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.
After 18 days of unprecedented filings of unemployment insurance claims, the state's top employment security official wanted to offer a moment of reassurance to hundreds of thousands of frustrated North Carolinians.
What Lockhart Taylor provided Friday, unintentionally, was a sobering reality of how limited the state's UI benefits are currently.
Taylor said at a press conference conducted by Democratic Gov. Roy Cooper that $10 million already has been paid for about 41,000 claims filed during the first week (March 16-20) of job cuts and layoffs related to the COVID-19 pandemic.
Doing the math, that averages to about $243.90 per week per claimant. Those benefits would have to be declared as income when the recipient files tax returns for 2020.
State law permits a maximum of $350 a week. That ceiling, down from $530 previously, was established in February 2013 by a Republican supermajority in the General Assembly and signed into law by then-Republican Gov. Pat McCrory.
Senate president pro tem Phil Berger, R-Rockingham, and then-House speaker Thom Tillis, R-Mecklenburg, jointly touted the benefit reductions in HB4.
Tillis used his final two years as speaker as a springboard toward being elected as North Carolina's junior U.S. senator in November 2014. He is engaged in a toss-up 2020 re-election fight with Democrat Cal Cunningham in which the balance of the chamber could be decided.
The federal UI debt was created in part because N.C. employers received a series of unemployment insurance tax cuts in the 1990s when the state jobless rate was well below the 5% level that economists consider full employment.
The jobless insurance tax rate was not raised, thus replenishing the state reserves for benefit payments until 2011, despite the state going through two recessions.
The 2013 state UI law raised by $21 a year the per-employee unemployment insurance tax on most businesses until the debt was paid off. That put the per-employee tax as $126 for 2015, before reducing it to $42 in 2016 once the debt was extinguished.
Berger's office released a statement before the law went into effect on July 1, 2013, to serve as “a quick reminder” on why the legislature chose to reduce the benefits.
“During good economic times, previous Democratic legislatures and administrations made irresponsible decisions that hurt the solvency of our state’s unemployment insurance system,” according to the statement.
“When the recession hit, North Carolina was completely unprepared to pay the flood of new unemployment claims and was forced to borrow more than $2 billion from the federal government.”
However, it is clear at that time there was no outcry from Republican legislators or from employers to raise the employer UI tax as the state went through the 2001-03 recession and the Great Recession.
Instead, the common theme was state officials couldn't raise the tax because it will dissuade employers from hiring.
According to the left-leaning N.C. Justice Center, employers bore about 22% of the UI trust fund repayment burden through the temporary employer tax increase, while beneficiaries bore 73% through reduced benefits.
Sen. Thom Tillis’s (R-N.C.) seat has emerged as a bellwether in the race for control of the Senate.
Over the past week, the two leading Democratic and Republican super PACs focusing on Senate campaigns have poured a combined $47 million into fall advertising reservations in North Carolina, far more than they have invested in any other Senate battleground state.
The influx of spending suggests that operatives on both sides of the aisle see North Carolina, more than any other state, as a must-win in their bids to either flip or retain control of the Senate in November.
At the same time, the outside investments nod at North Carolina’s status as a presidential battleground, where competitive gubernatorial and House races will also be waged and where both parties are expected to incur massive expenses.
“It’s going to be kind of the pivotal race to decide who has the majority in the Senate this fall,” one state Democratic official said, noting that “if one party does well here, then it bodes well for how they’re doing nationally.”
The general election match-up for the Senate was finalized on Super Tuesday when former North Carolina state Sen. Cal Cunningham won the Democratic primary to take on Tillis, beating out a more progressive rival in state Sen. Erica Smith, whom Republicans had sought to boost with nearly $3 million in positive ads.
Polling in the race between Cunningham and Tillis has been scarce since the March 3 primary, but what surveys there are show a close match-up.
An East Carolina University poll conducted in late February found Tillis leading Cunningham by 2 points, while an NBC News-Marist poll fielded days earlier showed Cunningham ahead by 5 points.
Tillis needs to pay for how he’s treated the people of North Carolina. Click here to donate and get involved with Cal Cunningham’s (D. NC) campaign.