N.C. unemployment fight being watched across the U.S.

Jordan Friedman | USA TODAY

Scott Bland of Waxhaw, N.C., is out of work — and the hardships that he and 70,000 other people face have grabbed national headlines.

Sparks are flying over a recent change in North Carolina's unemployment benefits – the elimination of federally-funded compensation – bringing protests to the state capitol and leaving citizens and some legislators up in arms.

Unemployment snafus in states across the country aren't new or unusual. But North Carolina is unique because it's the only state to cut off access to the federal Emergency Unemployment Compensation (EUC), a program that gives unemployed citizens money after they use up their state benefits.

This leaves people like Bland in a tough position.

"I was due to have a full year of benefits," Bland said. "Now I've had to tap into my 401(k) to pay the bills and mortgage."

Since April, these cuts have been a topic of protest at weekly "Moral Mondays," rallies in Raleigh that have also addressed other issues like women's rights and health care. Protesters typically sing hymns, give speeches and chant as they carry signs, and several hundred have been arrested so far.

"It's just one of those things – we're stunned," said Harry Payne, senior counsel for policy and law at the North Carolina Justice Center, who has participated in protests and spoke out against the law for months. "Elections have consequences and the pendulum will swing, but the pendulum shouldn't go through the wall and into the next room."

North Carolina isn't the only state facing unemployment benefit cuts, though most of the changes elsewhere aren't as severe. With a national unemployment rate of 7.6%, eight states including North Carolina have in the past few years reduced the number of weeks that jobless citizens are eligible for state unemployment funds.

Until recently, the standard limit for state unemployment benefits was 26 weeks. But five states have lowered that number to either 19 or 20, and Georgia has reduced it to 18. Arkansas and Illinois have lowered their limits to 25.

With the new state law, North Carolina's benefits end after 20 weeks.

What makes North Carolina's situation different, though, is the fact that the state government also reduced the maximum amount of money that unemployed people can get each week from $535 to $350. It's this change that cuts off North Carolina from the federal unemployment funds: states that change the average weekly benefit can't get this money.

About 70,000 North Carolinians have already felt the impact of the change, effective July 1, and an estimated 100,000 more are expected to face cuts in the next few months.

Just last week, Gay Gilbert, administrator for the U.S. Office of Unemployment Insurance, wrote in a letter to Dale Folwell, assistant secretary for N.C.'s Division of Employment Security, that under federal law, North Carolina can't deny benefits to certain groups, including those who voluntarily left their jobs or who work at "educational institutions."

Gov. Pat McCrory instantly faced backlash when he signed the law that put the changes into effect back in February. The state has also increased taxes on businesses to help pay off its more than $2 billion debt to the federal government.

The benefit cuts have some North Carolina legislators arguing that the decision to eliminate the federal benefits starting in July was rushed, especially given the fact that the EUC wasn't set to expire until January.

"It's not a time for us to turn our backs on the people who need help the most," said Sen. Floyd McKissick, D-North Carolina.

But Rep. Julia Howard, R-Davie, said delaying the law until then could have burdened businesses and increased debt. The benefits cuts will encourage people to find work faster and then move to a better job as the economy improves, she said.

"It may not be the job that you want or your career for the rest of your life. But to take a job, get back into the job market," Howard said.

Many of the unemployed see the situation differently.

"I think it was underhanded," Bland said. "There was no consideration for what the people wanted."

Contributing: The Associated Press