Durham residents prepare for end of extended benefits

Jun. 26, 2013 @ 10:35 PM

After she said she lost her customer service job in a downsizing at a subcontracting company for a TV provider, Angie McCormick said unemployment benefits helped her buy food and keep a roof over her head.

“Without that, I wouldn’t have made it,” the Durham resident said Wednesday. She was sitting in front of a computer at the Durham JobLink Career Center at Northgate Mall searching for jobs online. She said that’s something she’s been up to “today, yesterday and every other day.”

McCormick said she’s looking for customer service, clerical and administrative work, but she’s found the job market competitive. This month, she said her federal extended unemployment benefits are being cut off. Because she needs work as soon as possible, she said she may apply for jobs she’s overqualified for.

“Thank God I have my dad, family support,” she said. “With everybody pulling together, we can probably make it together.”

An estimated 70,000 people in North Carolina are on track to lose their federal emergency extended unemployment benefits Sunday. The last payments are slated this week. In Durham County, 1,739 people were receiving the benefits in the first week of June, said Josh Ellis, a N.C. Department of Commerce spokesman.

The federally funded extended unemployment benefits are ending because of a state law passed by the Republican-led legislature and signed by Gov. Pat McCrory earlier this year. The law cut state unemployment benefits and put the state out of compliance with program requirements.

Among other changes, the law cut the weekly maximum regular state unemployment benefit to $350 from $535 for new claims filed on or after Sunday. That was in violation of a federal “non reduction rule,” which led to the termination of a federal-state agreement for the extended benefits program, Michael D’Aquino, a spokesman for the U.S. Department of Labor, said in an email.

The federal unemployment benefit program launched in 2008 in response to the recession, D’Aqunio said. Similar benefits had been offered in previous recessions. He said the department estimated that North Carolina is forfeiting about $780 million in federally funded unemployment benefits, and that 170,000 unemployed workers here are losing benefits through the end of the year.

The extended benefits would have been available through the end of this year, D’Aquino said, so they’re ending here six months early. However, he said the program has been extended several times since 2008, and could be extended again.

State leaders cut state benefits as part of a plan to repay more than $2 billion to the federal government. The state borrowed the money to pay new unemployment claims filed during the recession, according to an email from Amy Auth, a spokeswoman for Sen. Phil Berger, R-Eden, the president pro tem of the N.C. Senate.

The cuts to unemployment benefits were part of a plan to pay off the debt three years early, by 2016. Auth’s email said that in 2019, employers would have paid $718.2 million in taxes solely for unemployment insurance debt repayment. That would threaten “existing jobs and making it hard to recruit jobs,” she said.

In 2011, which is the year tax increases kicked in for states that had outstanding unemployment insurance debt, Auth said North Carolina employers paid $79.8 million to pay down debt. In 2016, which is the year the debt is expected to be paid, employers will pay federal taxes of $478.8 million for debt repayment, she said.

In an emailed statement Monday, McCrory spokeswoman Kim Genardo said the law will allow the state to pay off the debt early and ensure the “unemployment safety net is secure and financially sound for future generations.”

Officials at the N.C. Chamber of Commerce supported the state law. A statement sent by the chamber’s  director of communications, Meredith Daughtridge Archie, said the group believes the additional tax burden that would have resulted from the repayment of debt by 2019 would have threatened jobs. Chamber officials believe the law gave employers more certainty.

In contrast, James W. Kleckley, director of the East Carolina University Bureau of Business Research, said he doubts the lessened tax burden on businesses will have much of an effect as it’s “typically small in relation to others paid.”

Kleckley also said the purpose of the unemployment insurance is to provide a financial bridge for people who have lost their jobs -- through no fault of their own -- while they search for a new job. But he said jobs are just not there.

Individuals will be hurt by the end of the benefits, he said, and the economy will probably suffer since benefits that would have been paid would probably have gone back into the economy.

 “While the benefit cutback might help an employer at the margin, the people that lose their benefits will probably suffer; perhaps losing their home, perhaps having difficulty getting food on the table,” he said in an email.

To try to prevent the benefit expiration, advocacy groups such as the N.C. Justice Center and the N.C. State AFL-CIO called on state leaders to act this week to delay state benefits cuts.

Bill Rowe, general counsel and director of advocacy for the N.C. Justice Center, an advocacy group for the poor, said in a recent interview that there was still hope that the legislators would act. He said the end to the federal benefits will be a “serious blow,” affecting people’s ability to pay their mortgage, rent or utilities bills.

“It’s going to present a level of stress for these families that they haven’t seen for awhile,” he said.

When the federal extended benefits end, she said she has her husband to fall back on. She said she plans to continue looking for jobs.

Durham resident Sukhwinder Virk said he just started receiving unemployment benefits weeks ago, so he wouldn’t have been receiving the federal extended unemployment benefits. However, he said he expects the expiration of the benefits would be hard on people without work.

Virk said he’s worked at technology companies in the area. He said he’s had jobs testing networks and testing computers. He said the job market is “not so good” here.

 “The market is not good in this area,” he said. “All the manufacturing jobs are gone.”