News Column

Lawmakers 'Just Don't Seem to Care,' Jobless Woman Says

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No time is a good time to be without a job.

But for the long-term unemployed -- defined as being out of work for at least 27 weeks -- these remain particularly perilous and frustrating times.

More economists and employment officials acknowledge what a group of long-term jobless Triad residents already know firsthand -- some employers are increasingly leery of hiring someone full time who has been out of work that for long, citing potentially deteriorating skills and lack of new training.

Adding to their financial and emotional anxiety is House Bill 4, which has passed the state House and is up for discussion in the state Senate Tuesday.

The bill, which has Gov. Pat McCrory's support, would cut state unemployment insurance benefits from a maximum of weeks 26 weeks to 20 and from a maximum weekly amount of $535 to $350.

The move would affect more than 155,000 North Carolinians if the bill becomes law July 1, according to the N.C. Justice Center, a left-leaning advocacy group.

A 2011 study by the Federal Reserve Bank of Richmond shows that as workers age, it becomes increasing harder to recover from taking a 40 percent hit in net worth; for many North Carolinians that would represent basically a 40 percent reduction in their paycheck.

"The proportional shock pushes the household deeper into debt and is costliest when the household has the most debt," according to the study. "As age increases, so does median wealth, and the same percentage drop in net worth represents a much larger absolute loss."

'Playing with people's lives'

Connie Reynolds, 53, of Mocksville has been searching for work for more than two months after her general clerk job at Parks Mazda in High Point was eliminated after nearly 10 years. She said she made $13.25 an hour, or about $530 a week.

"I had a decent paying job with a company I liked working for, and now I'm down to nothing," Reynolds said. "I had no warning I was being replaced, no write ups or anything. They just wanted to bring in someone part time that they could pay less."

To lower her expenses, Reynolds has moved in with her parents, both of whom have health issues. She said she expects to get her first unemployment benefit check this week after some miscommunications between the company and the N.C. Division of Employment Security delayed the filing process.

"I used my last paycheck to pay up my bills, but that was two months ago, and now I am getting creditors calling for their money," Reynolds said.

"This already has been leaving a real sour taste in my mouth, so to hear my benefits may be cut after July 1 in this economy is just unfair for somebody who wants desperately to work even with a herniated disk. I don't want to live off disability. I want to earn my living as I have my whole life.

"These legislators are playing with people's lives, and they just don't seem to care. I don't think they ever will unless losing their job happens to them or somebody close to them," Reynolds said.

Under a living wage

It's not easy to determine how much of an impact having the weekly maximum benefit drop from $535 to $350 would have on N.C. households. The weekly benefits have taxes taken out.

To qualify for the current $535 maximum weekly benefit, a person would have to make at least $55,000. With the drop to a maximum $350 weekly benefit, a person would have to make at least $37,000.

The N.C. Justice Center estimates it takes an average of $874 a week for a N.C. family of three to pay their actual costs of housing, food, health care and transportation. That is $524 more than the proposed $350 maximum benefit would cover.

"When people are out of work for longer periods, their health deteriorates, their savings are depleted and their job skills erode," the center said. "They increasingly have to choose between shelter, food and transportation because they increasingly can't afford even those staples."

Local real estate agents say the U.S. Department of Housing and Urban Development has a rule of thumb that homeowners should spend no more than 30 percent of their gross income on a mortgage.

For a household with $55,000 in annual income, that means it has about $1,060 in gross weekly income and about $742 in net weekly income when calculating an overall 30 percent tax rate. At 30 percent of $55,000, the household could be expected to reasonably afford up to a $1,375 monthly mortgage.

A $350 weekly benefit would not cover that household's monthly mortgage, much less provide any money for food, automobile expenses and other monthly expenditures.

As a result, opponents of the bill say the reduced benefits will lead to more foreclosures, defaults on credit card and other loans, and more people requiring the assistance of local charitable groups already stretched to the breaking point in providing aid to pay utility bills and offer groceries.

Several charitable groups, such as Crisis Control Ministries and Sunnyside Ministries, have found themselves in recent years serving people who once were dependable donors.

Financial reality hits

Counselors with Financial Pathways of the Piedmont said they often have to give clients a dose of financial reality to gird them for the sacrifices necessary to survive months without steady income.

"We haven't slowed down one bit since 2008. In fact, we have picked up in recent months," said Mark Shore, a housing and credit counselor with the Winston-Salem nonprofit group.

"We tell clients they have to have three things to live -- housing, food and utilities. They may insist that clothing and transportation should be in that list, and we can adjust because every case is different."

Financial Pathways helps clients access local and statewide financial assistance groups, such as N.C. Foreclosure Prevention Fund, to secure aid or a loan to keep them in their homes as they look for work.

Shore acknowledges that are some instances when a client exhausts the limit of the aid and still doesn't have a job, potentially compounding their debt problems.

The counselors agree with the Federal Reserve Bank of Richmond study that people who lose their job after age 50 are less likely to regain the same pay level.

"Some people were fortunate enough to have set aside money into savings or a 401(k) to help them for a while," said Lisa Engelkins, a Financial Pathways housing and credit counselor.

"But if the job doesn't come quick enough, or if it does but doesn't have the same level of pay, we have to prepare clients that they may have to give up their home, their car and get a less-expensive home, a less-expensive car. We have to help them take the emotion out of those decisions.

"There are people who can make it on $270 or $350 a week, but they typically either owe nothing on their home or car, or have a low mortgage or rent, and they have little or no credit-card debt," Engelkins said.

Shore said companies are capitalizing on the economic downturn by hiring more temporary and part-time workers to drive down wages and reduce or eliminate what they pay in benefits.

"Some employers are very aware how desperately folks need a job and are paying accordingly," he said.

'Reverse Robin Hood'

Sen. Earline Parmon, D-Forsyth, said it is unthinkable for supporters of cutting state jobless benefits, such as state Rep. Julia Howard, R-Davie, to compare unemployment insurance beneficiaries with people dependent on welfare. Howard has referred to the unemployment insurance program as a "welfare-dependent" program for some.

Justice Center officials said in a January report that 54 percent of N.C. unemployment recipients are white, 51 percent are female and 45 percent are 46 years or older.

"My jaw dropped when I first heard those thoughts being expressed," Parmon said. 'You can't compare the two because to qualify for unemployment, you have to meet certain criteria, such as being let go from a job for no cause of your own."

Bill supporters say they are trying to bring the N.C. jobless benefits, which some consider too generous, in line with the maximum paid in eight Southeast states -- Alabama ($265), Florida ($275), Georgia ($330), Kentucky ($415), Mississippi ($235), South Carolina ($326), Tennessee ($275) and Virginia ($378).

George Wentworth, a senior staff attorney with the National Employment Law Project, said bill supporters' "whole notion that North Carolina sticks out in its region -- because it provides unemployment insurance benefits that people can actually live on -- is very troubling public policy."

John Hood, president of the John Locke Foundation, a conservative policy research group, said there is "no question North Carolina needs to bring its jobless benefits in line with other states and with the realities of the job market."

Chris Fitzsimon, director of N.C. Policy Watch, a liberal-leaning think tank, disagrees with the bill, calling it a "reverse Robin Hood."

"Supporters of the proposal to slash worker benefits to repay the state's unemployment debt to the federal government keep saying the package is balanced and requires both workers and employers to sacrifice," Fitzsimon said.

"Seventy-five percent of the debt is repaid through benefit cuts for laid-off workers. Some businesses will actually pay lower taxes in the long run under the plan, not to mention the fact that the debt was created largely because of a series of unemployment tax cuts for businesses in the last 20 years."

Parmon said cutting state jobless benefits "will cause more people to lose their homes, their cars, bring harm to their families. We shouldn't be forcing people to live below middle-class standards that they worked hard to achieve.

"When we as a legislature embrace that mindset, we are taking North Carolina backward in its quality of life.

"How is that going to make North Carolina more attractive to employers?"

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