A Perfect Storm of Cuts Batters North Carolina's Unemployed
The House of Raeford turkey processing plant in Raeford, North Carolina. Credit: Spencer Woodman/The Nation.
Maxton, North Carolina—On a sweltering morning in early August, Lester Dixon packed a U-Haul truck tightly with his family’s possessions, which would soon set off for a nearby storage facility. No longer able to afford rent on their four-bedroom home, the family would disperse later that day to stay with friends and relatives until a cheaper dwelling became available. Resting his elbows on the lid of an industrial-size plastic garbage bin, Dixon pointed to one thing he’d be holding onto: a regional phonebook he used daily to call warehouses, factories and retail stores across the state that might hire him as a forklift driver.
On July 1, Dixon, along with over 70,000 other North Carolinians, lost his unemployment benefits in an unprecedented cut to state aid for the jobless. By voting to slash its unemployment insurance program last February, the state violated federal guidelines, causing it to become the first state ineligible for federal jobless aid. Over the next few months, an additional 100,000 job seekers in the state, who would have otherwise qualified, will lose benefits.
State Republicans argue that the cuts, designed and lobbied for by the North Carolina Chamber of Commerce, will keep the state’s business taxes within reason while its government repays a massive debt owed to the federal government for its post-recession unemployment program.
At 8.8 percent, North Carolina’s unemployment rate is the fifth highest in the nation, and some of its most extreme joblessness is focused in rural counties along its eastern and western flanks. Dixon’s town of Maxton, on the state’s southern edge, divides between Scotland and Robeson counties, which reported June unemployment rates of 16.2 percent and 13 percent respectively. Advocates worry that people and organizations in such areas could bear a particularly harsh impact of the benefit reduction.
“With that income, we’d still be living in our home,” Dixon, 48, shouted over the roar of a freight train running just beyond the backyard of his vacated house. “This was our home, the whole thing. I used to care for my mother, now she’s trying to look after me and that hurts me to death.”
Three decades of mechanization and outsourcing in Dixon’s region triggered successive waves of mass layoffs. (Even while loading the U-Haul, two of Dixon’s moving helpers approached me to ask if I was offering work.) Low-skilled jobs in particular have been slow to return. “The boss at a plant down the road says he’s got a big stack of applications for a forklift operator, but problem is, you’ve got to have a computer degree nowadays to qualify for it,” said Don Porter, economic development director for the nearby town of Raeford, where Dixon used to work as a forklift driver. “I can take you to the factory and you can see shelves being stocked all day, but you won’t see any people—it’s robots doing everything.”
Sitting in his cavernous office inside Raeford’s decommissioned train depot, Porter explained that jobs are still fast disappearing from the region. Later that week, his town of 4,600 would lose almost a thousand jobs in the closure of a massive turkey processing facility called the House of Raeford. For decades, the plant had been a keystone of the town’s private sector economy. Porter worries most for workers old enough to face challenges updating their skill-sets, but who also must continue to earn a living.
“I’m an eternal optimist,” Porter said. “But I don’t know how this is going to turn out for some folks.”
* * *
The workers cast off by the House of Raeford closure will “become the first large-scale test” of North Carolina’s novel approach to unemployment insurance, according to Sarah Ovaska, an investigative reporter at NC Policy Watch, a think tank associated with the NC Justice Center. As a consequence of dramatically scaled back benefits, the newly unemployed can expect to see civil society organizations straining to meet a new level of need.
“It’s a scary time for us,” said Amy Grimes Sims, who directs The Community Table food pantry in Jackson County, located in the far western region of the state. Grimes Sims says that, after July 1, those cut from unemployment rolls flocked to her nonprofit. “We are supposed to be supplemental to state, federal and the local agencies,” Grimes Sims said. “But the burden has continually been shifted onto us to the point that we’re the sole source of nutrition for a lot of folks. There have been days when there’s hardly anything on our shelves and we have to just wait for the next shipment to come.”
“We had a record month in July,” said Terry Foley, director of Catholic Parish Outreach, a network of food pantries that serves three counties in central Carolina, adding that need rose 20 percent this July compared with July 2012. “It was a perfect storm of the cuts to unemployment compounded with problems with our state’s food stamp system.”
The benefit changes entail a reduction in both duration and size of benefits, from $535 a week to $350. The reduction in the weekly amount brings the state in line with most throughout the South, yet the cuts to duration—July 1 marking an immediate shift from the state’s offering sixty-three weeks of combined state and federal unemployment aid to as few as twelve weeks depending on the state’s unemployment rate—makes North Carolina a national outlier.
“The state has racked up more than $2.5 billion of debt from the federal government for unemployment compensation,” Gary Salamido, vice president of governmental affairs at the NC Chamber of Commerce, said in an e-mail. “This debt not only triggered mandatory employer tax increases but, more importantly, was on an unsustainable path for job growth and job creation, which is exactly what is needed for the people of North Carolina.”
“We had to do something to pay that debt,” said Republican Representative C. Robert Brawley, who voted for the bill though his son was unemployed at the time. Brawley himself questioned whether the cuts would have too harsh a consequence on the jobless. “At the end of the day, I don’t do what’s best for my family, I do what’s best for my state.”
According to the most recent available USDA data, over 17 percent of North Carolina’s families faced a low level of food security in 2011—placing the state’s hunger rate at sixth highest in the nation.
Nonperishable protein items such as canned meats are in particularly short supply in Scotland County, according to Pastor Faye Coates, director of the Restoring Hope Center in Laurinburg. Pastor Coates, who oversees a network of twenty-four food distribution sites throughout county, says that her food pantries began seeing an increase in clients in the weeks before July 1. “It was like a pot brewing, you could feel the rumbling in the water telling something was coming,” Pastor Coates said. “We had people coming in—just anticipating it—asking, ‘What am I going to do?’”
“The stories about hunger in this state are stunning,” says Gene Nichol, the director of the Center on Poverty, Work & Opportunity at UNC School of Law, who has traveled the state extensively to research economic conditions. “You hear mothers tell of not eating so their children won’t go hungry, you hear parents talk about having to pick which child will eat on which day. This is an emergency in our state, but it’s talked about very little.”
* * *
One of the South’s fastest-growing economies, North Carolina is regarded as a role model for development. For three decades, the state has attracted huge numbers of high-skilled jobs to cities in its central Piedmont region such as Raleigh-Durham, where Fulbright Scholars, specialty surgeons and French fusion chefs have helped to give the area a claim on cosmopolitan competitiveness.
“There are a lot of parts to our economic miracle that are very real,” Nichol said, “But the state has developed unevenly. While we’ve spent a lot of time and money recruiting high-tech jobs to its big cities, a lot of people have been left out.” Like many other states, North Carolina’s poverty rate distributes differently between racial groups. Fourteen percent of whites in the state face persistent poverty, but that number more than doubles for African-Americans and other minorities.
The state’s premier libertarian think tank, the John Locke Foundation, has vigorously argued that because unemployment insurance provides temporary income, it discourages the unemployed from looking for work and is therefore partly to blame for the state’s high unemployment rate. “No economy ever grew more healthy and productive by paying employable adults not to take jobs,” wrote John Locke President John Hood earlier this year.
The state’s billionaire retail magnate, Art Pope, largely funds the John Locke Foundation and its sister think tank, the Civitas Institute, which Pope founded. A 2011 New Yorker profile of Pope outlined how the activist financier might—especially in the wake of the Supreme Court’s Citizens United decision—single-handedly shift rightward the state’s political landscape. This year, for the first time since Reconstruction, Republicans took control of both the state’s legislature and the governorship. The new governor, Pat McCrory, installed Art Pope as co-chair of his transition team.
Republicans quickly launched a bitterly polarizing yet comprehensively successful push to legislate some of the country’s most sweepingly conservative state policies, including deep cuts to public education, tight regulations on abortion clinics, and one of the nation’s strictest voter laws. In seven months, despite the arrest of hundreds of Moral Monday protesters led by the charismatic Reverend William Barber, North Carolina reversed many policies that had made the state among the South’s most moderate.
“More responsibility is being passed down to local communities and, at the same time, power is being removed from these very areas,” said Reverend Mac Legerton, who runs a nonprofit that helps job seekers in Lumberton, the seat of Robeson County. “[At a time when] we need support and partnerships at the state and federal level, we’re being forced to find ways become self-reliant.”
The state’s change to jobless aid is one among many worries for rural poverty advocates. The state’s recent decision to opt out of the federal Medicaid expansion will exclude some 500,000 low-income North Carolinians from subsidized health insurance. The new government also initiated deep cuts to funding for the NC Rural Center, a nonprofit dogged by allegations of rampant cronyism and inefficiency, but one of the only statewide organization that focuses on development of poor areas of the countryside.
“Even starting in kindergarten through twelfth grade,” said Legerton, “kids look around and think, ‘Why would I want to finish high school, when there are no jobs out there?’ ” Legerton traces much of Robeson County’s ills (it’s one of the poorest and most violent areas in the state) to the outsourcing of jobs that once held together a social fabric of stable homes and gave residents confidence to invest in their futures.
“It’s hard to tell people what kind of skills they need to learn for jobs that don’t even exist,” said Christina Davis-McCoy, executive director of Blue Springs-Hoke Community Development Corporation in Raeford. “How do you motivate them to move beyond a place of hopelessness?”
Nonetheless, Legerton and Davis-McCoy say that most workers use unemployment benefits to invest in education and job searching. “It’s a very slim percentage of folks who use that money to sit back and relax,” Legerton said. “The vast majority of people know they can’t afford to do that.”
Lester Dixon, who holds an industrial welding degree, had been using his unemployment insurance to cover bills and to pay friends and family to drive him to job interviews and employment offices across the region. “I’d pay them $25 to take me and then I’d go interview, fill out the application and all that stuff,” Dixon said. “But once unemployment [benefits] stopped, people would say ‘I’d love to take you but I don’t have the gas’—and you can’t give nobody gas if you don’t have any money.”
Three years ago, Dixon found a job doing maintenance and driving a forklift at a factory in Raeford, twenty-five miles north of Maxton. “I got that job and—bam!—I was making the big bucks, fourteen dollars an hour.” Last year, Dixon was laid off and, last March, began collecting unemployment insurance. Dixon said that affording adequate meals for his family has become difficult.
“For a man who just wants to work, it’s hard out here,” Dixon said. “Everybody’s looking for jobs all the time.”