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Thursday, January 16, 2014

McCrory jams foot in mouth on unemployment benefits

Posted By on Thu, Jan 16, 2014 at 11:32 AM

Gov. Pat McCrory has binders full of unemployed transplants. Asked to defend recent changes to North Carolina's unemployment system - including cutting the duration of unemployment benefits from a maximum of 63 weeks to a maximum of 19 weeks in 2013 - during a recent taping of NC Spin, McCrory said:

"We had the ninth-most-generous unemployment compensation in the country. We were having a lot of people move here, frankly, from other areas to get unemployment ... People were moving here because of our very generous benefits, and then, of course, we had more debt."

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But that's not quite how unemployment insurance works. Benefits are paid by the state in which an individual's former employer is located, regardless of where that individual moves. The only beneficiaries of North Carolina's "generous benefits" are people who were employed by N.C. companies. And even then, their landings were perhaps not as soft as the governor implied. North Carolina's average weekly unemployment benefit amount prior to the cuts actually ranked 23rd in the nation, not 9th, according to NC Policy Watch.

As for the victorious drop in unemployment rates following unemployment benefit belt-tightening, economists aren't yet convinced. As Paul Krugman noted in The New York Times on Saturday, "The unemployment rate did fall - but this was due to a large drop in the labor force, as the number of people looking for work fell. Why? Well, a likely explanation is that some of the unemployed continued to search for work, and were therefore counted in the labor force, despite low prospects of finding a job in a depressed economy, because such search is a requirement for those collecting benefits. Take away the benefits, and they drop out."

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