One in five of the state’s unemployed workers will be affected
RALEIGH (June 27, 2013) — As a result of legislation that passed earlier this year, the federal unemployment compensation program will end in North Carolina on June 30, directly impacting an estimated 70,000 North Carolinians across the state’s 100 counties who are out of work by no fault of their own, according to a new report from the Budget & Tax Center, a project of the North Carolina Justice Center.
As of June 30, an estimated additional 70,000 North Carolinians will not be able to access Emergency Unemployment Compensation (EUC) benefits that allow jobless workers who are exhausting their state-funded unemployment benefits to receive additional weeks of benefits through the end of 2013 – paid entirely by the federal government. Thanks to the massive and unprecedented cuts made to the state’s state-funded unemployment benefits by state legislators and Gov. McCrory in the early days of the 2013 legislative session, the report said, an estimated $600 million in these federal benefits will be lost to North Carolina’s economy.
EUC provides anywhere from 14 to 47 weeks of emergency, federally funded benefits, the report said, depending on the state’s unemployment rate. As of May 2013, North Carolina’s unemployment rate stood at 8.8 percent, meaning jobless workers could have received up to 37 weeks of federal EUC benefits if they exhausted their eligibility for regular state benefits without finding work. Currently, jobless workers can receive a maximum 26 weeks of regular state-funded benefits. Added together, workers could qualify for a maximum of 63 weeks of unemployment insurance benefits.
The loss of these federal benefits will reduce the number of weeks available to jobless workers in North Carolina by 70 percent to just 19 weeks, the report said. In every other state across the U.S., jobless workers will continue to receive emergency federal unemployment benefits until the end of 2013, and perhaps longer if Congress extends the program.
The huge cuts in benefits run afoul of federal rules, the report said, which require that states maintain their existing benefit levels as long as the emergency benefits are available and that no changes be made to the formula by which the weekly benefit amount is calculated. States that flout the rules and cut their benefit levels are no longer eligible to receive the emergency federal benefits.
There is likely to be significant economic challenges for the 70,000 workers across North Carolina who abruptly lose their benefits on June 30, as unemployment benefits provide a modest yet vital support, the report said. These benefits allow families to meet their most basic needs but often remain insufficient to cover all a family’s weekly costs relying on many going without or relying on credit and thus more susceptible to being pushed into poverty.
“There will also be ripple effects for businesses and the broader economy,” said Alexandra Forter Sirota, director of the Budget & Tax Center and author of the report. “The loss of the estimated $600 million in federal funds coming into North Carolina through the emergency program could translate into a loss of as much as $1.2 billion in economic activity.”
Read the complete report here.
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