Fact Check: Moving to NC to collect unemployment?
Posted January 13, 2014
Raleigh, N.C. — The claim: During a recent taping of NC Spin, Gov. Pat McCrory was asked to defend controversial changes to the state unemployment system. As part of that conversation, he said that, until those changes were put in place, people were moving to North Carolina because the state's benefits were among the most generous in the country.
"We had the ninth-most-generous unemployment compensation in the country," McCrory said. "We were having a lot of people move here, frankly, from other areas to get unemployment ... People were moving here because of our very generous benefits, and then, of course, we had more debt."
The question: Were people moving to North Carolina attracted by unemployment benefits?
The backup: In general, McCrory has argued that unemployment insurance reform was necessary because the state didn't have the money to pay new unemployment insurance claims. As a result, the state borrowed roughly $2.5 billion from the federal government, which in turn triggered automatic tax increases for businesses. Those taxes, he has argued, are a drag on hiring.
What's new about his statement on NC Spin is that McCrory implied a significant portion of those new claims came from people moving to North Carolina from elsewhere. WRAL News asked McCrory spokeswoman Kim Genardo where McCrory got the information regarding benefits.
"The governor was referring to personal stories he’s heard," she said.
Genardo also pointed to three different sources that discussed unemployment benefits. They include a Politico story on North Carolina's unemployment insurance changes, a paper co-authored by Alan Krueger, a former adviser to President Barack Obama, and a report by the Congressional Budget Office. All those of those documents discussed why paring unemployment benefits might spur people to find work, but none of them addressed the question of whether people move to states for more generous unemployment payments.
More information: If someone did move to North Carolina expressly to file for unemployment insurance, they would likely be disappointed.
Generally, state unemployment insurance payments are based on the amount of time a worker has earned wages in the state. According to North Carolina's Division of Employment Security, the minimum qualification for someone to apply for benefits is for someone to have worked in a job for which unemployment insurance tax was collected "in at least two (2) quarters of your base period." Base periods can vary but are typically the last 15 months.
Although there are exceptions, the easiest way to think about this is someone would have had to work in the state for around six of the last 15 months in order to be eligible for benefits. The amount of someone's benefit is governed by how long they worked and how much they made. Although the recently passed unemployment insurance reform bill changed the amount of benefits paid, it did not significantly change the five-quarter base period definition.
Workers who move from other states but haven't worked in North Carolina can tap their former state's unemployment insurance, but those payments come from the state where they earned their wages.
From the experts: Andrew Brod, an economist and researcher at the University of North Carolina at Greensboro, said that McCrory's claim "defies reason."
This isn't the first time Brod has looked at this claim. In November, Commerce Secretary Sharon Decker told an audience that the state's unemployment rate remained high because of the "headwind" of people moving here. She did not claim that people were moving here for unemployment benefits, but her claims got some push back from economists who said her statement cited old data.
At the time of Decker's remarks, Brod wrote a column relying on census data that showed fewer people were moving for any reason. Only a small percentage – somewhere between 2 and 3 percent – of those who do move, he said, moved because they were laid off.
"People are a little bit more likely to stay in place and suffer the slings and arrows of an outrageous recession," Brod said.
He said it's important to keep in mind that not everyone who is moving is moving across state lines. Some people will just move to the neighboring county or across the state.
Can he rule out people moving to a state because its safety net is better?
"No, it could be a phenomenon," he said. "But it's numerically so small there's no way it's affecting the kind of traction that North Carolina gets on its economic policies."
The call: North Carolina's own rules prohibit people who have not worked in the state from tapping the state's unemployment insurance system, and economists say there's scant evidence for people moving across state lines for any work-related reason, much less because they're comparison shopping for unemployment insurance.
Given that McCrory can offer scant evidence for his claim, it would be hard not to rate his statement as false.