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By Claire Dickey
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Legislatures in Alabama, North Carolina and Iowa are considering significant changes to unemployment benefits. These proposed changes could affect how people qualify for benefits, the amount they receive and the state tax structures supporting these benefits.
Newsweek reached out to legislators in Alabama, North Carolina and Iowa for comment via email on Thursday.
Why It Matters
Unemployment benefits serve as a crucial buffer for individuals facing job loss, especially during economic downturns. Changes to these benefits can significantly impact the economic stability of families and the broader economic health of states.
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In states like Alabama and North Carolina, proposed increases in job search requirements and benefit amounts are sparking debates about the balance between encouraging employment and providing necessary support. In Iowa, discussions focus on adjusting tax obligations for employers, potentially reshaping state economic landscapes.
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What To Know
The proposed changes in Alabama, North Carolina and Iowa highlight how different states are updating their approaches to unemployment benefits.
Alabama
In Alabama, House Bill 29, spearheaded by Representative Ed Oliver, aims to increase the number of weekly job applications unemployed individuals must submit from three to five. The bill is currently headed for debate and a vote in the full Senate.
"In terms of accomplishments, we hope that it would encourage people to be much more serious about seeking jobs when they're on unemployment," Oliver told Alabama Daily News last August.
Supporters argue this change is reasonable given the state's job openings. Per U.S. Bureau of Labor Statistics (BLS) data, Alabama's job openings rate was 5.4 percent in December compared to 4.5 percent nationally. Critics, including David Stout of Alabama Arise, contend that Alabama's already stringent rules do not necessarily correlate with higher employment rates.
North Carolina
North Carolina's House Bill 48 proposes increasing the maximum weekly unemployment payout from $350 to $450, marking the first rise in nearly a decade. This bill also seeks to ratify and phase out an emergency increase instituted after Hurricane Helene.
"In order to adjust for inflation, and [in consideration] of the devastation of 25 of our western counties due to hurricane Helene, raising our maximum weekly unemployment benefit, was the right and prudent thing to do," North Carolina Representative Harry Warren told Newsweek. "Within those counties, towns were completely washed away, businesses were shuttered and hundreds of jobs were lost."
Currently, the bill has received initial approval in the House and awaits further consideration in the Senate.
Iowa
Iowa is considering two proposals affecting unemployment taxes paid by employers. Iowa Governor Kim Reynolds' proposal, the Unemployment Insurance Reform Bill, aims to cut unemployment taxes in half by lowering the maximum tax rate to the federally allowed minimum of 5.4 percent and reducing the taxable wage base by half. It advanced through the Senate Workforce Committee this week.
"Our unemployment trust fund is full," Reynolds said in an address this week, as reported by the Des Moines Register. "In fact, we have more than we need. Our nearly $2 billion trust fund is the ninth-highest in the country, even though we're 32nd for population. Clearly, we're over-collecting."
A competing proposal from Iowa Senator Adrian Dickey introduces a tiered tax system based on business size, aiming to relieve smaller businesses by establishing two different wage bases for unemployment taxes: one at $10,000 for small businesses and another at $30,500 for larger businesses.
What People Are Saying
Alabama Senator Arthur Orr said on Tuesday in front of the Senate County and Municipal Government Committee, as reported by the Alabama Reflector: "We have 127,000 open jobs across the state, and this presumably would require people to look more for jobs and available employment, rather than just taking three a week."
North Carolina Representative Harry Warren told Newsweek: "In addition to the more than $1 billion already invested in mitigating the damage, with billions more to follow, raising the maximum weekly unemployment benefit was just another effort to help the folks impacted by the disaster."
North Carolina Representative Mark Brody told Newsweek: "North Carolina generally has a low unemployment rate but the tragedy in Western NC prompted us to review our weekly benefits. By legislation, if it goes through, will increase the monthly benefits totals from $1400 to $1800 coming weekly at $350 to $450 weekly. We recognize that inflation also has had its effects and, even with the increases, our base reserves remain sound.
North Carolina is one of the fastest growing states in the nation in both population and economic opportunities, thus offering many employment opportunities for those who find themselves unemployed but providing the safety net in the meantime."
Iowa Governor Kim Reynolds said in a January press release: "Our trust fund balance sits near a record high $2 billion, while unemployment claims are at a record low length of nine weeks. We need to stop overcollecting on Iowa employers and allow them to reinvest savings in their businesses and employees. A simplification of the system is necessary to maintain our momentum in state tax reform and ensure we stay competitive with surrounding states."
Iowa Senator Adrian Dickey said at a bill hearing this week, as reported by Iowa's Telegraph Herald: "The question being asked and presented with this bill is: Should 92 percent of businesses that have paid into the system — and are the majority reason why there's nearly a $2 billion balance — receive the bulk of the $1 billion in tax reduction, or should the 7 percent of the Iowa businesses that have not paid in to that level receive the bulk of the $1 billion relief?"
What Happens Next
The bills in all three states are still under review and may be changed as they move through the legislative process. Their development reflects a larger national dialogue on how to balance supporting unemployed workers with stimulating economic growth—a challenge many states across the country are currently navigating.
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