South By North Strategies, Ltd.

Congress’ inability to extend the various emergency unemployment insurance provisions contained in the recovery act is harmful to North Carolina’s unemployed workers and its overall economy. For, as the N.C. Budget & Tax Center has reported, unemployment insurance replaces part of the income lost by jobless workers and helps stabilize the larger economy.

In response to the current recession, the federal recovery act contained numerous provisions related to unemployment insurance. For individuals, the program created an Emergency Unemployment Compensation (EUC) program that allows individuals to receive up to 99 weeks of benefits.  Additionally, the Federal Additional Compensation (FAC) program adds $25 to each weekly unemployment insurance check. And individuals may shield a portion of their benefits from federal income taxes.

State systems, meanwhile, received access to interest-free loans from the federal government, and the federal government also agreed to pay temporarily the states’ share of the Extended Benefits (EB) program. A series of incentive payments also provided states with supplemental funds provided they enacted certain reforms.

The expiration of certain recovery act provisions — primarily the EUC and FAC  programs — will harm unemployed North Carolinians and slow the state’s recovery. Consider the following:

• The Employment Security Commission estimates that 21,000 people per week are losing EUC benefits.
• Without FAC benefits, the average weekly benefit will fall from $327 to $302, an eight-percent decline.
• In March, FAC alone supported an estimated $50 million in statewide economic activity.
• In May, EUC payments of $234 million supported some $383 million in statewide economic activity.
• Ending federal EB funding will impose more costs one the state’s insurance fund; in May, federal support saved the fund some $11 million.