Cut to unemployment benefits looms

Rules change July 1
Feb. 28, 2013 @ 07:46 AM

If you are unemployed, your weekly unemployment insurance benefits could be cut by up to one-third beginning July 1, thanks to a bill signed into law last week.

The bill, designed in part to help pay back $2.5 billion owed by the North Carolina to the federal government for jobless benefits paid since the Great Recession, was signed into law Feb. 19 by Gov. Pat McCrory. The law also reduces the maximum number of weeks anyone can receive benefits from 26 to as few as 12, based on factors such as the state unemployment rate.

James Rackley, who has been unemployed since October 2012, bristles at the new legislation. He feels the law hurts displaced workers already suffering from a sour local economy.

“I would ask Gov. McCrory to go outside Raleigh and quit looking at the numbers he’s being fed,” Rackley said. “If he opened his eyes and saw how drastic the problem is here in Western North Carolina, he wouldn’t have passed the bill. He should have been more informed.”

Rackley’s job woes began way back in 2003, when he was laid off from Broyhill Furniture. He worked odd jobs for the next three years and says he was finally able to go back to school and graduate from Caldwell Community College and Technical Institute with an associate's degree in 2008. He also earned career-readiness certification from the college. He started his own company, Computechs of Caldwell County, but, in his words, “business bottomed out.” Through a temporary staffing service he found work at Lowe’s Home Improvement, where he worked in IT until last April. He worked for a short while at the Biz Center, a sweepstakes parlor on Morganton Boulevard, but decided to try and restart his IT company, with no success. Now divorced and on his own, he again signed up for unemployment insurance benefits.

Rackley is nearing the 26-week window on benefits before filing for an extension. He subsists on $250 per week; he pays $300 a monthfor his car payment, along with another $100 for insurance. And there’s still the cost of gas and food. If not for his custodianship of his grandfather’s estate, his bills would surely outstrip his ability to pay.

“I have already had to get help from my parents,” Rackley said.

The N.C. Justice Center says about 80,000 unemployed workers in North Carolina will lose the federally-funded extension of unemployment benefits on July 1. Only one state currently has a sliding scale for benefits that begins as a low as 12 weeks, the Justice Center says. George Wentworth of the National Employment Law Project says the changes would take North Carolina’s unemployment compensation program from one that’s roughly average compared to other states to a program that would be near the bottom in how workers are treated.

Chris Fitzsimon, the executive director of N.C. Policy Watch, wrote on his organization’s website: “That’s not shared sacrifice, that’s Robin Hood in reverse, the well-connected corporate interests using the lingering effects of the Great Recession as an excuse to overhaul the unemployment system they never liked much in the first place, a program that was designed to help both families and the state’s economy weather a crisis.”

According to Mitch Kokai, political analyst for the John Locke Foundation, a conservative think tank, the new law is a needed step for North Carolina’s fiscal health.

“The unemployment insurance system in this state has fallen way behind in terms of the amount of money owed to the federal government to pay for unemployment benefits generated during the Great Recession,” Kokai said. “If lawmakers had done nothing, the ($2.5 billion) debt would have been paid through tax increases on businesses, which already pay unemployment insurance taxes. The state would be adding a surcharge per worker, per business, until it reaches a cap. This would take five to six years to accomplish.”

The law still leads to tax increases for businesses, just not as much as it would without the benefit cuts, Kokai added.

Kokai has mixed feelings about the state of economic recovery.

“Signs point to at least slow growth. Some say we are dipping back into a recession,” he said.

Rackley’s own economy is just as uncertain.

“I want a career, not a state check,” he said. “I hate being on unemployment, but until something is done to even the playing field, I have no choice.”