House Bill 48: Increase UI Max Benefit / 2025 UI Tax Credit
Modest but inadequate increase to unemployment benefits
HB 48 Summary (Edition 2): Increases the state’s maximum Unemployment Insurance (UI) benefit from $350 per week to $450 per week, provides a fully refundable tax credit for UI payments made by employers in the last quarter of 2024, and removes the governor’s existing powers to expand UI benefits during a disaster.
Increase in UI benefits is inadequate and does not address the UI program’s other weaknesses
- The maximum weekly UI benefit of $450 would provide about a 40 percent wage replacement for the average weekly wage of people claiming unemployment in North Carolina.[1] The new amount of $450 is less than half the average rent cost for a one-bedroom apartment and does not reflect the recommended wage replacement for UI benefits: 50 percent of the average weekly insured wage.[2]
- HB 48 does not address the state’s flawed formula for calculating benefit amounts using the last two quarters wages. Because employers often reduce hours or wages before a layoff, most states use either the highest quarter or an average of the two highest quarters in the previous year to calculate the weekly benefit amount.
Positive effect of a modest increase in benefits is muted by other harmful provisions
- This legislation limits the Governor’s existing power to increase UI benefits during a disaster, as was done to address economic hardship after Hurricane Helene.[3]
- Providing a tax break to all employers for their UI contributions sets a dangerous precedent by further eroding employers’ responsibility to ensure that the UI Trust Fund is solvent. The precedent for this action was during COVID-19, but North Carolina did not experience a similar statewide threat in the 4th quarter of 2024.
- The motivation for the tax break is likely to support to Western NC employers, but the recommended practice is instead to “non-charge” benefits during an emergency so that employers don’t bear the cost.[4] This means the state should pool benefit charges during an emergency by drawing from the state’s healthy UI Trust Fund balance.
[1] The average weekly wage for UI claimants in Q4 of 2024 (the most recent available data) was about $1,100. https://oui.doleta.gov/unemploy/ui_replacement_rates.asp
[2] Statewide average Fair Market Rent for a one-bedroom apartment is about $1,410
[3] See NC Emergency ManagementAct, https://www.ncleg.gov/EnactedLegislation/Statutes/PDF/BySection/Chapter_166A/GS_166A-19.10.pdf and Executive Order 322 Issued by Gov. Cooper, https://governor.nc.gov/executive-order-no-322/open
[4] https://www.nelp.org/insights-research/rebooting-disaster-unemployment-assistance-steps-state-federal-policymakers/
