Problems in unemployment insurance
Unemployment insurance is a government program that pays unemployed workers a monthly benefit, but with the recession and high unemployment running so long, the program faces problems. N.C. State University economist Mike Walden explains.
“This unemployment compensation program … is a joint federal-state program, and what has happened as the recession has lingered and … as we’ve had more people qualify for unemployment insurance, many states have simply run out of money. They simply have not had the money that they’ve taken in from the tax that funds unemployment insurance at the local and state levels.
“And so states have had to borrow money from the federal government, and in fact North Carolina, unfortunately, is in this group. Right now, North Carolina owes the federal government over $2.5 billion for the unemployment insurance program. We have the sixth highest debt in that regard.
“And so the big question is, How’s it going to be paid back? And there are really only two options — well, I guess, three options. One, the federal government could say, well, we’re going to forgive that debt, but besides that either we’re going to have to increase the tax that is assessed on businesses that funds the unemployment insurance program or we’re going to have to reduce benefits. Neither of these is very attractive, but clearly this is an issue we’re going to have to face very, very soon.”Category: Economic Perspective