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Jobless rate sets off more benefits
About 40,000 unemployed North Carolinians expected to qualify for additional aid
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Published: October 8, 2008
North Carolina's rising unemployment rate has triggered a safety net that may catch about 40,000 jobless North Carolinians who have exhausted their unemployment benefits in the past year.
How many more residents become eligible for the benefits depends on how long the unemployment rate stays at or above 6.5 percent based on a three-month average.
The N.C. Employment Security Commission said yesterday that the program, based on state law, remains in effect as long as the three-month criteria are met.
That's likely to happen, considering that economists are projecting that the state's jobless rate could reach at least 7.5 percent in 2009.
But with the extended benefits not renewable, economists said that the program will provide at best a short-term help to a worsening unemployment scenario.
The commission said that the extension is aimed at recipients who established a new regular claim for benefits -- thus beginning a benefit year -- on or after Oct.14, 2007.
About 14 percent of the nearly 315,000 North Carolinians counted as unemployed in August are eligible for up to 13 weeks of extended benefits. Their first payment expected to arrive next week.
"The economy has deteriorated much more than most economists expected, and the reason is the large drops in housing prices that are without precedent," said Michael Walden, an economics professor at N.C. State University.
"The recession we are now in will most likely be the worst since the 1981-82 downturn."
The state rate was 6.9 percent in August, up more than two percentage points in the past year and representing the highest level since January 2002.
The extended benefits are paid for through a sharing arrangement between state and federal governments, with 50 percent coming from federal funds and 50 percent from the commission's trust fund, which comes from taxes collected from employers.
It is the second time in six years that the criteria for the extended benefits have been met.
Depending on how long the program is needed, the extended benefits could deplete the trust fund and require borrowing from the U.S. Labor Department, similar to what occurred in 2002-03.
Larry Parker, a spokesman for the commission, said that the trust fund currently has about $400 million, which the agency believes is enough to cover its current share of the payment responsibility.
"We know there are a lot of people hurting out there," Parker said.
"North Carolina seems to have gotten hit later by the economy than other states in the Southeast, but we're definitely feeling it now.
"Extended benefits will continue until we are told by the Department of Labor that we have gone back under the average of 6.5 percent," he said.
But Parker added that those eligible for the extended benefit can receive it only once.
The commission said that the extended benefits have additional eligibility requirements for recipients.
Along with being unemployed, able and available for work, claimants are required to look for work on two different days at two different places of employment, and maintain a written record of work-search contacts that must be presented in person to the nearest commission office every four weeks.
If the three-month average for the jobless rate remains above 6.5 percent, new claimants would be eligible for the extended benefits once their initial benefits are exhausted, as long as they met the additional eligibility requirements.
Parker said that those people who have not exhausted their initial unemployment benefits for 2008 should continue to file weekly claims. Once those initial benefits are done, the commission will determine whether the recipient is eligible for the extended benefits.
The extended benefits come at a time when the commission has had a recent backlog in unemployment claims that it has had to mediate or adjudicate.
That number had risen to 17,000 cases before commission officials reduced the cases to about 6,000.
"It's not that checks are late getting to individuals who deserve them," Parker said. "It's only those who have gone to adjudication," which typically involves a dispute of the claim by the former employer.
"One of our adjudicators must look at both sides and make a determination," Parker said.
"We have adjudicators working some evenings and weekends to remedy the backlog and have made significant progress in the last two weeks."
The local job market is still slow, said Piers Clarkson, the director of client and employee relations for The Clarks' Group of Winston-Salem.
"There are more employers with hiring freezes than those hiring," Clarkson said. "There may be some thawing of the hiring freeze once the presidential election is over and we know who will be in the White House.
"But I don't expect any significant interest in local hiring until 2009, perhaps well into 2009."
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
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