Changes to our unemployment insurance a cruel blow
Is anyone else alarmed over the reckless changes to our unemployment insurance system being rushed through in Raleigh? As a historian of the 20th-century United States, I'm stunned at both the radical-right content of the changes approved and the refusal of the new supermajority in the N.C. General Assembly to allow public hearings and debate.
Forcing through a major change in a long-established system in less than two weeks and with just a few minutes of public input shows a disturbing contempt for transparency and democracy. Shutting out the voices of the state's working people on a measure promoted by the Chamber of Commerce suggests a partisanship for corporate lobbyists over North Carolina citizens.
And cutting benefits by one-third and sharply curtailing their duration in a tough economy where three unemployed workers are competing for every job is just plain cruel.
But the irony is this: it's terrible economics, too. The General Assembly's recklessness is likely to endanger our state's still-weak recovery.
Back in the era of America's peak economic performance, Republicans as well as Democrats understood the necessity of an adequate system of employer-financed unemployment insurance. President Dwight Eisenhower's Council of Economic Advisers knew that the system had a macroeconomic multiplier effect. Eisenhower's Council reported that each dollar of compensation turned over a dozen times per year, as opposed to regular dollars which only turned over six times. People in need buy necessities.
Our state's Republican leaders, in contrast, seem so eager to blame people who are jobless for being out of work that they fail to understand the ultimate purpose of unemployment insurance: to stabilize the labor market and shore up demand for consumer goods so as to prevent further economic decline. That it provides vital assistance to people struggling to get back on their feet is a side benefit.
Congress has recognized the importance of the unemployment insurance system to the recovery from this Great Recession and voted last month to extend emergency unemployment insurance in light of the slow job recovery. By rushing to implement benefit cuts in July, North Carolina will violate the state's agreement with the secretary of labor governing federal unemployment insurance for the rest of the year.
As a result, North Carolina will become the only state in the country that does not provide additional weeks of benefits under the Emergency Unemployment Compensation (EUC) program – a program that does not cost the state or state employers a dime. With one of the highest unemployment rates in the nation, North Carolina will offer its jobless workers 20 weeks of unemployment insurance or less while unemployed workers in other states will qualify for anywhere from 40 to 73 weeks of benefits.
By deliberately violating the federal agreement to pay EUC, the governor and legislature will be draining over $600 million in federal funds from the state economy over the second half of 2013. This will almost certainly undermine any ongoing economic recovery efforts.
Franklin Roosevelt and Dwight Eisenhower both knew that protecting workers from risk helped provide the stability and predictability needed for business to thrive.
"We have always known that heedless self-interest was bad morals," Roosevelt said in his second inaugural address. "We now know that it is bad economics."
How has North Carolina's Republican Party lost that wisdom?
Let's hope enough people will raise their voices to restore reason in Raleigh. Otherwise, North Carolina could face a frightening future.