A recent report on Market Watch—hardly a right-wing hangout—should be required reading for every Democrat who believes that extending “temporary” unemployment benefits is always the humane thing to do.
An experiment in North Carolina indicates that—as is all too often the case—Democrats actually may be hurting the very people they claim to be helping in their quest, temporarily halted, to extend unemployment benefits.
North Carolina, it seems, pressed for money and under the cruel sway of a Republican governor, resorted to drastic measures: slashing unemployment benefits and, as if that wasn’t draconian enough, cutting the number of weeks the unemployed could receive even these meager benefits.
“Within several months, the unemployment rate fell a few ticks and by November it fell to a five-year low,” Market Watch reported. The jobless rates declined similarly, if less spectacularly, in Georgia and South Carolina, where benefits were also reduced in 2012.
Market Watch was cautious not to conclude that the news from North Carolina is a vindication of critics of extending unemployment benefits. It noted that several states that did not cut benefits had also shown a decline in joblessness.
Nevertheless the North Carolina experience deserves a look. What happened in North Carolina is even more relevant because the state was particularly hard hit during the Great Recession. In dire straits, North Carolina availed itself of federal loans to help pay for unemployment benefits, which lasted 26 weeks.
When North Carolina ended up seriously in hock to the feds, Republican Governor Pat McCrory, who took office in 2013, faced a choice: raise taxes, a course of action McCrory maintained would harm businesses (which, after all, create jobs) or cut unemployment benefits. The brave governor cut benefits.
The maximum weekly benefit was cut from the previous high of $535 to $350, a not insignificant reduction. The time people could collect benefits was cut from 26 weeks to only 12 or 20. But that was not the end of the cruelty.
McCrory’s cuts imposed a further hardship on the unemployed: unemployed North Carolinians became ineligible for certain cash payments offered by the federal government, which requires states to pay a certain level of benefits to qualify for these payments. About 70,000 North Carolinians lost out on these payments.