Effective Sunday, about 450 people in Wilkes County receiving long-term federal unemployment benefits will see their checks end.
They’re among about 70,500 people statewide losing these particular jobless benefits Sunday and about 100,000 more by the end of the year due to a combination of state and federal action.
Under a federal budget plan approved in early 2013, this compensation was set to continue until Dec. 31, 2013, in states that didn’t modify their existing unemployment insurance (UI) systems.
Because the N.C. legislature voted early this year to reduce maximum benefit payouts and the eligibility period as part of a reform of the state’s UI system, only in North Carolina are these benefits ending before the end of calendar 2013.
Benefits being stopped come from the federal Emergency Unemployment Compensation Program. These long-term benefits kicked in after jobless people exhausted their 26 weeks of state-funded benefits and provided as many as 47 additional weeks of benefits – at the 26-week payment level.
All people who started receiving unemployment checks before this past Jan. 1 are losing the benefits, according to the N.C. Division of Employment Security. Exceptions include people who became unemployed before Jan. 1, but then worked part of the time since that date.
The state legislation changed the maximum number of weeks a person can claim unemployment benefits from 26 to a new sliding scale of 12 to 20 weeks, starting Sunday.
As part of this change, the number of weeks a person can claim benefits decreases by one week to a minimum of 12 weeks with every 0.5 percentage point decline in the state jobless rate. When the state’s unemployment rate is greater than 9 percent, the maximum number of weeks a claimant can receive benefits is 20.
The state legislation also reduced the maximum unemployment payment by about a third, from about $535 under the way it is calculated now to a flat maximum of $350 per week.
In addition to about 450 Wilkes residents receiving long-term federal unemployment benefits, nearly 600 Wilkes residents receive state unemployment benefits.
On Tuesday, representatives of nearly 24 advocacy organizations again pleaded with Gov. Pat McCrory and legislators for a six-month delay in the loss of federal emergency unemployment compensation. This was the third time the groups made the request.
A letter they submitted Tuesday stated that the loss of benefits starting July 1 would “almost certainly undermine any ongoing economic recovery efforts in North Carolina with hundreds of millions of dollars in benefits being lost.”
The state estimates that extended federal benefits pump about $20 million a week into North Carolina’s economy.
Groups signing the letter included the N.C. Justice Center, N.C. AFL-CIO, N.C. Council of Churches, American Association of Retired Persons, Disability Rights N.C., Teamsters Local 391, American Association of University Women and the N.C. Association of Women Attorneys.
Earlier Tuesday, N.C. House Republicans defeated a Democratic attempt to extend the benefits. Republicans say they want to speed up paying off over $2 billion the state borrowed from the federal government to fund jobless benefits beginning in 2008.
Advocates of scaling back jobless benefits say this will accelerate paying off the debt, which triggered higher federal unemployment taxes for businesses.
The law that scaled back benefits also raised the unemployment insurance tax on most businesses until the debt is paid off, projected to be by the end of 2015.
Gary Salamido, a lobbyist for the N.C. Chamber, told the News & Observer in Raleigh that North Carolina businesses paid $395 million in additional federal and state taxes last year because of the situation. Individuals don’t pay unemployment taxes.
Business leaders have also acknowledged that a series of reductions in the state unemployment taxes paid by businesses in the 1990s contributed to the situation, but they say unemployment benefits in North Carolina have been more generous than in surrounding states.
The N.C. legislature’s Joint Revenue Laws Study Committee, citing data from the W.E. Upjohn Institute for Employment Research, found that North Carolina’s then-maximum weekly benefit was the highest in the Southeast and $91 more than the No. 2 state in the region, Kentucky.
The data also showed the average weekly benefits paid out by the state were below the national average and just a few dollars more than Virginia and Kentucky.
North Carolina has the fifth highest unemployment rate among the 50 states.