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.
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.
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.
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.
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.
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.
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.
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.
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.
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.