N.C. offers nation example of end of extended jobless aid

Dec. 27, 2013 @ 05:00 PM

As the nation prepares to cut off an extended unemployment program that North Carolina already ended six months ago, a recent report on state jobless benefits shows what might be coming for the rest of the country.
The national extended unemployment compensation program will end effective this weekend for upward of 1 million long-term, out-of-work Americans because Congress didn’t renew the assistance. However, extended jobless benefits were a thing of the past in North Carolina as of this past summer.
Republican Gov. Pat McCrory and the GOP-controlled N.C. General Assembly ended the state’s participation in the program, confronting a $2.5 billion debt to the federal government for jobless assistance. So North Carolinians who are out of work for long periods have been coping with finding some source of income without jobless benefits since the first of July.
A recent report on unemployment benefits payments in the state by an economic research firm shows a dramatic decline in people receiving assistance. The number of claimants getting state-funded unemployment insurance compensation totaled 58,432 this November, down by 42,514 claimants, or 42 percent, from November 2012.
The state paid $52.6 million in state-funded unemployment insurance compensation this November, 44 percent lower than the total of $94.7 million paid in November 2012, according to research by South by North Strategies.
In addition to limiting the number of weeks out-of-work North Carolinians can receive benefits, McCrory and the General Assembly capped the maximum weekly benefit that previously was up to $535 to no more than $350.
However, during the second half of this year, the state’s unemployment rate has declined noticeably.
“The Tar Heel state’s unemployment rate has fallen 2 percentage points over the past year, marking the largest decline of any state in the country. Three quarters of that drop has occurred in just the past four months,” according to Wells Fargo’s most recent North Carolina economic report.
The governor’s office touts the jobless rate decline, saying it shows the policies of the Republican leadership of the state are paying off.
“We are thankful that new businesses are investing in North Carolina but just as thankful that existing businesses are feeling the confidence to reinvest in our great state as well,” McCrory said in a statement last week.
Still, John Quinterno, an economic researcher and principal with South by North Strategies out of Chapel Hill, said the large drop in unemployment compensation reflects a sobering reality. While new jobs are being created, many out-of-work North Carolinians who can’t get extended unemployment benefits are dropping out of the labor force and no longer are counted as part of the state work force.
“While North Carolina’s unemployment rate fell sharply over the past year, most of the decline was attributable to a contraction in the size of the state’s labor force, which now has 95,009 fewer members — minus 2 percent — than it did a year ago,” Quinterno said.
Unemployment compensation keeps jobless men and woman “anchored in the labor force” by compelling them to submit job applications as part of receiving benefits, Quinterno said.
“You want people to be engaged in the labor force, to be able to replace at least a portion of their pre-unemployment earnings, because it helps them and local economies,” Quinterno told The High Point Enterprise.

pjohnson@hpe.com | 888-3528