The State of Unemployment in North Carolina
As the citizens of North Carolina sit down to root for the Blue Devils and Tar Heels, as well as the Wolf Pack and Demon Deacons, the state legislature is gearing up to tackle $2.5 billion in unemployment insurance debt. Although it seems like trillions have become the new billions in the media, this is still a staggering number.
North Carolina is attempting to face down massive accumulated debts from tapping into the federal government’s benefit extensions. The Republican chamber of the state legislature is working towards a plan to pay down the debt through a combination of cuts to current unemployment benefits and rate hikes on employers. The proposed plan would not only erase the debt by 2015, but would create a $2.3 billion dollar reserve by 2021 through the following:
- Cutting unemployment benefits by roughly one-third
- Reducing the maximum number of weeks that one could acquire benefits (further reducing
this metric when unemployment is low)
- Eliminating the zero UI tax rates on some companies
- Raising maximum and minimum rates of taxes that businesses pay per employee
- Continuing with current tax surcharges
The proposal, however, has tottered out into public opinion, much like the Wright brothers first wavering flight over the sands of Kitty Hawk, North Carolina. The Chamber of North Carolina and the North Carolina Retail Merchants Association came out in favor of the plan, applauding the actions as balanced between their effects on both citizens and businesses. However, critics of the plan feel that the burden falls too heavily on the unemployed, as the cuts to benefits are permanent while the rate hikes on businesses are set to expire after several years (in fact, some employers might even see tax rates reduced through the law). Some of the more impassioned critics have noted that if North Carolina had simply been taxing employers at the national average over the last twenty years, the state would owe the federal government no money and, in fact, have a $2.8 billion insurance surplus in state coffers.
Legal issues in North Carolina are known to become tense, especially if a lawmaker is attempting to confirm either Lexington or Eastern style barbeque as the official state barbecue. But the aforementioned issues are particularly strained in North Carolina where unemployment, which remained at 9.1% through November 2012, is at one of the highest rates in the country. Experts have attributed this unusually high rate to a manufacturing sector that has been hit hard as consumers cut back on major appliance and textile purchases in response to the Great Recession. In addition, the state also has a high rate of incoming citizens – five times the national average – many of whom remain unemployed.
Further complicating this issue are repercussions from the federal fiscal cliff deal. North Carolina was recently saved from having to drop approximately 100,000 benefit recipients through the extension of unemployment insurance mandated within the deal. However, it now seems that the proposal has encountered a complication, as the language of the fiscal cliff deal only extends insurance for states that maintain their current level of benefits. If passed, the changes in the debated law are proposed to go into effect July 1st, 2013. Stay tuned for further updates!
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