Vast Majority of Eligible Workers Receive No Unemployment Benefits In NC
It turns out that slashing unemployment benefits and making it more difficult to collect those benefits makes workers less likely to obtain the money they are entitled to. New figures show that in NC, only 1-in-5 eligible workers collects the jobless benefits they should be able to receive. This makes North Carolina 42nd in the county in participation, due in large part to the dramatic cuts in recent years.
The reduction in North Carolina’s unemployment insurance benefits has produced another set of consequences for recipients, according to a research report.
The report by the left-leaning Economic Policy Institute found that just 20.5 percent of North Carolinians eligible for short-term unemployment insurance (UI) benefits receive them.
That puts North Carolina at 42nd in the nation and well below the national average of 34.7 percent.
The reasons for why so few workers draw benefits vary, ranging from workers choosing not to apply for various reasons to employers disputing claims.
And workers are also eligible for less in benefits than they were two years ago.
The General Assembly passed a law, effective July 2013, that put the state’s UI benefits on a sliding scale with a maximum amount of 12 to 20 weeks and a minimum amount of five to 12 weeks.
Previously, the state offered 26 benefit weeks to qualified recipients. There is a bill in the current session that would set the minimum number of weeks at 12. The state jobless rate was 5.4 percent in January and the maximum number of weeks is 15.
The law also reduced the maximum weekly benefit amount from $530 to $350.
The stated reason behind the benefit cuts was to help eliminate the state’s $2.8 billion debt to the U.S. Labor and Treasury departments for borrowing money required to pay extended state benefits from 2008 to 2011. The borrowing is at $141.2 million as of March 19 and could be paid off as early as May.
“State UI legislation is often passed during and following recessions, and is explicitly designed to cut benefit costs,” said Will Kimball and Rick McHugh, the report’s authors. “Not unexpectedly, this legislation then plays a role in falling state UI program recipiency rates.”
Since 2011, employers have been required to pay an annual increase of $21 for each employee in the companies’ federal UI tax until the debt is retired, when it would be restored to $42. The current employers’ UI tax is at $125 per worker. The initiative would be complete when a $1 billion balance is established in the UI account as a rainy day fund for future economic downturns.