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Limited NC unemployment benefits become stark reality for recipients

Limited NC unemployment benefits become stark reality for recipients

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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

By comparison, that first-week average of the pandemic crisis is about $33 less that the average $277 UI beneficiaries in N.C. received during the fourth quarter of 2019, according to the U.S. Bureau of Labor Statistics.

Less than 10% of N.C. jobless workers received UI benefits in the fourth quarter, last in the country.

The $10 million in first-week benefit payments represents just 0.025% of the $3.9 billion in the state’s Unemployment Trust Fund as the economic crisis began.

2.5 million affected

Economists forecast as many as 2.5 million North Carolinians, or 40% of the 6.29 million adult working-age population, may be at high- or moderate-risk for a layoff or reductions in wages, tips and work hours, or for furloughs.

Of the 10 private-sector and government employment sectors, none is expected to be spared massive job losses, but the cuts will likely most acutely affect the lower-wage leisure, hospitality, manufacturing and retail categories.

From March 16 through Saturday, there have been at least 407,737 claims filed, with 87.2% of applicants citing the COVID-19 virus as the reason for their job loss, layoff from work, reduced wages or furlough.

When the state jobless rate was at an 18-year low of 3.6% in January 2019, about 191,000 North Carolinians were listed as unemployed, of which about 19,100 were receiving UI benefits at that time.

A significant number to be sure, but overall more of an out-of-sight than top of mind issue for most N.C. adults.

If the state jobless rate vaults to the 8% to 15% range in April-May that most economists are projecting, there could be a doubling to quadrupling of the unemployed ranks, or between 380,000 to nearly 800,000.

Those affected by job loss, lost wages, lost working hours or furloughs suddenly become either yourself, a family member, a neighbor or friend.

For most, it is likely their first real exposure to North Carolina being tied with Florida in providing the lowest maximum number of state UI weekly benefits.

State responses

“We know our job is just beginning, and we will not rest until we’ve processed every claim, answered every question and answered every phone call,” Taylor said.

To that extent, Taylor said the division is hiring 50 new employees, utilizing the help of 100 employees from the state Division of Workforce Solutions Career Centers, and contracting with a third-party call center for an additional workforce of 200. When the workforce initiatives are in place, the division said it will have about 850 workers dedicated to processing UI benefit claims.

It’s not clear, however, when that apparatus will be at full production.

House speaker Tim Moore, R-Cleveland, said March 17 the Unemployment Trust Fund “is ready to activate with emergency measures that support families hurting from the economic impact of the COVID-19 response.”

“Those who are missing paychecks and bearing the brunt of these drastic economic measures need immediate access and support from these benefits and can have confidence our state will provide another robust disaster response.”

However, several economists and advocacy groups, many left-leaning, question how easily the state will cut loose UI Trust Fund monies.

Bill Rowe, with the left-leaning N.C. Justice Center, said Thursday “the benefits that the state’s unemployment insurance program provides workers is among the stingiest in the United States.”

Financial lifeline

Legislative leaders from both parties recognize that the state’s economy is teetering on a cliff and hundreds of thousands of workers need a financial lifeline.

However, outside of COVID-19 legislative working groups, there hasn’t been a major push to hold a special legislative session to amend the state’s UI statutes before the April 28 start of the 2020 session.

Joseph Kyzer, communications director for Moore, said March 30 that nonpartisan legislative staff is preparing to brief state lawmakers on what the federal supplements, extended duration and broader qualifications for unemployment insurance mean for the state’s system.

“Particularly now that many of our application requirements have been waived (by Cooper) and the congressional relief package was signed into law by President Trump,” Kyzer said.

Senate leader Phil Berger, R-Rockingham, said in a March 17 statement that “reforms put in place years ago helped build that large balance to allow the state to adjust its benefits program in response to an economic downturn.”

“What adjustments to the state program might be necessary will become clearer once we have more finality on what the federal program will look like.”

Remove UI barriers

Cooper’s pledge was to “take down some barriers to unemployment benefits” as laid-off workers apply at www.des.gov or call 888-737-0259.

Among the key elements of Cooper’s Order No. 118 are:

  • Waiving the one-week waiting period to receive benefits;
  • Allowing applicants to file for benefits if they are subject to reduced hours as well as laid off; and
  • Removing the requirement that recipients have to look for work during the benefits period.

Meanwhile, the federal package includes up to $600 a week in UI benefits for up to 13 weeks, on top of the current 12 weeks provided by the state.

“Another front we’re fighting is helping people whose jobs and livelihoods have been lost in the blink of an eye due to this cruel virus,” Cooper said Friday.

Meanwhile, Kyzer said the General Assembly “will continue to make smart budget choices that reflect the seriousness of this emergency and benefit North Carolina’s workforce in its time of greatest need.”

Benefits debate in Congress

The recent debate in the U.S. Senate about the 13 weeks of federal UI benefits contained familiar arguments from Republicans leaders, such as Sen. Lindsay Graham of South Carolina.

In 2013, the claim by state GOP legislative leaders was that paying at the pre-2013 level of up to 26 weeks and a maximum of $530 a week deterred unemployed people from pursing new work, including part- and full-time jobs that could leave them underemployed for their skill sets.

In this year’s U.S. Senate debate, there was 11th-hour opposition from Republicans to the $600 in weekly federal UI benefits that threatened to derail the entire congressional stimulus package.

Conservative leaders Art Lafler, Steve Forbes (a Republican presidential candidate in 1996 and 2000) and Stephen Moore cited their opposition to a repeat of the 99 weeks of federal and state UI benefits of 2009-13 when they tweeted March 17: “Don’t expand welfare and other income redistribution benefits, like paid leave and unemployment benefits, that will inhibit growth and discourage work.”

A GOP proposed amendment to the congressional bill had the statement of purpose: “to ensure that additional unemployment benefits do not result in an individual receiving unemployment compensation that is more than the amount of wages the individual was earning prior to becoming unemployed.

The vote on the amendment tied at 48-48, which meant the original language with the $600 in UI weekly benefits remained in the bill that President Donald Trump signed March 27.

The amendment failed in part because GOP senators Susan Collins of Maine and Cory Gardner of Colorado voted against it even as Democrat Senator Joe Manchin of West Virginia voted in favor. Collins and Gardner are considered as vulnerable to being defeated in their 2020 re-election bids.

Voting to remove the language about the $600 in weekly UI benefits were North Carolina’s GOP senators Richard Burr and Thom Tillis, the latter engaged in a toss-up re-election campaign with Democratic challenger Cal Cunningham.

Don’t expect new borrowings

Mitch Kokai, senior policy analyst with Libertarian think tank John Locke Foundation, said “we’re likely to hear calls for North Carolina to liberalize its unemployment compensation rules.”

“I would not be surprised to see legislators give the idea serious consideration.”

However, Kokai added that “I am certain lawmakers will be unwilling to dig themselves back into the hole that they escaped during the past decade.”

“They won’t agree to borrow multiple billions of dollars from the feds for unemployment benefits without regard for how they will pay the money back. If state-based benefits change, lawmakers will have some plan to pay for it.”

rcraver@wsjournal.com

336-727-7376

@rcraverWSJ

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