North Carolina Cut Jobless Benefits and the Sky Didn’t Fall

Politico, By Diana Furchtgott-Roth, January 10, 2014

As the House of Representatives ponders whether to follow the Senate’s example and extend unemployment benefits, members might want to consider the case of North Carolina, where employment has increased and unemployment has declined from 8.8 percent to 7.4 percent in the five months following dramatic cuts in the state’s unemployment benefits

The decline in the duration of unemployment benefits did not necessarily cause the employment gains, but it did not harm the state’s economy. So much for those who say the sky will fall if Congress does not extend federal emergency unemployment insurance benefits, which expired at the end of 2013.

Read more.  

NC: What happens when jobless benefits are cut?

North Carolina may offer clues.

Last summer, North Carolina slashed the amount of cash it gave to people after they lost their jobs and the state also reduced the number of weeks they could receive benefits. Within several months, the unemployment rate fell a few ticks and by November it fell to a five-year low.

Similar though less dramatic declines occurred in Georgia and South Carolina after they made benefits less generous starting in 2012.

Vindication for critics of extended unemployment benefits? Hard to say. It’s the experience of just a few states and others have also witnessed sharp declines despite retaining more generous benefits. Indeed, the national unemployment rate has fallen by nearly 1 percentage point in the past year. Read: How end of extra benefits could send U.S. unemployment rate lower.

Still, it’s worth taking a look at North Carolina’s experience.

READ THE ARTICLE.