Lew Ebert, President and CEO of the North Carolina Chamber, outlines some major problems with NC’s unemployment insurance program in this N&O guest column.
Among the problems, Ebert points out the massive $2.4 billion debt NC owes the federal government for UI benefits (which has already triggered a tax increase on employers), the annual deficit of $470 million the program is currently running, poor management and fraud.
Ebert then proceeds to offer a few suggestions for improvement, including the state issuing debt in order to pay off the loan to the feds to try and solve that immediate problem.
Disappointingly, however, Ebert stops short of what the ultimate goal should be: privatizing unemployment insurance. The latest problems confronting our government-run UI system serves to reinforce the need to de-politicize how we handle the risk of losing one’s job. Rather than forcing all employers to contribute to a fund in which the rules for those out of work receiving the benefits are completely at the whim of politicians, we should remove government from the process and allow individuals to decide for themselves how to hedge against the risk of losing their job.
Employers could offer private UI plans to workers, similar to how many offer disability plans. Or, workers could be offered the option of individual unemployment accounts – in which workers could set aside money (tax free) while they are working that they could draw down in the event they lose their job.
In a free society, these decisions and responsibilities would be the domain of individuals rather than concentrated in the hands of the political class.