Paying for a slight raise in North Carolina's maximum unemployment benefit is likely to require the state to lean even more heavily on the federal government for support.
The N.C. Employment Security Commission said yesterday that the top weekly benefit is going up $11 to $505, effective Saturday and lasting through at least July 31, 2010.
However, in order to pay the increase, the commission is likely to have to borrow even more from the federal government to meet its initial unemployment-benefit obligations.
As of Wednesday, the state had borrowed almost $900 million interest free from the U.S. Labor Department. The federal government has waived the Sept. 30 deadline -- the end of its 2008-09 fiscal year -- for avoiding interest charges on the borrowed money. The new deadline is Dec. 31, 2010.
Larry Parker, a spokesman for the commission, said that the benefit increase will be only for claims starting next week.
"Anyone getting the current $494 maximum amount will not see their benefits increase," Parker said.
In less severe economic times, the state's Unemployment Trust Fund takes care of the money needed for the benefits. The fund is collected in quarterly unemployment-insurance tax payments from the state's 200,000 employers.
But the fund ran dry in February after having a balance of $400 million as recently as October.
State law requires that unemployment-benefit calculations be done each year, Parker said. As wages grow, the maximum benefit also rises to a level equal to 67 percent of the average weekly wage. For the next 12 months, that average weekly wage is $758.44, or $39,438.88 annually.
"North Carolina has the highest maximum weekly benefit amount among the Southeastern states," said Moses Carey Jr., the chairman of the commission.
"This money is spent locally -- and immediately, in most cases, as our customers receive the funds. So it helps to stabilize the local economy, which is terribly important," Carey said.
The state's unemployment rate was 11 percent in June, while the Triad's rate was 11.7 percent -- at least a 41-year high. The commission is able to track the Triad's rate back only to 1968, Parker said.
Applicants' benefits are determined by a base period. Wages earned during the base period determine the weekly amount and duration of an individual's benefits. That information can be found at www.ncesc.com under "individual services."
The maximum-wage increase is the second extra money that some claimants will receive this year. In February, the passage of the Unemployed Workers and Struggling Families Act put an extra $25 a week into qualified claimants' benefit checks. The extra money goes away either when a recipient's unemployment benefits run out, or at the end of the year.
Parker said that it would take weeks before the commission would have an estimate on how many people will receive the maximum benefit.
"Relatively few people get the maximum," said John Quinterno, a principal at South by North Strategies Ltd., a research company focused on economic and social policy. "Keep in mind that the taxable wage base and tax schedules also change every August, and I am assuming both are increasing. So there should be additional revenues coming in as well."
Tony Plath, a finance professor at UNC Charlotte, said that the commission should maintain the current level of benefits "recognizing that the total cost of unemployment compensation in North Carolina will almost certainly rise in the months ahead with still more increases in the ranks of the unemployed.
"Or, why not maintain the current level of benefits until we at least figure out how we're going pay current compensatory benefits without borrowing more money to do it?" Plath asked.
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
Jobless borrowing
North Carolina is among the top 10 states in the amount of money borrowed from the federal government to pay its initial unemployment-benefit obligations. Figures are through Wednesday:
State - Amount
California - $2.64 billion
Michigan - $2.35 billion
New York - $1.32 billion
Ohio - $1.06 billion
Indiana - $1.03 billion
N.C. - $889.5 million
Pa. - $693.7 million
Wisconsin - $568.1 million
N.J. - $514.8 million
S.C. - $427.3 million
Source: U.S. Labor Department
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