Unemployment cuts will be tough for many workers on the Outer Banks

At around the same time people on the Outer Banks started the busiest week of the year serving the tourist community, North Carolina’s new law on unemployment insurance was implemented.

 The law that went into effect on July 1 reduces the cap for new claims for weekly state unemployment insurance benefits from $535 to $350, and cuts the maximum number of weeks of benefits from 26 weeks to as few as 12 weeks.

In a move that The New York Times this week called  the state’s “cruelest decision,” a  total of 70,000 people statewide had their long-term unemployment check cut. North Carolina is the only state in the country to choose to lose the federally-funded benefit.  

And although the numbers are not huge – 137 in Dare, 84 in Currituck, and 17 in Hyde –the folks who had been collecting federal long-term unemployment benefits now face a substantial challenge in supporting themselves. 

Even in the midst of the summer overdrive, some Outer Bankers are starting to worry about the implications of the unemployment law changes come fall, when jobs here disappear until spring.

“I don’t think he’s thinking about the whole state,” Jane Metacarpa, an owner of  Sandbar & Grille in Buxton, said about Gov. Pat McCrory. “We’re not Raleigh. We’re not a major city that’s got other options.

“There’s no work here in the winter,” she said. “This is going to affect every single one of us.”

Any old timer remembers the days before tourism, when fishing was the mainstay of the economy, and young people routinely left to find jobs.  Since tourism took off in the 1980s, there’s so much work in the summer months, employers have trouble getting enough workers.

The reverse is true in the off-season, when employers close their businesses or scale down dramatically. As a consequence, whatever staff remains  – nearly all year-round residents – are laid off until Easter, when the tourists come back.

Metacarpa, who is in her 15th season, said that most employers on the Outer Banks simply can’t afford to stay open all year.

“There’s too many businesses,” she said, “and not enough people to support them.”

And members of the local workforce, many of whom stay at the same job for years, have adapted to the seasonal cycle of work-overwork-no work by planning ahead.

“Everybody has to save enough money to get through the winter,” she said. “Unemployment isn’t enough (but) it certainly helps put food on the table.”

It’s bad enough that some individuals stand to lose nearly $200 a week in benefits, she added, but a number of unemployed couples will be losing about $400 a week from their household income.

“I think they’re going to see a lot of people applying for aid elsewhere,” Metacarpa said.

Allen Burrus, owner of Burrus Red & White in Hatteras, said that local people are not sure what to expect, and there’s much misinformation swirling around. The bottom line is, he said, that they are worried about how they’re going to get through the winter.

It used to be that winter fishing and construction-related jobs would sustain the locals when the tourists were gone, he said, but now both those industries are struggling. 

So what work can be found nowadays on the islands in the winter for unemployed people? 

“When it comes down to it –nothing,” he said. “I assume that some of them will leave.”

The impact would be lessened if the weather is good, he said, and people can work through Thanksgiving. But if a tropical storm blows in, businesses often must close early.

For example, after Hurricane Sandy last October and Hurricane Irene in August 2011, people had to file for unemployment weeks earlier than they usually would do.
 
Burrus, who represents Hatteras Island on the Dare County Board of Commissioners, said there is no ready answer to finding work in an economy of which 80 percent is based on tourism revenue.

‘It’s going to take the government stepping in and creating jobs,” he said, as FDR did with the Civilian Conservation Corps that built dunes and other coastal projects.

“I don’t see the private sector doing that because there’s just not enough money out there. When you don’t have cash flow in the winter time, it’s even more difficult.”

The Currituck Outer Banks and Ocracoke Island in Hyde County also become ghost towns in the winter, and even though the central beaches from Kitty Hawk to Nags Head and Roanoke Island have more year-round residents, jobs are also few and far between in the off-season.

“We’ve already had people leave this area because they couldn’t find work,” said Anne York, branch manager at Coastal Staffing Service in Kitty Hawk. “I’m sure we’ll see more people leave this area.”

York said that the only notable work that’s been available lately in the winter months on the Outer Banks has been for general labor, which are typically short-term projects involving strenuous physical labor.

 Although the construction business has been recovering, she said that without a major project or year-round industry coming in, the off-season work situation here will likely remain dismal.

“It’s always been up and down here on the Outer Banks, “ she said, “and I don’t see that changing in the perceivable future.”

According to the recent Census data and economic indicators provided by the Outer Banks Chamber of Commerce, the top employers in Dare County are Dare County Schools and Dare County government.  Food Lion supermarket is No. 3, the North Carolina Department of Transportation is No. 6 and Walmart is No. 10.

Out of the 18,018-member workforce in 2011, more than 4,300 worked in accommodation and food businesses, 3,238 worked in retail businesses, and 2,147 worked in real estate and rental companies.

In October 2012, the seasonally adjusted unemployment rate in the U.S was 7.9 percent. In North Carolina, it was 9.3 percent. Locally, it was 6.6 percent in Currituck County, 11.2 percent in Dare County, and 11.0 percent in Hyde County. By January, Dare’s rate had climbed to 11.5 percent, one of the highest in the state.

Meanwhile, Dare County’s cost of living index in the third quarter of 2011 –the last available figure – was 109, with the U.S. average at 100.  At the same time, Raleigh’s index was 93.3; Durham, 90.6, and Charlotte, 92.6. What that means is that it costs more for food, housing and medical care in Dare County than urban areas in the state.
 
The main purpose behind the change in the state unemployment law is to create sustainable long-term job growth throughout the state, said Josh Ellis, a spokesman for the state Department of Commerce, which oversees the workforce and unemployment insurance offices.

The offices’ roles have recently been divided between jobs and insurance.  For instance, what used to be the state Employment Security Commission office in Nags Head is now called the Dare County Career Center. The sole “unemployment office” on the Outer Banks can now assist people only in finding jobs and no longer deals with unemployment insurance.  The renamed state Division of Employment Security is available to assist people with unemployment insurance issues.

Staff at the state Department of Social Services and the College of The Albemarle are also available to assist with unemployment concerns.

Ending the long-term federal benefit will pay down the $2.6 billion debt employers owe the federal government by 2015 instead of 2018, Ellis said.

“By eliminating it,” he said, “we believe that will put employers in a better place to hire folks.”

The average time people collect state benefits is 18 weeks, Ellis said, but with North Carolina’s recent unemployment rate of 8.8 percent being the fifth highest in the nation, some workers have collected benefits as long as 73 weeks. Much of the state, he said, has not seen economic growth since 2008.

“Generally speaking, we’re trying to put all of North Carolina to where working a few months a year and collecting unemployment for the remainder of the year is not the only option that’s out there,” Ellis said. “This is not a decision that was made lightly, and I am totally empathetic with folks. This is our best long-term approach to sustainable job growth.”

Ellis said that the state’s economic development plan will not be one-size-fits-all.
 
“There will be a strategic approach to it,” he said. “But what works in Wake County will not work in Dare County. You cannot use the same template in every part of the state.”

Some ideas for job development in the northeast, he said, could include connecting to Norfolk’s port resources to foster export markets for North Carolina products.

“It’s just time to take a fresh look at economic development,” Ellis said.

Whatever the state policy makers imagine the answer is for people looking for work, Metacarpa said the unemployment law change is going to do anything but help the people working for a living on the Outer Banks.

“We already have so many obstacles,” she said. “We need this like a hole in the head.”

DETAILS OF THE NEW LAW

Here are some details about the state unemployment law based on information from the Division of Employment Security and House Bill 4.

Changes impact only claims filed after June 30, 2013.

Everyone who files for unemployment insurance has to search for work unless the work search provision has been waived.

Applicants for unemployment insurance must be able, available and looking for work –same as previous law.

The maximum amount of benefit weeks is 20 instead of 26.  The number of weeks will be predicated on the seasonally adjusted state – not county — unemployment rate.   For a base period that begins July 1, the rate for April would apply.  For a state rate of less than or equal to 5.5 percent, the range is a minimum of five weeks and a maximum of 12 weeks. For a state rate of greater than 9 percent, the range is a minimum of 13 weeks and a maximum of 20 weeks.

Part-time workers are expected to accept available full-time jobs.

After the 10th week of unemployment, any job offer paying 120 percent of the individual’s weekly benefit amount will be considered suitable work.

Earnings allowance for new claims will be capped at 20 percent of the weekly benefit amount.

Attached claims – when an employer files for the employee with the intention of bringing them back to work – now have new requirements:

    –Employers with a negative balance must have a zero balance before the claim can be submitted.
    –The full amount of the benefits to be paid the employee must be paid in full upfront.
    –Only one claim per employee per benefit year may be filed
    –The period of attached unemployment may not exceed six consecutive weeks.
    –If an employee has a weekly benefit amount established prior to June 30, the weekly benefit amount will not change.
    –A one-week waiting period must be served for any attached claim filed after June 30.

FOR MORE INFORMATION        

Here’s the link to the unemployment law:
http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H4v4.pdf