I think this gets most if it - I had over a dozen pages open when I posted, trying to find the most current info, but these seem to sum it up nicely:
North Carolina’s Unemployment Insurance System: Unprepared for Recession, Despite Solvent Trust Fund
3/11/2020
(Includes some very good illustrations)
North Carolina is one of 10 states that reduced the maximum duration of benefits from what was previously the standard of 26 weeks. The UI legislation passed in 2013 reduced maximum benefit duration from 26 weeks down to a range of 12 to 20 weeks, depending on the unemployment rate. The unemployment rate required to hit the 20-week maximum is an astoundingly high 9 percent; an unemployment rate below 5.5 percent triggers the 12-week maximum duration.
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The sharply truncated UI benefit durations in North Carolina have compound negative effects on workers. They force workers to accept lower-paying jobs and jobs that are a worse fit for their skills and experience. This not only drives down wages but can result in shorter periods of subsequent employment as well. This effect is exacerbated by the fact that the 2013 law also changed the pay-level standard for a “suitable replacement” job—one that would require a claimant to accept a job offer or lose benefits. Now, if a job offers just 50 percent more than a worker receives in UI benefits, even if that job is part time, the worker would have to accept the offer.
The reduction in benefit durations also limits the available support from federal UI extensions during economic downturns. Historically, there are two ways that UI benefits can be extended during recessions. One is an automatic extension included in federal law called Extended Benefits (EB). Although colloquially thought to provide a uniform 13 weeks, EB can actually provide up to 20 weeks, or 80 percent of the total state benefits, depending in part on that state’s unemployment rate. The second way requires Congressional action. In fact, Congress has regularly enacted further supplemental extensions during recessions, such as the Emergency Unemployment Compensation program in the most recent recession.
Because federal extensions are based on existing state UI benefit durations, states that reduce UI durations lose out on weeks of federally funded benefits at a time when the state economy is most in need of a boost. Economists Alan Blinder and Mark Zandi examined all stimulus expenditures during the peak of the last recession and found that UI benefits had some of the most positive local economic impacts. They found that each dollar paid in UI produced $1.61 in local economic activity. North Carolina would stand to lose out on that multiplier several times over as a result of its shortened benefit durations. The U.S. Government Accountability Office looked at how much unemployed workers would have receive had they entered the last recession with the reduced duration of benefits and found that an average North Carolinian who was eligible for all of the UI extensions would have received between $21,973 and $24,381 less over their period of unemployment.
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UI Recipiency
Recipiency is a measure of the share of unemployed workers receiving unemployment benefits. Historically, this number hovered around 50 percent. Clearly, not all workers who are out of work will qualify for UI for a variety of reasons. Some have exhausted their benefits; some left work for reasons that do not qualify them for UI; some may have no need or inclination to seek work; others choose not to file for UI for some reason. Overall, the recipiency rate has been declining nationwide, but it has slowly ticked up a bit in the past couple of years.
North Carolina’s recipiency rate has plummeted and is now the lowest in the United States. It was 9.1 percent for 2019, dropping as low as 8.3 percent in the third quarter.
Full PDF available here:
National Employment Law Project Policy Brief
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The time to fix NC’s broken unemployment insurance system is right now
3/18/2020
Once upon a time, North Carolina’s unemployment insurance program was well-positioned to deal with such crises by not only providing critical assistance to laid off workers and their families, but also by helping to shore up the economy when times got hard. Families’ rents, mortgages, utilities and other necessities got paid for with unemployment insurance benefits while they weathered the downturn. Unfortunately, that assistance is no longer available at the scale that is needed to protect workers from further harm and contain the ripple effect of this shock to our economy.
In 2013, the North Carolina General Assembly and then-Gov. Pat McCrory approved House Bill 4 with the stated objective of bringing solvency to the state’s Unemployment Insurance Trust Fund, which is funded by taxes on employers and pays unemployment benefits to laid-off workers.
Ultimately, the bill achieved solvency for the trust fund, but only by permanently cutting the amount, duration, and eligibility for benefits for all unemployed workers. All told, the changes enacted in North Carolina amounted to the most severe cuts ever enacted by any state during the 80-plus-year history of American unemployment insurance. At the time, legislators claimed that when the trust fund was solvent, these draconian cuts would be revisited.
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The cuts made in 2013 have resulted in three enormous problems and deficiencies for the state’s program.
First, only 8.6 percent of jobless workers in North Carolina received unemployment insurance in the third quarter of 2019, ranking the state 51st in the country (including the District of Columbia and Puerto Rico).
Second, the average duration of unemployment insurance in North Carolina is just 8.6 weeks, ranking last in the country. This short duration is, in part, a function of the state’s arbitrary sliding scale that ties the number of weeks of benefits to the state unemployment rate.
Finally, North Carolina provides just $264.70 each week on average to jobless workers and a fixed maximum of $350, despite the average weekly wage in the state being $986. The state is replacing just 32 cents for every $1 in lost income, circulating far fewer dollars than recommended by economists who typically seek a replacement rate of at least 50 percent.
The upshot of all this is that a very big “I told you so” moment is about to occur in North Carolina unless state leaders (starting with the General Assembly) take action to rebalance the state’s unemployment insurance program. Being last in how we help unemployed workers and their families is not something to be proud of, especially in these unsettling times.
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