Unemployment Insurance Reform Moves Closer To Adoption | Eastern North Carolina Now

    Publisher's note: The author of this political post Barry Smith, who is an associate editor to the Carolina Journal, John Hood Publisher.

Play would retire debt to feds early; liberals say benefit cuts too painful

    RALEIGH     An interim legislative committee Tuesday set the stage for a major battle over unemployment insurance benefits when the General Assembly gears up later this month.

    The Revenue Laws Study Committee recommended that lawmakers cut the maximum number of weeks workers can receive unemployment benefits from 26 weeks to 20 weeks and recommended that the maximum weekly benefit be reduced from $535 to $350. The number of weeks an unemployed person could receive benefits would decrease to 12 weeks if the state's unemployment rate improved to 5.5 percent or lower.

    The move is an attempt to repay the federal government $2.5 billion the state borrowed to pay for benefits during the Great Recession. Under the current repayment plan, the state would repay the debt by 2018. If the new proposal is adopted, the debt could be repaid by 2015.

    Advocates for business and industry hailed the proposal as a measure to retire a debt that hinders job creation ahead of schedule.

    Advocates for unemployed North Carolinians say the proposal is unbalanced and would pay off the debt on the backs of unemployed workers.

    "It's cutting the scope of the program in half," said George Wentworth, a senior staff attorney with the National Employment Law Project, during a news conference sponsored by the N.C. Justice Center moments after the committee approved the recommendation.

    "You're talking about the effectiveness of unemployment insurance as wage replacement really being substantially diminished," Wentworth said.

    During committee debate, Rep. Edgar Starnes, R-Caldwell, said that the benefit reductions only would affect higher income earners.

    "This will not impact the average worker in the state of North Carolina," Starnes said.

    Wentworth said that it would reache workers making as little as $35,000 to $50,000 a year. "I don't consider that range to be a high wage earner," Wentworth said.

    Andy Ellen, president of the N.C. Retail Merchants Association, compared the move to paying off a credit card earlier and putting the state in better shape before the next recession hits.

    "It's sort of like paying a minimum payment on your credit card every month," Ellen said, referring to the current rate of paying back the loan. "That's going to hurt job creation. ... We cannot afford to not have paid off the debt and have to turn around and start borrowing money from the federal government again."

    "The debt has to be paid back to the federal government, said Gregg Thompson, state director of the National Federation of Independent Business.

    Thompson said he was aware that reduced benefits for unemployed workers would cause difficulties for some.

    "We have a much richer unemployment benefit plan than all of our surrounding states," Thompson said. "That's one of the reasons we are sitting around with a $2.5 billion debt to the federal government."

    Sen. Floyd McKissick, D-Durham, said that the move could impact thousands. He said he hoped some sort of compromise could be worked out before the proposal becomes law.

    In addition to reducing the maximum benefits and the number of weeks of benefits, the proposal would also:

   • Require workers who have collected benefits for 10 weeks to accept any work offered.

   • Require governmental entities and nonprofits that finance benefits through reimbursements to maintain a reserve of 1 percent of its taxable wages.

   • Require companies that have not been paying unemployment taxes because they have not tapped into the unemployment insurance fund to start paying them. Taxes on companies at the other end of the spectrum that have been providing the most unemployment benefits would increase as well.