New unemployment regulations passed by the N.C. General Assembly in February take effect July 1, when unemployed North Carolinians, including approximately 250 here, will see reduced benefits on a sliding-scale duration, and employers will pay higher unemployment taxes.
The GA began the 2013 legislative session with unemployment reform a top priority: the state owes the federal government $2.5 billion in jobless benefits paid to N.C.’s unemployed during the “Great Recession.”
Under the state’s new unemployment insurance program, maximum weekly benefits for regular unemployment will be $350, reduced from $535.
According to new regulations, weekly benefits will be calculated by adding all the claimant’s wages for the last two quarters, dividing by 52 and rounding down to the next whole dollar amount.
Based on this formula, a worker who was paid $7.50 per hour for 40 hours per week for the six months prior to becoming unemployed would receive a $138 per week. A full-time worker who earned $10 per hour would receive $184 per week.
Benefit duration will be determined on a sliding-scale depending on the statewide seasonally-adjusted unemployment rate over the six-month base period during which the claim is filed. Claimants will receive a maximum 20 weeks of benefits if the unemployment rate is above nine percent, and a maximum 12 weeks if the unemployment rate is 5.5 percent or less.
The changes will not affect any claimant currently drawing benefits, or anyone who files for unemployment through June 30, according to Department of Commerce spokesman Josh Ellis.
“If anybody has any questions about ‘Am I impacted?’ we have made information available on the Division of Employment Security’s Website,” Ellis said. The DOC also has information on help with job searches and job training at http://nccommerce.com/workforce.
There are currently about 300 claimants in Ashe county drawing regular unemployment benefits, Ellis said.
Regular unemployment benefits paid in Ashe from March, 2012, to February, 2013, totalled $4,393,769.
Employers are required to make contributions to the state’s Unemployment Insurance Fund computed as a percentage of taxable wages paid to employees in a fiscal year.
Under new regulations, the “standard beginning rate” is one percent, with employer base rates adjusted according to an experience rating determined by the employer reserve ratio percentage (EERP). A positive EERP means a lower contribution rate while a negative EERP means a higher contribution rate.
The minimum employer contribution rate is 0.06 percent, the maximum 5.76 percent.
A surtax of 20 percent of an employer’s total contribution is in effect until the state’s $2.5 billion federal debt is paid off. The N.C. Chamber of Commerce estimates the surtax will cost employers an average $21 per employee per year.
Based on these percentages, an employer contributing at the standard beginning rate would pay $187 per year for a full-time, minimum-wage employee.
Federal benefits cut
The legislature’s unemployment revamp violated the federal Emergency Unemployment Compensation (EUC) program’s, “non-reduction rule,” meant to discourage states from reducing jobless benefits before the program expires at the end of 2013. According to the rule, “any state with legislation enacted…that violates the non-reduction rule” is subject to termination of its agreement to administer (EUC).”
About 250 Ashe Countians currently drawing approximately $290 per week through EUC will be cut off July 1, losing 26 weeks of benefits.
The local economy will lose those benefits, too. Last year, Emergency Unemplyment Compensation pumped about $60,000 per week into Ashe County’s economy, with $3,052,344 in EUC benfits paid in the county from March, 2012, to February, 2013.
About 70,000 unemployed North Carolinians will stop receiving EUC benefits at the end of this month. Another 91,000 currently drawing state unemployment will have no EUC available when their benefits run out.
Jobless rate remains high
Ashe County’s jobless rate remains stubbornly high, with the DES reporting 11 percent in April. The county has averaged 12.8 percent unemployment over the last four calendar years, and has experienced double-digit employment since December, 2008.
Ashe most recently averaged “full employment” — generally accepted by labor economists as 3-6 percent unemployment — in 2007.
The U.S. Department of Labor classifies people as unemployed “if they do not have a job, have actively looked for work in the prior four weeks, and are currently available for work.”
The “official” unemployment rate used by the government and the media represents the percentage of the total civilian labor force who want to work, but can’t find employment.
But in the context of persistent high unemployment, other measures of labor underutilization are used to get a handle on dynamics the official unemployment rate — known as the U-3 — doesn’t measure.
The U-6 unemployment rate accounts for two other groups: those who have unsuccessfully looked for work in the last 12 months and are no longer looking — called “marginally attached” workers — and those who want full-time employment, but have taken part-time work for economic reasons.
While N.C.’s U-3 jobless rate has slowly but steadily declined from a high of 11.4 percent in February, 2010, the state’s U-6 figure from the second quarter of 2012 through the first quarter of 2013 was 16.2 percent.
Allan Freyer, a policy analyst with the N.C. Budget and Tax Center, said in a May press release, “The unemployment rate is dropping because jobless folks are giving up on finding work and dropping out of the labor force, not because we’re experiencing significant and meaningful job creation.”