Last session the NCGA passed HB 4, stopping extended unemployment benefits in July 2013 in order to gain control over a $2.6 Billion debt to the federal government to pay for those benefits. How is that working out? Our debt will be paid during the 3rd quarter of 2015, and we will have 1 billion in our trust fund in 2017. When the debt is paid, the surtax will come off of every employer and when we have a billion in the trust fund, the 20 percent surcharge that every employer is paying will cease.
To that end, employers will be in a much better position to hire new employees and their cash flow will be freed up to invest in their business, create jobs and hire people. And now the Feds are pressuring states to begin issuing extended benefits again. This is a problem and would only put NC in a catch 20-20 situation. NC’s debt to the federal government is under control, reserves are being re-built, employers are getting back on their feet and the economy is beginning to improve. Let’s not move backwards.
Some argue that workforce participation statistics justify re-enacting extended unemployment benefits again. These people are confused with what the employment numbers mean. The Washington Post explains the nations’ workforce participation rate:
When Obama took office in January 2009, the workforce participation rate was 65.7 percent — and now it is 62.8 percent. So there has certainly been a decline. But the rate had already been on a steady downward track since it hit a high of 67.3 percent in the last year of Bill Clinton’s presidency.
The Federal Reserve Bank of Chicago in 2012 concluded that just over half of the post-1999 decline in the participation rate comes from the retirement of the baby boomers. Critically, the research showed that the problem is only going to get worse in the rest of the decade, with retirements accounting for two-thirds of the decline of participation rate by 2020. In other words, the rate will keep declining, no matter how well the economy does.
Barclays economists, meanwhile, say that just 15 percent of the drop in the labor force stems from people who want a job and are of prime working age (25-54). “We view the possibility of a large and sudden return of previously discouraged job seekers to the labor force as remote,” they wrote.
Hood on North Carolina’s jobs numbers; lamenting if they only knew.
There is a lot of confusion but the numbers tell the story. And it’s pretty simple. Extended unemployment benefits are more harmful than helpful. North Carolina is on the right track.