Written by Lorian Eades   

A dollar a day to keep destitution away! Not.

This week draconian cuts to unemployment benefits took effect here in NC.

The maximum weekly benefit was cut from $535 to $350 and duration of benefits was cut to 12 weeks.

How did this happen? The thinking was that the state should pay back the $2.5 billion in extended benefits that the federal government had loaned them. The Federal government wasn't asking for repayment, but our conservative lawmakers felt it was time to prod our worthless unemployed slugs to get off the couch and go to work. So, rather than increase the premiums that businesses pay for the unemployment insurance program, our leaders cut benefits to those who were receiving them.

Just to put this into some kind of perspective, consider that as of May NC had 4,320,014 citizens with jobs. We also had 424,551 officially unemployed citizens. Unemployment was increasing in every metropolitan area and overall 8.9% of the state is unemployed.

Currently, the maximum weekly reduction in benefits is $185 and duration was reduced by 14 weeks. This means that benefits for someone receiving the maximum unemployment income were reduced by $2,220 for the first 12 weeks and an additional $7,490 for the other 14 weeks leading to a total reduction in income of $9,710 for the six months that were covered before the laws were changed.

The state has decided that the people currently receiving benefits should shoulder the entire burden of repaying the debt incurred over the last 10 years because the rates paid by businesses for the insurance was far too low. This means that each current recipient "owes" $5,889 for benefits that others received while the business owners who laid them off continue to receive an artificially low insurance assessment.

If every unemployed citizen was receiving the maximum benefit, the reduction in payments would more than cover the $5,889 per employee that is owed.

However, unemployment benefits are supposed to be funded by insurance premiums that are charged to employers for each current employee. Unfortunately, the NC Department of Commerce Division of Employment Security failed repeatedly to raise premiums for over a decade even though unemployment was increasing every year and the system was spiraling into insolvency.

Now, to cover the entire debt for extended unemployment benefits would come to $578.70 per citizen currently with a job.

If businesses were assessed an additional $1 a day per employee for the next 3 years, it would completely cover the entire debt and the further costs of extended federal benefits.

Stated another way, about 12 cents an hour would pay for unemployment insurance and the debt incurred over the last decade of poor management.

I can't believe this would be a burden for any solvent business.

Of course, reductions in unemployment payments don't just harm the official recipient but impact their families as well. The real effect on these reductions will immediately cast over 1.1 million citizens into abject poverty.

On a more cynical note, since the unemployment rate is largely a reflection of the number of people receiving unemployment benefits, this will make NC appear to have more rosy economy as the unemployed fall off the rolls many months earlier and disappear into homeless destitution.