Q&A: North Carolina's unemployment insurance program

As many struggle to make ends meet on an income reduced yet again by the change, the debate rages on about how much the state should help the unemployed. Here are a few key questions to consider about North Carolina's unemployment insurance program.

Posted 4:00 p.m. Sep 12, 2013 — Updated 7:16 p.m. Jul 1, 2015

RALEIGH, N.C. — On July 1, 2013, about 65,000 unemployed workers in North Carolina lost federally funded extended unemployment benefits because of a new state law that overhauled North Carolina's unemployment insurance program.

1. What is unemployment insurance?

Each state administers a separate unemployment insurance (also called unemployment benefits) program, but in general, the state-federal programs are intended to provide temporary financial assistance to workers who have lost their jobs through no fault of their own and also meet other work and wage requirements.

Benefits are determined based on a worker’s earnings during a base period, and each state sets guidelines about how much money an unemployed worker can receive and for how long he can receive it. For most, the base period normally includes the first four of the last five completed calendar quarters. Benefits are subject to federal and most state income taxes, and they must be reported on income tax returns in North Carolina.

The first unemployment insurance program originated in Wisconsin in 1932, and by 1935, the federal government began encouraging individual states to adopt unemployment insurance plans. The North Carolina Employment Service was created on March 19, 1935, and the first payments were made available in January 1938.

North Carolina’s unemployment insurance program is federally funded, but benefits are paid through the collection of state unemployment taxes. The Federal Unemployment Tax Act gave the Internal Revenue Service authorization to collect federal taxes from employers to fund unemployment insurance programs.

2. Who qualifies for unemployment insurance?

In North Carolina, workers who become unemployed through no fault of their own can file a claim for benefits if they are willing to register for work, actively seek employment and are able and available to work if they are offered a job. The program is generally for people who are laid off from work and not a right to all who have lost their job.

Applicants must have worked in a job where their employer paid into the unemployment program and have received wages in at least two quarters of the base period.

Eligible applicants must also have been paid wages totaling at least six times the average weekly insured wage during the base period. The exact amount of unemployment benefits and duration of those benefits is determined on an individual basis, based on information provided by the worker.

The North Carolina Division of Employment Security has a benefit calculator on its website to estimate potential unemployment payments.

3. How many people in North Carolina are collecting unemployment benefits?

Reported monthly, statistics from the North Carolina Department of Commerce provide insight into how many people apply for unemployment benefits in the state.

In July 2013, 81,423 people were collecting unemployment, down 9,555 from June. In July 2012, nearly 111,000 people in the state were collecting unemployment benefits.

For a complete look at the state’s labor force, unemployed population and unemployment rate, visit the unemployment page on WRAL.com. It details the monthly statistics for the state and the U-6 unemployment date, which calculates a quarterly rate with factors that are left out of the standard unemployment rate.

Those who have given up looking for a job are considered marginally attached – people not actively looking for work who have indicated that they want a job and have unsuccessfully looked for a job in the past 12 months.

The U-6 rate combines the total number of people unemployed, marginally attached workers and the total number of people employed part time for economic reasons as a percent of the labor force.

In the second quarter of 2013, the U-6 rate was 15.6 percent, much higher than the month-to-month unemployment rates reported in April, May and June.

4. How does someone apply for unemployment benefits?

Those who have lost jobs through no fault of their own have several options when applying for unemployment benefits. They can file by phone, online or at a computer terminal provided by the Division of Workforce Solutions in local offices across the state. The online process available on the Division of Employment Security’s website takes about 30 minutes.

Before beginning, those seeking unemployment benefits should read a list of frequently asked questions found on the Division of Employment Security’s website. They detail everything about the unemployment benefits program, including how to apply to how to meet eligibility requirements for weekly benefit payments. To stay eligible, a person must be able, available and actively looking for work.

On the application itself, those seeking unemployment benefits should expect questions about education and employment history. The Division of Workforce Solutions uses that data to help people search for jobs, a key part of staying eligible for unemployment benefits.

The average wait time from filing benefits to receiving a first check is about four weeks. Funds can be accessed weekly by direct deposit or debit card.

Once in the system, job seekers must file a weekly certification to attest that they are looking for work and would be willing and able to take a job they are qualified for if it's offered to them.

5. How much is the average weekly check?

The weekly benefit amount in North Carolina is different for each claimant and is based on the total of wages earned in the last two quarters of the base period divided by 52. That number is then rounded to the next lower whole dollar.

In order to receive a payment, the total must equal to or exceed $15. The maximum weekly payout in North Carolina is $350, but the exact amount of benefits and the length of time they may be collected is determined on an individual basis.

Nearby states have similar maximum amounts: $378 in Virginia, $326 in South Carolina and $275 in Tennessee.

A person working a minimum wage job would earn about $290 per week. That's about one-quarter of the average household incoming in North Carolina, according to U.S. Census data.

Between 2007 and 2011, households in North Carolina brought in an average of $46,291 per year.

6. How long can someone collect unemployment?

Those collecting regular unemployment benefits from the state can do so for between five and 20 weeks depending on the seasonally adjusted statewide unemployment rate. The unemployment rate used to determine the length of unemployment benefits is calculated on Jan. 1 and July 1 each year.

People who work part time can collect benefits while working in limited circumstances. People who have returned to work full time should stop filing for unemployment benefits and notify the Division of Employment Security. If they are laid off again, they can re-file for benefits.

In July, about 65,000 people who had been out of work for months lost their federal long-term jobless benefits because of state lawmakers’ decision to overhaul North Carolina’s unemployment system.

7. Why did North Carolina cut people off?

During the 1990s, states gradually cut back on the unemployment tax they charged to businesses. When recession hit in 2008, and unemployment claims began to rise, the states lacked the funds to pay those benefits. They borrowed from the federal government, and that bill is now coming due.

North Carolina lawmakers had a tough choice this spring: Change how unemployment benefits are calculated, potentially cutting off benefits to tens of thousands of people, or allow the debt that state businesses owe to the federal government to continue as a drag on the economy.

The Tar Heel State was one of many in the same situation, but North Carolina lawmakers were the only ones who chose the quicker fix. On July 1, 65,000 people saw those extended benefits end.

Lawmakers agreed to a plan that reduced state unemployment compensation, eliminated extended benefits and raised employer contributions into the system. The maximum weekly benefit and the length of benefits were reduced. Under the plan, the $2.5 billion debt North Carolina owes will be paid off in 2015, three years early.

8. Where can I find out more about unemployment law?

The North Carolina Justice Center published a report in June analyzing the impact of lawmakers' decision to end federal benefits for the long-term unemployed, focusing on how the decision would impact families and the overall state economy.

In its report, the Justice Center argued that North Carolina had "run afoul of federal rules" that require that states maintain their existing benefit levels as long as the emergency federal benefits are available. The Justice Center also said local economies would feel "ripple effects" because of the cut in benefits.

The National Unemployment Law Project is a group that partners with national, state and local allies to "promote policies and programs that create good jobs, strengthen upward mobility, enforce hard-won worker rights and helps unemployed workers regain their economic footing."

9. Are there other resources for the unemployed?

The North Carolina Department of Commerce offers resources for workers on its Workforce Solutions website. The Division of Workforce Solutions administers programs that prepare residents for employment.

The Division of Workforce Solutions has a list of office locations on its website for workers who want to speak with someone in person.

NCWorks is a one-stop online resource for job seekers and employers. Workers can search for jobs, create resumes and find education and training, and employers can find candidates, post jobs and search labor market information.

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