The financial crisis of 2009 led to tremendous stress on families and governments. State budgets suffered from lower revenues and higher need for public programs, and legislators across the country responded by slashing programs intended to help the jobless – in particular, unemployment insurance.
In North Carolina, these cuts were particularly sweeping. Lawmakers limited the number of weeks that a person could receive assistance to just 12, down from the national standard of 26. They cut the maximum weekly check by 35 percent (from $535 to $350), and eliminated the provision that indexed benefits to the average wage of North Carolina workers. Additionally, strict limitations were put in place so that fewer workers were eligible for unemployment insurance in the first place.
There are, as we’ve seen play out, reasonable debates to be had over both the necessity and the severity of these cuts. In times of fiscal belt-tightening, some important government programs inevitably take a hit. That is simply how they are structured.
But the reverse is also true: When budgets return to full health and the economy is steadily growing, lawmakers should remove supposedly temporary cuts and restore benefits to citizens who need them most. Indeed, states like West Virginia and Kentucky, which reduced benefits after the recession, also put in place automatic mechanisms for benefits to rise once their trust funds recovered. Unfortunately, this hasn’t been the case in North Carolina.
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A report this week by The Century Foundation, a national public policy think tank, details how North Carolina has one of the least generous and most restrictive unemployment insurance programs of any state in the U.S., despite a dramatic turnaround in the state’s unemployment trust fund, which has gone from more than $2.5 billion in debt to a $3 billion surplus.
So who has benefited from this economic recovery? Not workers or the unemployed.
North Carolina has kept in place its 12-week limit on receiving assistance – currently the lowest in the country. The maximum benefit amount has remained frozen, too. As a result, only one in 10 jobless workers in North Carolina receive an unemployment payment in 2017, the third-lowest in the country. That’s down from 43 percent in 2009.
Employers, on the other hand, are benefiting greatly from the turnaround. According to the Century Foundation report, business owners paid only 0.42 percent in unemployment taxes in 2017, down from the 1-plus percent rate they paid in 2012. That amounts to an average savings of $282 per employee. What’s more, North Carolina businesses are expected to enjoy a second-straight 0.5 percent reduction in unemployment taxes in 2018.
In other words, employers are benefiting from a recovered unemployment trust fund and growing economy. For workers, however, it still feels like 2013.
North Carolina has a responsibility to fix this imbalance, take a fresh look at the system, and restore unemployment benefits to their pre-recession levels. The money is there to do so: North Carolina is one of 29 states that now meets the Department of Labor’s standards for having enough money in the trust fund to withstand the next recession. By federal standards, the state now has nearly five times as much in reserves than it had in 2007.
Now, leaders in the General Assembly must address how few of the unemployed are receiving benefits, how little they receive and how short they receive them. Senate Bill 580, introduced by Sens. Ben Clark and Joel Ford, is a good start. It would raise the minimum number of weeks of unemployment benefits and increase state funding for the program, among other changes.
Before the recession, someone who was laid off because their company closed or department downsized could count on up to six months of help with keeping their family fed and rent paid. In turn, those people continued to participate in the economy, doing their part to pay taxes and support local businesses. Since the 2013 rollback in benefits, however, these North Carolinians have been less capable of supporting their family, in turn giving less back into the economy as a whole.
This holiday season, even though the economy is growing, many of us will think of friends, family members or neighbors who recently lost their jobs through no fault of their own. Consider the 100 workers at Avery Dennison in Greensboro, whose jobs making labels were outsourced overseas this September.
It’s a story repeated in communities across the state, especially rural ones, who are not enjoying the full fruit of the current economic expansion. It is our obligation to fulfill the government’s promise to support these workers as they find their next job, especially when we have the means to do it.
Right now, we can and must offer greater support for the unemployed. The North Carolina legislature should act to restore these benefits, strengthen the economy and guard against the next downturn.
Andrew Stettner is a senior fellow at The Century Foundation, a progressive think tank, and author of the new report, “Unemployment Trust Fund Recovery Is Helping Employers, Not Workers.”