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FGA Report Shows North Carolina’s Unemployment Indexing is a Nationwide Model for State Economies

Naples, FL—A recent report by the Foundation for Government Accountability (FGA) showed that unemployment indexing helped North Carolina recover faster after the Great Recession and respond more favorably to economic challenges brought on by the COVID-19 pandemic.

Unemployment indexing, which ties how long individuals can collect benefits to economic conditions, allowed North Carolina state lawmakers to decrease unemployment costs and employer taxes while replenishing the state trust fund. This reduced unemployment program costs three times as fast as states that did not reform their unemployment systems and decreased unemployment costs by nearly 87 percent.

Lawmakers’ decision to implement unemployment indexing also fully restored the state trust fund, moving it from $2 billion in debt to a balance of $3.6 billion in the black. Indexing also allowed North Carolina to respond more favorably to economic challenges imposed by federal unemployment program expansions during the COVID-19 pandemic. The state’s trust fund balance remains above $3 billion despite expansions that decimated state economies.

“Policymakers can restore their trust fund balances, lower taxes, and reduce dependency if they follow North Carolina’s example and implement unemployment indexing,” said Hayden Dublois, Deputy Research Director at FGA. “As states continue to struggle with labor shortages and supply chain issues, leaders should focus on reforms that empower Americans to return to work and contribute to their communities. They can do this while protecting their state from future economic downturns with unemployment indexing.”

States should follow North Carolina’s lead and implement unemployment indexing.


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