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North Carolina will become first state to forfeit federal long-term unemployment benefits

Federal extended unemployment benefits end for more than 70,000 jobless North Carolinians on Sunday as the state becomes the first in the nation to opt out of the federal long-term compensation program.

A state unemployment overhaul that takes effect this weekend disqualifies North Carolina from receiving the federal benefits intended for those unemployed longer than 26 weeks. Federal law cuts off aid to states that don’t maintain their current benefit system.

Supporters of the reform say the move will help the state pay back $2.5 billion in federal debt more quickly. The state borrowed the money to pay unemployment benefits during the economic downturn.

Advocates for the unemployed say the measure will hurt the state’s economy, where the unemployment rate is the fifth-highest in the nation at 8.8 percent in May.

In addition to those losing benefits when the law kicks in, the U.S. Department of Labor estimates that by the end of the year an additional 100,000 jobless workers in North Carolina won’t receive the long-term unemployment benefits for which they’d otherwise have been eligible.

The unemployment overhaul, passed in February, raises taxes on employers and cuts both the amount and length of benefits for the unemployed.

The N.C. Chamber of Commerce supported the plan. It said the plan would save North Carolina $2 billion and allow the state to pay back its federal debt by 2015 – three years earlier than planned.

The overhaul scales back maximum unemployment benefits to workers by nearly one-third, from $535 a week to $350 a week, and reduces the maximum weeks of benefits from 26 weeks to between 12 and 20 weeks, depending on the state’s unemployment rate.

“Scaling back the benefits provides that this debt won’t accumulate again,” Mitch Kokai, a political analyst for the John Locke Foundation, which supported the measure, told the Observer in June.

Others have balked at the pro-business logic. John Shaw, a spokesman for the North Carolina Justice Center, a group that advocates for the poor, said Friday that the measure would have an adverse ripple effect on the state’s economy.

“People will lose the modest benefits they were getting for basic needs,” he said. “Once that money goes away, businesses won’t be getting paid.”

In Mecklenburg County more than 7,000 people were receiving federal extended unemployment benefits at the beginning of the month. If they haven’t found jobs since then, they will all lose those benefits.

Eddrena Morris, who lives in northwest Charlotte, hasn’t found work since losing her job at Time Warner Cable in February 2012.

Although her weekly federal unemployment benefits are less than she made at her job, she said the payments help put food on the table for her and her 95-year-old great aunt.

She’s optimistic about the job search but wonders whether state leaders are paying attention at the legislative level.

“What do they expect people to do?” she said. “How are people going to feed their families?”

Burley: 704-358-5085
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