In a move designed to repay their Federal debt faster, the state of North Carolina has cut benefits to 170,000 workers within the state. As a result, they have put themselves in a position of not being eligible to receive Federal jobless benefits for people who have been employed for longer than six months.
North Carolina has the fifth worst unemployment ranking in the U.S. Usually when a person has been on state unemployment for six months, they can then go on to a federally funded Emergency Unemployment Compensation. However, the rules for that program specify that the state can not cut the funds that they are paying to that person or the Emergency Unemployment Compensation program stops. North Carolina has now become the first state to do just that.
The move comes in combination with an entire package of benefit cuts and tax increases on businesses. The decrease in benefits includes cutting the benefit period from six months to just three to five months. Qualifying for the benefits in the first place is more difficult. And the amount of the weekly benefit itself is reduced. For example, the maximum benefit anyone could ever be paid weekly has been $535 per week. That amount now tops out at $350.
The changes will mean $3.6 billion in total benefit cuts and higher costs to employers through 2017, but 74% of that number is benefit cuts to workers.
Some people will stop receiving unemployment benefits right away. Others will see their benefit amount reduced so drastically that they fear being able to meet basic necessities. In order to qualify for unemployment benefits in the first place, they had to have a record of work in the previous five quarters. They may have lost jobs due to economic downturn or to other disasters, such as a fatal explosion at the ConAgra Foods plant in Raleigh.
According to the U.S. Department of Labor, no other state is even considering enacting the kind of legislation that North Carolina has, choosing to lose federal jobless benefits for their unemployed citizens.