Many of us have found ourselves between jobs due to a workforce reduction, layoff, or one of many other possible reasons. During these difficult times, the safety net of the unemployment benefit can be the difference between losing a home or car. Most people use this benefit for a short time until they can get back on their feet.
During the recent economic downturn, the number of people receiving unemployment benefits dramatically increased. This burden added a tremendous burden to the states. If the states did not have adequate funding, many were required to become credit reduction states. This means that the state would take out a loan on behalf of the businesses in that state. These funds would then be added to the ESC tax of every business.
The amount that each business had to repay was not prorated based on the number of employees that had received benefits; it was shared equally among all businesses. For example, in North Carolina, the loan was for $2.8 billion and a related interest payment of $283 million. This is a lot for a State of nine million citizens.
While these large spikes are normal, there never seems to be a surplus that is created or retained during the times of economic growth. Employers do not get this money back if they do not have employees that receive the benefit. If a business pays into the fund for ten years, there is no cap for them. They could theoretically pay into the fund forever and never use a dollar of the benefit.
While the Government waste and incompetence is nothing new and is something that will likely never be cured, there is another issue that is decreasing the wages of workers nationwide.
The issue of fraud is one that has not been adequately enforced. When you receive benefits, you have generally been expected to actively seek employment and report any monies earned so that amount can be subtracted from your benefit amount.
Many states have relaxed these rules to the point that no one has to look or prove they have looked for employment. The net effect of this is less employment and longer times receiving benefits. In addition, the number of agents assigned to investigate fraud has been reduced and there are no funds available to police the validity of the recipient.
This would be like the water department saying we cannot afford to find the leaks in the lines because we need more water. While a few select people are receiving benefits, employers are reducing wages so they can afford to pay this never-ending “fee”.
There have been many reports of North Carolina employers contacting the Employment Security Commission with proof of fraud including video and witness transcripts only to be told, we do not have the resources to follow up.
Until someone steps up to the plate and actually investigates the spending, we will continue to subsidize an inept Government and a lot of fraud.