Benefit overhaul could hamper communities

Feb. 06, 2013 @ 06:00 AM

Now that a sweeping unemployment benefit bill has swept through the North Carolina House, the question remains: What does it mean?

On Monday night, the House voted to pass a bill that lowers the maximum weekly unemployment benefit to $350 and cut the maximum length of those benefits to 20 weeks, effective July 1, 2013.

But, Kevin Rogers, director of policy and public affairs at ActionNC, said that communities with higher unemployment — Rutherford County's unemployment rate was over 13 percent in December 2012 — the impact will take its toll on the overall economy.

"One would imagine that communities with more depressed economies will see reactions right away after the bill goes into effect," Rogers said. "With the way the scale has changed, not only will people get less, but the time they get it will also be less.

"It is kind of a double-whammy going on here."

House Republicans moved the bill through as a means to pay the state's $2.6 billion unemployment benefit debt to the federal government.

"This bill will make North Carolina more competitive for economic development and make it easier for job creators to hire more workers," said House Speaker Thom Tillis, R-Mecklenburg.

According to the Fiscal Research Division of the General Assembly, utilizing an increase in federal unemployment taxes to businesses, the state's Unemployment Trust Fund balance will return to the positive in 2015. At that point, the business taxes will return to half of their 2013 rate but the maximum benefits and the reduction in the maximum weeks those benefits would be paid will not.

In fact, the state's fund would be replenished to the tune of $2.265 million by 2021.

Some disagree and contend that the bill does nothing more than shoulder the state's debt on the unemployed. A large reason for that is a sliding scale used in the bill to determine the duration of unemployment benefits.

The scale is determined based on the seasonally adjusted statewide unemployment rate, which some believe will hurt those unemployed in counties were unemployment is significantly higher than the state average.

According to a report from the North Carolina Justice Center, counties with higher unemployment — such as Rutherford, which as the sixth-highest unemployment in the state —  could see the unemployed have their length of benefits reduced using the adjustable scale.

"There is no way of looking at it and not see that people will have a much, much lower amount of time," said Kevin Rogers, director of policy and public affairs for ActionNC "That is the whole key to this bill ... getting people off the rolls of unemployment."

Currently, only seven states have maximum weeks of benefits below 26 and only Florida has a sliding scale to determine the timeframe.

The bill also adds one week to the wait time that unemployed will have before receiving their benefits. Currently the state has a one-week wait time. The bill will jump that to two weeks, making it the only state to have more than one week.

"The business community and our citizens understand the need to fix this problem so we can be in a better position to create jobs and move people off of unemployment and into the workplace," said state Rep. Julia Howard, R-Davie, the senior chair of the House Finance Committee.

Upon passage in the House, the bill will move to the Senate where a similar bill has already been introduced. Rogers said it is likely the bill could be heard on the Senate floor by the end of the week.