Unemployment insurance provides financial support for workers who have lost their jobs through no fault of their own. Unemployment benefits help families avoid financial disaster and give workers time to seek new employment.
- More than 800,000 Americans avoided poverty in 2014 because of unemployment insurance.
- Only about 1 in 10 unemployed workers in North Carolina receive unemployment insurance, the lowest level in the nation. Workers who do receive unemployment insurance, receive roughly a third of what they were earning at their previous jobs.
Funding for unemployment insurance comes from federal and state payroll taxes and is saved in the Unemployment Insurance (UI) Trust Fund. The system should have a forward-financing design—employers pay into the system in good times so money is available to pay out benefits when the economy slows, unemployment claims grow and employer contributions shrink.
However, North Carolina significantly cut employers’ contributions to the trust fund during the boom times of the 1990s, resulting in a severe shortage of needed funds now. In 2013, policymakers undertook the most drastic cuts to a state’s unemployment insurance system in the country: reducing the number of available weeks, changing the way benefit amounts were calculated, capping the maximum amount a jobless worker could receive to an arbitrary amount, restricting eligibility and eliminating funding for job search and training supports.