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North Carolina lawmakers vote to slash unemployment benefits

By Marti Maguire

RALEIGH, North Carolina (Reuters) - North Carolina lawmakers moved closer on Tuesday to cutting benefits for unemployed workers in a money-saving effort that critics call the harshest such cuts in the country.

The Republican-controlled state Senate voted 36-13 to approve a measure that cuts the amount of money jobless workers get as well as how many weeks they can collect the benefits.

North Carolina has the fifth highest unemployment rate in the country with more than 400,000 jobless, according to the U.S. Bureau of Labor Statistics, making its unemployment rate 9.2 percent high than the national average of 7.9 percent.

A final vote by the Senate is expected on Wednesday before the measure goes to the state's newly elected Republican governor, Pat McCrory, who has said he will sign it into law.

Supporters say making the state's unemployment fund solvent will unburden businesses that are paying higher federal taxes because of the debt and will in turn free them to hire more workers.

"What this really should be called is a re-employment rather than an unemployment bill," said Republican state Senator Bob Rucho, a sponsor of the measure. "We're trying to put North Carolinians back to work."

But critics say the measure will harm some of the state's most vulnerable residents. It would cut the maximum weekly benefit to $350 from $535 and cap benefits at 12 to 20 weeks, depending on the unemployment rate, instead of the current 26 weeks.

"It makes dramatic changes to our unemployment benefits that no other state has ever done," said Bill Rowe, director of advocacy for the North Carolina Justice Center. "It just puts a huge hurt on a lot of people."

The Justice Center is part of a coalition of nonprofit and labor groups that has opposed the bill as it moved swiftly through the state legislature.

The Senate approved the legislation in much the same manner as the Republican-led House did last week - largely along party lines and after rejecting several amendments made by Democrats that would have softened its impact.

One such amendment would have postponed implementation of the measure long enough to allow the state's long-term unemployed to still receive federal benefits once their state benefits have run out. By cutting benefits starting in July, the state is ineligible for those federal benefits.

U.S. LABOR SECRETARY WEIGHS IN

Acting U.S. Labor Department Secretary Seth Harris said 170,000 North Carolinians would lose $780 million in federal funds if the bill goes into effect.

"We know that for every dollar spent on unemployment insurance benefits, nearly two dollars are generated in the local economy," Harris said in a statement. "Unemployed workers and their families spend these benefits in local grocery stores and small businesses, and use them to stay current on mortgage or rent payments and utilities."

Other provisions of the legislation would bar people who leave their jobs due to disabilities or family issues from receiving unemployment benefits, and change the formula used to determine benefit amounts.

The bill would allow the state unemployment fund to be out of debt by 2015 instead of 2018, according to a fiscal analysis of its impact.

But Democrats said the measure shifts too much of the debt burden onto the jobless instead of businesses.

"We're looking for a reasonable, equitable solution to an overwhelming problem that doesn't do it on the backs of those who are unemployed," said Democratic Senator Floyd McKissick Jr., who proposed making less harsh cuts to the maximum weekly benefits.

(Editing by Colleen Jenkins and Leslie Gevirtz)

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