Raleigh, N.C. — The General Assembly's plans to reduce the amount and duration of unemployment insurance in North Carolina, and as a side-effect cut off federal benefits in the state, has attracted the attention of Acting U.S. Labor Secretary Seth Harris, who took the unusual step of issuing a news release on a piece of state legislation.
For those who haven't been following this issue, North Carolina owes the federal government $2.5 billion to repay money borrowed to pay unemployment claims during the recession.
To minimize mandatory tax increases on businesses, lawmakers are pushing through a bill that will cut how much a worker may collect in weekly benefits and the duration of those benefits.
Under the bill, federal emergency extended benefits would be cut off for all state recipients, including unemployed military veterans. Such changes will trigger a provision in federal law that cuts off federal benefits provided to workers who have been unemployed longer than 26 weeks, when state benefits currently end.
The full Senate is due to hear the bill at 2 p.m. Tuesday. Watch it LIVE on WRAL.com.
Harris pegs the number of workers who could lose extended federal benefits at 170,000, much higher than the 80,000 to 100,000 estimates that have been bandied about the state. According to an email provided by The Associated Press, the federal government estimates that 104,000 will lose their federal unemployment benefits immediately on July 1. Another 66,000 people who would have become eligible for federal benefits between July 1 and the end of the year also would not have access to the extended unemployment insurance program, according to that email.
Harris says the federal government will have "no discretion" to cut off the aid.
In his news release, Harris wrote:
"The North Carolina legislature is considering legislation that would reduce state Unemployment Insurance benefits. If enacted, the legislation also would cut off all federally funded Emergency Unemployment Compensation – that is, benefits after 26 weeks of unemployment – to 170,000 unemployed North Carolinians. This cutoff is automatic under federal law. I have no discretion to stop it. As a result, families struggling to secure their place in the middle class will suffer a grievous blow, and the state's economy will lose $780 million in federal funds that are vital to reducing North Carolina's high unemployment rate.
"We know that for every dollar spent on Unemployment Insurance benefits, nearly $2 are generated in the local economy. Unemployed workers and their families spend these benefits in local grocery stores and small businesses and use them to stay current on mortgage or rent payments and utilities. For these reasons, UI programs are vital to economic growth in difficult times, particularly in states like North Carolina with high unemployment rates."