’’
This view, I might add, is contrary to my life experience. Three of my grandparents worked in a textile mill. My father was a factory worker. I worked in a textile mill and other manufacturing plants in my early years.
I have known lots of hard working people – family, friends, neighbors, and colleagues – who have been laid off. It is a terrifying experience. You don’t know how you will take care of your family or meet your mortgage payments. Often your self-esteem takes a beating. The modest amount of unemployment insurance doesn’t even begin to cover living expenses.
There are apparently some people who believe the American worker is a slug just waiting for a chance to sit on his or her duff. I think they are wrong. I believe most Americans just want a chance to earn a decent living.