Misplaced priorities on unemployment insurance symbolize the callousness of conservative policies
If a person wanted to understand what’s wrong with North Carolina’s government these days and how the folks in charge have lost sight of the forest in a wasteful and destructive obsession with inspecting the paperwork associated with each and every little tree, he or she would have done well to attend yesterday’s meeting of the Joint Legislative Oversight Committee on Unemployment Insurance.
The backdrop: A time of crisis
The meeting came at a time of what can only be described as profound crisis for the state’s unemployment insurance system – the social safety net program that’s supposed to provide a cushion for families whose breadwinner has lost his or her job through no fault of their own. Despite the fact that the state’s economy and employment picture remain extremely weak, the number of workers accessing insurance benefits has been dropping like a rock for months.
According to the most recent U.S. Department of Labor statistics, a scant 13% of unemployed North Carolina workers are now receiving unemployment insurance benefits. Add to this the fact that benefit levels themselves have been slashed and that the length of time that one may receive benefits has also been dramatically reduced (half of those who manage to obtain benefits now exhaust them before they find work) and you get an idea of just how grim the picture has become for hundreds of thousands of unemployed North Carolinians.
The most recent edition of the North Carolina Justice Center’s “Prosperity Watch” series provides more details on how dysfunctional the unemployment insurance system has become. As author Allan Freyer reports:
“More and more jobless North Carolinians are not able to access unemployment benefits that help them make ends meet at time when a troubled economy just isn’t creating enough jobs for those who want them. Policy changes enacted in 2013 dramatically cut the amount of time workers are eligible to receive benefits and made various changes to eligibility criteria, payment formulas and administration of the program. Since those changes have taken effect the number of jobless workers not covered by the state’s unemployment insurance system grew twice as fast as the rest of the South and more than three times as fast as the national average….The decline in the coverage of unemployment insurance means that the system is less able to provide these broad economic benefits and more likely to underserve jobless workers who have lost their jobs through no fault of their own.…There are two reasons that the number of jobless workers receiving unemployment insurance would go down, changes in the labor market that would make jobless workers ineligible or changes to the program rules that would restrict access. In 2013, policymakers in North Carolina enacted the most significant overhaul to a state unemployment insurance system. The changes began to take effect on July 1, 2013 and included reductions to the weeks available (moving from the standard 26 week maximum to now 14 weeks), changes to the benefit formula reducing weekly benefit amounts, caps on maximum benefit amounts, elimination of various eligibility provisions that allowed for coverage of certain workers and various changes to the way in which the program was administered and applications were received.
North Carolina has seen the number of unemployed workers not covered by unemployment benefits skyrocket by 40% in the period since the changes to the state’s unemployment insurance program went into effect. This is more than three times as fast as the national average and double the rest of the South. This suggests that something more than labor market conditions are at play in driving down coverage of the program and that the changes made to the program have contributed to lower reach of the unemployment insurance system at a still critical time in the recovery. (Emphasis supplied.)
Legislative and administrative neglect
In such an environment, you’d think public officials would be greatly concerned about the welfare of the jobless and their families. After all, there are still more unemployed workers in North Carolina than there are available jobs. As Alexandra Sirota of the N.C. Budget and Tax Center explained just last week:
“In December 2007, just as the Great Recession started, 62 percent of North Carolina’s working-age population was employed. As of October 2014, employment had fallen to 56.5 percent as measured by the employment to population ratio.”
Foreclosures and evictions remain widespread and a shamefully large number of North Carolinians are homeless and even hungry.
Unfortunately, no such concern was evident at yesterday’s meeting. Instead, members of the committee spent most of two dreary hours cross-examining officials from the Division of Employment Security about—we’re not making this up—efforts to weed out ineligible claimants and crack down on and collect money from workers who were overpaid. Indeed, one of the proudest accomplishments touted by the agency was its recent work to make sure that overpayments (which the agency head conceded could be less than $20) could be collected via credit cards.
The committee also: a) spent time lamenting President Obama’s recent executive orders on immigration policy because they might – God forbid – make a few more unemployed workers eligible for benefits and b) concluded the whole affair by giving preliminary blessings to a bill that will be introduced in 2015 to, among other things, further restrict eligibility by placing new job search requirements on the unemployed.
What’s next – requiring insurance beneficiaries to sing and dance for their benefits?
A mean-spirited and destructive pattern
The explanations for these conservative policies are the same hoary ones we’ve heard since the 1930’s when opponents of the New Deal tried to prevent the creation of unemployment insurance in the first place—namely, that the benefits amount to handouts that burden businesses and discourage hard work.
As the Prosperity Watch report makes clear, however, draconian policies do no demonstrable good and are actually harmful – both to workers and the economy as a whole:
“Unemployment Insurance plays a critical role in helping jobless workers survive until they find new employment while also ensuring that the broader economy is able to maintain a foundation of consumer spending that helps business as well. These broader benefits to the economy have been well documented by researchers and demonstrated to be even greater during the Great Recession when the Congressional Budget Office estimates that for every $1 of unemployment insurance payments, nearly $2 of economic activity is sustained. This economic activity happens as a result of jobless workers being able to maintain their purchases of basic goods and services to survive and keep up with payments to utility companies and mortgage companies, for example.”
The report concludes this way:
“Reducing the amount of time jobless workers can receive unemployment benefits or restricting their entrance into the unemployment insurance system doesn’t improve the economy or encourage workers to find jobs faster. It either forces the jobless to go without or to take jobs for which they are grossly overqualified and that pay significantly lower wages than what they earned before. This has the double effect of trapping high-skill workers in low-wage jobs, thus reducing the competitiveness of the state’s workforce, while pushing less skilled workers out of the jobs filled by high-skilled workers. Both end up effectively reducing the customers (since workers need money to buy things), pushing down sales, and hurting the very businesses that are needed to hire unemployed workers.”
Unfortunately, at this point, it appears that conservative ideology will trump economic common sense and human compassion in this critically important area for some time to come.
