Herald-Sun editorial: Unemployment benefit cuts will hit hard

Dec. 06, 2012 @ 06:45 PM

A General Assembly study committee this week put together a plan to reduce North Carolina’s $2.5 billion unemployment benefit debt. Unfortunately, that plan, if approved by the legislature, will end up harming people who need those benefits to keep their heads above water.

Under this plan, the maximum weekly benefit for unemployed workers would drop from $525, where it is now, to $350 – a huge cut.

The plan is designed to not only wipe out the borrowing by 2015, but also is expected to build up the state’s trust fund balance to $2.5 billion by 2021, according to an analysis.

A portion of this effort will also involve higher taxes on companies. The rates that employers must pay into the system will go up, from zero percent to 0.06 percent on the first $21,000 of wages, depending on how an employer is rated based on its history, layoffs and other factors. Also, the current 20 percent state unemployment tax surcharge on all businesses will remain until the state’s trust balance grows to exceed $1 million. Business advocates praised legislative committee members for working to address the pressing issue of the state debt.

"Business knows that the road to solvency is going to involve higher taxes," Gary Salamido with the North Carolina Chamber told committee members, adding that "in comprehensive reform, business is willing to do its part."

That is a welcome statement and approach, and the business community should get credit for doing its part. This is a serious matter, one that incoming Gov. Pat McCrory has pledged to address.

Unemployment remains a major problem, although unemployment across the state fell slightly in the most recent evaluation, thanks to fewer layoffs in food services, business services, health care and manufacturing. We are seeing an economic bounce-back, but a slow and steady one, not one that will magically reduce unemployment rates substantially (the unemployment rate for North Carolina was 9.3 percent in October).

Legislators and state leaders should look for ways to reduce the unemployment benefit debt that do not have such a massive impact on the people in the state who need help the most. Whether our leaders will make such an effort does not likely at the moment, but any measure would have to pass both chambers of the state legislature when it reconvenes next month.