Eight hours may seem a long time to wait for a meal. But the line of cars that formed in a derelict parking lot in Hertford, North Carolina, early last Thursday morning, full of people waiting for a few cans of soup and some pasta from a local food bank, was nothing unusual. Almost every morning now, there is a line like that somewhere in North Carolina.

From a distance, the rows of cars look innocuous enough. But they are a symbol of the desperation that has gotten worse in North Carolina since July, when a swathe of cuts to unemployment benefits made it arguably the worst state in the US to be out of work.

The cars appeared in Hertford shortly before 8am, though the truck bringing the food was not scheduled to arrive until 4pm. Volunteers who hand out the food said it is not uncommon for cars to start lining up before dawn.

“I had a man the other day who said: ‘All I want is a bar of soap,’” said Laura Williams, a volunteer at the storage depot in nearby Elizabeth City. “Another man came in here and said: ‘Can you get me some toilet paper? I’ve been having to use coffee filters.’”

She added: “We get that a lot – people asking for toilet paper. But we can’t stock too much of that as we’ve got to concentrate on canned food.”

Washington has this month been dominated by a political fight over whether to restore a federal benefits program for the long-term unemployed, which was allowed to expire on 28 December, cutting off a lifeline to more than 1.4 million Americans. The White House and Democrats want to reinstate the benefits. Republicans are reluctant.

What North Carolina is currently experiencing is a foretaste of the economic story likely to unfold across the country unless the federal benefits are restored.

The people in line on Thursday constituted a cross-section of America’s poor. Of those who wound down their windows and agreed to talk, the eldest was 77, the youngest 19. They included pensioners, students, people working for minimum wage and some who had recently been laid off. They were there so early, and willing to wait so long, because they wanted to increase their chances of receiving perishable items rather than just canned goods. Get a spot near the front of the line, and you might get some fresh vegetables, bread, or even some frozen chicken.

Charles Christman has been volunteering at the Food Bank of the Albemarle in Elizabeth City, North Carolina for the past three years. Photograph: James Robinson Photograph: James Robinson/Guardian

By 4pm, there were more than 100 cars in the dilapidated parking lot – once a bustling shopping mall. At the very front were Floyd Liston, 59, and his friend, Bobby Bass, 65. Their story was not atypical.

Bass is retired after years working in a cotton mill. Liston, a diabetic, worked all his life but had to give up in 2011 after a routine blister on his foot deteriorated. Married with two daughters, Liston didn’t have health insurance and did not visit a doctor until it was too late. “The infection had eaten all the bone. They told me to go to the hospital and that night they took my leg off,” he said.

In February, in an attempt to address a $2bn debt that it owed the federal government, North Carolina passed a law that slashed both the number of weeks for which a job-seeker can receive state benefits and reduced the amount that it pays out in unemployment, from $535 a week to $350.

In doing so, North Carolina knowingly violated a contract with the federal government, resulting in the automatic cutting off of federal assistance for the long-term unemployed. The changes, which came into effect in July, therefore didn’t just cut the amount of support that people who lost their jobs received from their government by a third, it also meant the maximum length of time they could receive such benefits plummeted from 99 weeks to just 19.

“What happened in North Carolina was one the harshest cuts in unemployment benefits we’ve ever seen in this country,” said Mike Evangelist, a policy director at the National Employment Law Project. "Nothing I know of compares to it."

The precise impact of the benefits reduction in North Carolina is difficult to discern, said Larry Katz, a Harvard professor. But he and other economists have recently been pointing to figures that hint at an alarming phenomena: people have been dropping out of an already bleak labor market, and in record numbers.

Since July, when the cuts came into force, North Carolina has experienced the largest contraction in its labor force since record-keeping began in 1977. Remarkably, the sharp decline in the workforce in North Carolina, which has a population of 9.75 million, has even altered the national picture.

Timothy Littke, 55, from Lumberton, gave up looking for work in North Carolina in October. He was laid off from his job building hog feeders in June, a month before the benefits cuts kicked in.

He has since relocated to live with his daughter in Pittsburgh. The story of Littke’s departure says much about about deprivation in his old home of Lumberton – a small city in the south of the state which, by one measure, is the poorest in America.

No one wanted to buy Littke's possessions, so what he couldn’t take with him to Pennsylvania, he locked up in his trailer. A friend later described how, the day Littke left, neighbors arrived with axes and pickup trucks to scavenge. “They even stripped off the metal to sell as scrap,” he said.

Unemployment insurance keeps the labor participation rate high because, in order to qualify for benefits, people need to look for work. When they stop looking, or stop receiving benefits, they are no longer counted in the unemployment rate, even if they're still out of work.

As a result, there has been a counterintuitive trend in the state: official figures say unemployment has actually fallen, from 8.8% in June to 7.4% in November.

That has led some Republicans to claim North Carolina's experiment in severe benefits reduction has been a success. Dave Camp, the chairman of the House ways and means committee, claimed the state's cut in benefits for jobseekers led to “rapid job creation”.

Brandie Connell waits with her son Cory, 5, at the Food Bank of the Albemarle. Connell's husband is out of work and the family relies on what they can get from the food bank. Photograph: James Robinson Photograph: James Robinson/Guardian

The theory is that when benefits are cut off, recipients will be forced to take a job, even if it's low-paid or part-time. But the theory doesn't work so well if there are no jobs available.

North Carolina has added about 22,000 jobs since June. But if the 50,452 people who left the state’s labor force between June and November were counted again as jobless workers, North Carolina’s unemployment rate in November would have jumped by a full percentage point, to 8.4%.

While North Carolinians have been lining up for food, lawmakers in Washington have been divided over whether they should help.

Long-term federal unemployment insurance is implemented during times of excessively high unemployment – a kind of supplement after state benefits expire. Congress allowed the program to expire in December. Republicans point to a declining national unemployment rate, which this month fell to 6.7%, a figure that belies a fall in labor participation also occurring nationwide. Democrats add that headline unemployment figures also masks rates of long-term joblessness, which remain stubbornly high.

A Democrat-backed bill in the Senate to temporarily restore the insurance program has stalled. Two procedural votes to advance the legislation failed on Tuesday amid disputes over how to pay the $6.4bn cost. Even if the bill succeeds in the Senate, which now looks doubtful, Republicans in the House show little appetite for backing the measure.

Democrats believe the decision by Republicans to block anti-poverty measures will play against them in the 2014 mid-term elections, particularly in states like North Carolina, which contains rural counties with the highest rates of deprivation in the country.

On Wednesday, President Barack Obama was in Raleigh, North Carolina, to announce new steps to boost the manufacturing sector.

The state’s Democratic senator, Kay Hagan, who will face a stiff challenge from Republicans in November's election, has inserted a provision in the bill restoring federal benefits that would allow North Carolinians to once again receive the benefits, despite their state’s law. “North Carolina [is] the one and only state in the nation to lose access to this critical lifeline [prematurely],” she told the Guardian. “And I am working in the Senate to right this wrong.”

However the bill is going nowhere fast, and the benefits reduction is already taking its toll.

Official indicators that will show the full impact on the state's economy may not be available for months to come, but the effect that the cuts have had on North Carolina's food banks tells its own story.

Volunteer Levey Padua moves skids of food around in the warehouse at the Food Bank of the Albemarle in Elizabeth City. Photograph: James Robinson Photograph: James Robinson/Guardian

The food banks saw a 10% increase in demand in the three months following the benefits cut in July. Demand increased by another 10% in October and November, the last months for which data is available.

Alan Briggs, executive director of North Carolina’s association of food banks, said not all of the increased demand can can be attributed to the reductions in unemployment benefits. A nationwide cut in funding for food stamps that went into effect in November has been particularly difficult for the network's clientele. Congress is reportedly on the verge of cutting the food stamp program by another $9bn.

But Briggs said there is little doubt the cut to unemployment insurance has "contributed significantly" to the growing numbers of people who have been forced to rely on food donations.

Liz Reasoner, the executive director of the food bank which supplies the whole of the north-east of the state, including Hertford, said her location has seen a 14% increase in demand since the benefits cuts came into force. Prior to that, the largest surge of demand was the 6% increase they experienced during the recession.

In her 19 years at the food bank, Reasoner says she has witnessed people lose faith in the so-called American dream. “What most people here dream of is self-sufficiency,” she said. “To have a job, healthcare and enough food – that’s what they’re striving for.”

That dream may not be aided much longer by the food truck that stops monthly in Hertford. It costs the local volunteers – Bettie Butler and her twin sister, Bonnie – between $300 and $500 to buy the cut-price food and hire a truck. With that, they feed 175 families each month.

But they rely on donations, which recently started to dry up. “Unless someone helps, we’re bust,” Butler said.