North Carolina’s inclusion among the five worst states for unemployment insurance beneficiaries may be a source of shame or pride, depending on the value placed upon the drastic cuts that went into effect in July 2013.

The state was ranked 46th by research firm 24/7 Wall St. in a report released June 11. Louisiana is listed as the worst state, followed by Alabama, Mississippi and Alaska.

In a report released Thursday, North Carolina ranked 49th in terms of what percentage of UI applicants receive benefits at 12.4 percent for 2015. That study comes from the Center for American Progress, Georgetown Center on Poverty and Inequality, and National Employment Law Project.

Benefits are drawn mostly by people who lost their jobs through no fault of their own.

The 24/7 Wall St. rankings were based on employment growth, unemployment rates, the proportion of jobless residents receiving UI benefits and the average weekly UI payment.

In both reports, the data comes from the U.S. Bureau of Labor Statistics.

“Unemployment is far from an ideal situation, but the prospects for out-of-work residents depend a great deal on where they live,” the firm said in its release.

The top-five best states are Hawaii, North Dakota, Minnesota, Vermont and Utah.

A state’s recipiency rate, or share of unemployed receiving UI benefits, depends on a number of factors and varies greatly from state to state.

“In no state does the entire unemployed population receive unemployment insurance,” 24/7 Wall St. said.

The firm said the recipiency rate ranged from a low of 10.2 percent in Florida to 74 percent in North Dakota. North Carolina is second lowest at 11.4 percent.

Ripple effect

For left-leaning advocates, the studies provide more evidence of the ripple effect of what they consider to be harsh UI restrictions supported by Gov. Pat McCrory and Republican legislative leaders.

In March, the left-leaning Economic Policy Institute found that just 20.5 percent of North Carolinians eligible for UI benefits receive them. That put North Carolina at 42nd in the nation and well below the national average of 34.7 percent.

The reasons why so few workers draw benefits vary, ranging from workers choosing not to apply for various reasons to employers disputing claims.

Claire McKenna, senior policy analyst at the National Employment Law Project, told 24/7 Wall St. that the more restrictive UI programs become, the fewer unemployed residents that receive benefits.

Putting North Carolina more in line with neighboring states — including Alabama and Mississippi — with UI benefits was the goal of McCrory and Republican legislative leaders.

They said that the reductions have made individuals more willing to take available jobs — including at lower wages and potentially below their skill levels — as their benefits run out.

The left-leaning N.C. Budget & Tax Center’s report on recipiency rates has North Carolina ranked 49th, compared with 24th before the new restrictions went into effect.

“Talk about racing to the bottom,” said Rob Schofield, an analyst with left-leaning N.C. Policy Watch.

In terms of weekly benefit amount, the 24/7 Wall St. report found that the maximum amount ranged nationally from a low of $221 in Louisiana to $679 in Massachusetts.

The legislature dropped North Carolina’s maximum weekly benefit from $535 to $350 in July 2013. The Budget & Tax Center said the average weekly amount was $233.69 in 2015, the fourth lowest.

“The average payment (in N.C.) covers just 28.1 percent of the state’s average weekly earnings, one of the lower replacement rates in the country,” the firm said. The Center for American Progress report determined that the percentage was at 39.9 percent.

Schofield said that the legislature has taken “a decent and middle-of-the-pack (but hardly overly generous) anti-poverty safety net program and, to put it bluntly, wrecked it.”

“What’s more, the damage reflected in these cuts doesn’t take into account the tens of thousands of workers who lost temporary extended benefits and the ($780 million) of federal dollars that did not flow into North Carolina back in 2013 as a result of the state’s refusal to abide by the federal government’s directive not to cut state benefits at that time.”

Other states’ cuts

The firm said that North Carolina wasn’t alone in making substantial reductions to its UI program.

“Many of the worst states to be unemployed in made drastic cuts to their UI schemes in the aftermath of the Great Recession,” the firm said.

It cited as an example the N.C. legislature’s decision to chop the maximum number of weekly benefits from 26 to 19. The number of weeks is on a sliding scale that rise and fall with the state jobless rate.

The maximum number of weeks has been 13 since January, but will fall back to 12 — set as the floor on weeks — in early July.

By comparison, the average UI claimant duration is 17.5 weeks, according to the N.C. Division of Employment Security.

A total of 41 states offer a maximum of 26 weeks, while Massachusetts and Montana provide 30 and 28 weeks, respectively.

The state jobless rate was 5.4 percent in April, little changed from 5.8 percent in March 2015.

Economists have said that recent jobless rates have been affected by more people entering the workforce, including individuals moving into the state.

The traditional jobless rate does not distinguish between full- and part-time work, or whether workers are gainfully employed.

Statewide, between 50,000 and 60,000 North Carolinians currently are estimated in the dropout category, thus not included in the unemployment data.

Job-search changes

The Republican-led changes to UI benefits didn’t end in July 2013.

In September 2015, McCrory signed into law Senate Bill 15, which raised the number of required weekly job-search contacts from two to five for people who receive benefits.

Claimants have to present valid photo identification to collect jobless benefits. The law allows investigators to cross-reference various state databases, such as N.C. Division of Motor Vehicles records, to detect identity theft.

According to the governor’s office, the law allows recipients to make the five contacts in one day, either in person or online, rather than on separate days. Recipients are required to register for work at www.ncworks.org.

Dale Folwell, former assistant secretary in the N.C. Department of Commerce, told legislators that having three weekly job search contacts would put North Carolina in line with 44 other states.

Bill supporters said that people looking for jobs should be required to increase the number of searches to improve their chances of being hired.

Steve Ford, a correspondent for the left-leaning N.C. Policy Watch, said that increasing weekly contacts to five sets “an unrealistic standard for what that active search must entail,” especially in rural communities that have experienced waves of manufacturing plant shutdowns the past 15 years.

Some bill supporters were concerned that the requirement could be a burden to employers, saying they would have to accept and potentially reply to applications from individuals who don’t have the skills for a job but need to make five weekly contacts.

Flawed premise

Mitch Kokai, a policy analyst with libertarian think tank John Locke Foundation, said the “basic premise of the (24/7 Wall St.) list is fundamentally flawed.”

“The worst state to be unemployed is the place where it’s least likely that the unemployed person will be able to find another job,” Kokai said.

“Since North Carolina’s job growth has outpaced regional and national averages in recent years, there is no way to argue with a straight face that this is one of the worst states to be unemployed.”

The state has had a net gain of 94,900 private-sector jobs and 700 government jobs from April 2015 to April 2016, according to state Commerce Department data.

Although the net gain of 29,700 professional and business services leads the way, low-wage sectors have played key hiring roles, such as trade, transportation and utilities (25,100), and leisure and hospitality services (17,500).

“People without jobs are re-entering the workforce or moving here with the intent of finding jobs,” Kokai said. “They obviously don’t believe this is one of the worst states to be unemployed.”

“A better title for the list might be ‘the worst states to be unemployed if you want to remain unemployed as long as possible.’”

Jobseeker allowance

The Center for American Progress recommends a “jobseeker’s allowance, what it called “a modest, temporary, means-tested benefit, to help those “who would remain left out of unemployment benefits insurance.”

“The federally funded allowance would connect these jobseekers to employment opportunities and help them improve their work-related knowledge and skills. It would boost labor force participation, provide greater economic security to working families, and complement UI as a macroeconomic stabilizer.”

The center said that by implementing the recommendation, it would “roughly double the number of unemployed workers served by our nation’s social assistance system” by extending protections to independent contractors, the self-employed, and workers returning from caregiving or illness.

“Since the next recession is inevitable, policymakers must act now to strengthen UI benefits and assist the many American job-seekers whom our current system leaves behind,” the center said.

“Working families and our economy need a social insurance system that is responsive to today’s economic realities and workforce and puts unemployed workers and our country back on a path to prosperity.”

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rcraver@wsjournal.com

(336) 727-7376 @rcraverWSJ

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