The Republican-controlled North Carolina state senate overwhelmingly approved legislation to slash the state’s unemployment insurance program Tuesday, reducing the amount of aid unemployed workers can receive and also the number of weeks they will be eligible to receive it. The legislation reduces the maximum benefit from $535 a week to $350, while reducing the time workers can receive aid from 26 weeks to 20.

The cuts will also cost unemployed North Carolinians access to the federal unemployment insurance program, which is based on state programs. The change will cost 170,000 North Carolinians a total of $780 million in federal funds, adding to the total they will lose in state funds. North Carolina’s unemployment rate is 9.2 percent, more than a percentage point higher than the national rate, but proponents of the legislation say it will help workers find jobs faster, Reuters reports:

“What this really should be called is a re-employment rather than an unemployment bill,” said Republican state Senator Bob Rucho, a sponsor of the measure. “We’re trying to put North Carolinians back to work.“

The average unemployed worker has been off the job for 35 weeks, meaning North Carolina will now fall far short in helping many of its jobless residents. And Despite Rucho’s assertions, and despite typical Republican concerns that programs like unemployment compensation cause a “culture of dependency,” studies show that workers who receive unemployment insurance look harder for jobs than those who do not. More likely, the bill will simply make the lives of unemployed workers even harder, preventing them from falling back on unemployment aid and cutting America’s already-stingy unemployment program even closer to the bone.

If the bill is approved and signed by Gov. Pat McCrory (R), who has sign he will sign it, North Carolina will become the seventh state to make cuts to unemployment insurance.

A combination of federal and state unemployment insurance programs kept 2.3 million Americans out of poverty in 2011, mitigating some of the negative effects the Great Recession had on jobless workers. But even as unemployment remains stubbornly high, several states are taking the axe to their unemployment programs, and the result is that recipients are losing federal unemployment insurance too.

Seven states have reduced the length of their unemployment programs from 26 weeks, the standard since the 1950s, by as much as 14 weeks, according to a new policy paper from the National Employment Law Project. But because federal benefits depend on the number of weeks offered at the state level, those cuts are also costing workers access to the federal program. In those states, five of which have unemployment rates higher than the federal level, those cuts are costing individual recipients as much as $5,000, according to NELP:

The average jobless worker has been unemployed for 35 weeks, and 40 percent of unemployed workers have been out of a job for at least 27 weeks, meaning the cuts will hammer large numbers of the unemployed in these states. While opponents of unemployment insurance decry the “culture of dependency” the program creates, research shows that recipients work harder to find a new job than those who don’t have access to the program.

America’s unemployment program, stingy as it is, also has benefits for the economy: the Congressional Budget Office estimated that failure to extend the federal program at the beginning of the year would have cost the country 300,000 jobs.

On Sunday, economist Paul Krugman hit back against GOP claims that public sector employment has increased under Obama, and that such jobs consist mainly of wasteful bureaucrats and somehow count less economically than private sector ones. Back in September it was tea party Senator Rand Paul (R-KY) toeing that line, and this morning it was former Republican gubernatorial candidate Carly Fiorina.

The exchange commenced immediately after Krugman made the point that, had government employment in the current recovery followed the same path it followed under previous recessions in the Bush and Reagan years, unemployment now would be slightly above 6 percent:

CARLY FIORINA: I think it’s important to remember, when we talk about the economy, that a private sector job and a public sector job are not the same things. They’re not equivalent. I’m not saying public sector jobs aren’t important. But a private sector job pays for itself. A private sector job creates other jobs. A public sector job is paid for by taxpayers. [...]

PAUL KRUGMAN: But when we say public sector jobs, it is not a bureaucrat in Washington, D.C.

FIORINA: Oh, it is, actually.

KRUGMAN: When we talk about public sector jobs — when we look at the ones that have been lost in large numbers in this — it’s basically school teachers. Don’t think about bureaucrats. It’s school teachers. What we’ve laid off hundreds of thousands of school teachers. And when we talk about the cuts in public spending that have happened, they are not, you know, some god awful who knows what. It’s actually public investment. It’s largely fixing potholes and repairing bridges.

So, you know, you have this image of these wasteful bureaucrats doing god knows what. What we’ve seen is an incredible drought of basic infrastructure, and laying off hundreds of thousands of school teachers.

FIORINA: It is a fact that virtually every department in every organization in Washington, D.C. has seen its budget increase for the last 40 years. That money is being paid to hire people. The number of people who are — of course there are some teachers…

Watch it:

Public sector jobs at the federal level have actually remained pretty stable over the last forty years. They began and ended the period around approximately 2.8 million, with a bounce to about 3.1 million circa-1990. Public sector jobs at the state and local levels increased significantly over those forty years, peaking at a bit over 19 million total when President Obama entered office. (They’ve fallen since, accounting for the decline in overall public employment.) But nearly all of that growth was in teachers and support staff for the education system, who now total nearly 7 million of those state and local workers.

The other major categories of jobs in state and local public employment are, as Krugman noted, police, firefighters, health care workers, and maintenance workers and drivers for the country’s transportation infrastructure. And the overall population of the country has also been growing, so even though the raw number of state and local workers increased significantly, the ratio of those workers to the overall population did not — 59 per 1000 in 1980 versus 65 per 1000 today.

In fact, the hit the U.S. economy took in the fourth quarter of 2012 was almost entirely due to a drop in government spending, and the economy is in for another blow should the sequester cuts kick in. We’ve been cutting jobs that provide demand in the economy and invest in the country’s potential for future economic growth, at a time when both are sorely needed to help the economy recover.

According to a new report from the National Consumer Law Center, jobless Americans are being forced to pay millions of dollars in unnecessary fees to big banks in order to access their unemployment insurance benefits. Several states do not give beneficiaries the option of having their benefits deposited directly into their bank accounts, forcing them to instead use prepaid debt cards, which come along with a host of fees and surcharges.

As the Associated press noted, the nation’s biggest banks make a killing under this system:

Banks including JPMorgan Chase & Co., U.S. Bancorp and Bank of America Corp. seized on government payments as a business opportunity. They pitched card programs to states as a win-win: States would save millions in overhead costs because the cards would be issued for free. And people without bank accounts would avoid the big fees charged by storefront check cashers.

However, most of the people being hit with fees already have bank accounts. The bank-state partnerships effectively shifted the cost of distributing payments from governments to individuals. The money needed to cover those costs is deducted from people’s unemployment benefits in the form of fees.

Big banks have also racked up huge profits administering food stamp programs. As the NCLC noted, “Even well-designed prepaid cards impose costs on workers, though the price is likely lower than the cost of cashing paper checks. In California, which continues to have the best card in our survey, workers paid nearly $1.8 million in fees in the past year, not including ATM surcharges. Thus, offering workers the choice of direct deposit remains important even for prepaid cards with the fewest fees.”

Sen. Dianne Feinstein (D-CA) urged lawmakers to embrace a package that could avert the so-called fiscal cliff, noting that 2.1 million Americans have already lost federal unemployment benefits as a result of Congressional inaction. “From this point on, it is lose-lose,” Feinstein explained, during an appearance on Fox News Sunday. “My big worry, is, a contraction of the economy. The loss of jobs, which could be well over 2 million in addition to the people already on unemployment.”

Indeed, the National Employment Law Project, a worker advocacy group, projects that “more than 2 million Americans will stop receiving benefits after Dec. 29, when the federal Emergency Unemployment Compensation program will cease to exist.” The benefits have kept 2.3 million out of poverty last year alone, and the Congressional Budget Office projects that a full, year-long extension would lead to the creation of 300,000 new jobs.

The initiative requires recipients to search for a job while receiving payments, and one study found that unemployment recipients search harder for jobs than those who are not receiving money from the program.

Earlier this week, Senate Minority Leader Mitch McConnell (R-KY) demanded spending cuts to pay for the program, which would cost $30 billion. Democrats have been pushing for a full extension of benefits.

House Speaker John Boehner (R-OH) yesterday punted negotiations over how to avert the so-called “fiscal cliff” back to the Senate, but in that chamber, Minority Leader Mitch McConnell (R-KY) is now demanding spending cuts to pay for an extension to the federal unemployment insurance program that expires at the end of the year.

Without an extension, 2 million Americans will lose unemployment insurance on January 1; another million will fall out of the program in the early months of 2013. But with the Senate rushing to act before the end of the year, McConnell is again asking for spending cuts to offset the program’s extension, the Associated Press reports:

For the Senate to act, it would require a commitment from Senate Republican Leader Mitch McConnell not to demand a 60-vote margin to consider the legislation on the Senate floor. McConnell’s office says it’s too early to make such an assessment because Obama’s plan is unclear on whether extended benefits for the unemployed would be paid for with cuts in other programs or on how it would deal with an expiring estate tax, among other issues.

More than 500,000 have already lost unemployment insurance because Congress restricted eligibility the last time the program expired, and America’s unemployment program is one of the world’s stingiest. Still, it kept 2.3 million out of poverty last year alone, and the Congressional Budget Office projects that a full, year-long extension would lead to the creation of 300,000 new jobs.

Opponents of the federal unemployment program, which George W. Bush signed into law in 2008 (unemployment insurance is generally handled by states), have argued that it creates a culture of dependency and laziness. But the federal program requires recipients to search for a job while receiving payments, and one study showed that people on unemployment search harder for jobs than those who are not receiving money from the program.

Without an extension, two million workers will lose their federal unemployment benefits in 2013, despite long-term unemployment still hovering at record highs. President Obama’s offers to avert the so-called “fiscal cliff” have included a new extension of federal benefits, but Republican proposals have not done the same.

According to The Hill, House Democrats are starting to agitate for an full extension:

Senior House Democrats insist they won’t leave Washington until Congress extends jobless benefits for the long-term unemployed.

Rep. Sandy Levin (D-Mich.), the House Ways and Means Committee ranking member, said Tuesday that he is determined to see a yearlong extension passed before the benefits expire on Dec. 29.

Levin said he would refuse to accept a reduction in the number of weeks or any other trade-off as part of an extension.

“I think it’s heartless to talk about a further reduction,” he said.

A majority of Senate Democrats have also signaled support for an extension. Without an extension, only one quarter of the unemployed will have access to unemployment insurance next year, as Sarah Ayres showed:

As Ayres noted, “Congress has never allowed emergency unemployment benefits to expire when the unemployment rate was above 7.2 percent. The unemployment rate today is 7.7 percent.”

If Congress doesn’t act, two million workers will see their unemployment benefits disappear at the end of the year due to the expiration of emergency measures put in place during the Great Recession. The expiration will be the first time Congress has ended federal benefits with unemployment so high.

But Congress is not the only entity standing between workers and the social safety net. According to a report by the Morning Call, online retail giant Amazon — via the contractors it employs to hire short-term workers — is preventing unemployed workers from accessing their benefits in an effort to drive down costs:

The pressure to keep costs down means many who take temporary jobs at an Amazon warehouse hoping it will result in long-term stability and independence instead find themselves jobless and fighting for a public benefit that represents their last financial resort.

The Morning Call attended 23 unemployment compensation hearings this year involving temporary Amazon warehouse workers hired by Integrity Staffing Solutions, including hearings for several employees who lost their jobs following illness or injury. Most workers were fighting for benefits of between $100 and $200 a week.

Advocates for the working poor say the company’s aggressive stance on unemployment compensation exploits low-wage earners who need the benefit for food, housing and other necessities while they search for other jobs. The workers are often outmatched in the unemployment process.

Unemployment insurance kept 2.3 million Americans out of poverty last year, and has the potential to create 300,000 jobs next year by pumping money into a weak economy. Unemployment benefits also discourage the long-term unemployed from dropping out of the labor force.

The sticking point of the negotiations over the so-called “fiscal cliff” has been the Bush tax cuts for the wealthy, which Republicans insist must be extended and President Obama and the Democrats insist must end. (Both sides agree on maintaining tax cuts for 98 percent of Americans.)

Of course, the reason the fiscal cliff is looming in the first place is because of concerns over deficit spending, and the cliff represents a sudden and massive reduction in the size of the country’s budget hole. Not all the fiscal cliff’s policy changes arrive at once, but should all of them be enacted, the Congressional Budget Office predicts a new recession over the course of 2013.

The GOP’s fiscal cliff offer says nothing about retaining the payroll tax cut or emergency unemployment benefits (EUC), both of which end come January 1. But as the Economic Policy Institute found, extending EUC creates five times as many jobs per dollar of budget deficit as the Bush income tax cuts for the wealthy:

Extending just the upper-income Bush tax cuts would boost GDP growth by 0.1 percentage point, increasing nonfarm payroll employment in 2013 by only 102,000 jobs—far less than one-tenth the impact of continuing the temporary ad hoc stimulus measures. Continuing EUC would do three times as much in terms of GDP growth and support 300,000 to 400,000 jobs. In terms of jobs created per dollar of budget deficit, EUC is more than five times as effective as the Bush income tax cuts for the wealthy. Combine them with the Bush estate tax cuts and they are one-seventh as effective as EUC.

That’s consistent with earlier work from EPI which determined that the expiration of the stimulus measures and the scheduled cuts to government spending were by far the most economically damaging aspects of the fiscal cliff. Meanwhile, the end of the Bush tax cuts for the wealthy was far less severe — in fact, in dollar terms their expiration did more to repair the budget than to hurt job growth. CBO came to a very similar conclusion.

Allowing the payroll tax cut to expire would result in $1,000 less take home pay for the average family.