As many as 70,000 long-term unemployed North Carolina workers will lose public benefits on Monday in a budget move enacted in February.
Cuts to state jobless aid rendered North Carolina ineligible for federal benefits to the long-term unemployed.
The state said it needed to slash benefits to repay debt more quickly, but critics argue the move favours business interests over individuals.
North Carolina has the nation's fifth-highest unemployment rate at 8.8%.
The US economy has endured a painfully slow recovery with the national unemployment rate currently at 7.6%, down from 10% at the depths of the financial crisis in October 2009.
'What are we to do?'The looming end of long-term unemployment benefits has left those dependent on them reeling.
"I'm just not sure what I'm going to do," said Lee Creighton, 45, who lost a job as a manager of statisticians and writers in 2009 and last worked in October.
"What are we to do? Is the state prepared to have this many people with no source of income?"
Under a law passed in February by North Carolina's Republican legislature, the state forfeits federal funds that support the long-term unemployed by cutting the dollar amount of weekly benefits offered to shorter-term unemployed residents.
While other US states have reduced the length of time unemployment benefits are paid out, they have spared weekly benefit payments, thereby avoiding the loss of federal assistance to the long-term jobless.
At the heart of the matter is $2.5bn (£1.6bn) in debt North Carolina owes to the US government, which the state accrued to pay for a sharp rise in demand for benefits during the 2009 economic meltdown.
Under the February law, the state's budget will see a net increase of $3.6bn over four years. More than two-thirds of that comes from benefit cuts, with the rest made up in tax rises to employers.
Much of the savings is being redirected toward the debt owed to the US.
'Over-taxation'North Carolina officials hope the debt will now be paid down by 2015 or 2016, not 2018 as before the February law was passed.
The law was signed by Republican Governor Pat McCrory in February.
Mr McCrory said it would protect the state's small businesses from "continued over-taxation" while securing the unemployment safety net and encouraging businesses to create jobs.
State Representative Julia Howard, the Republican who sponsored the bill, suggested the cuts would push out-of-work North Carolinians to find employment faster.
"It may not be the job that you want or your career for the rest of your life," she said.
Critics of the law say the state legislature has favoured businesses over the state's workers. The National Association for the Advancement of Colored People (NAACP) and other groups have staged Monday protests at the state assembly for seven weeks against the legislature's more conservative policies.
Democratic State Representative Paul Luebke told the Raleigh News and Observer he and others would continue to fight for the restoration of the programme.
"This is critical income," Mr Luebke said. "This is income that in some instances is the difference between losing a house, foreclosure, losing a car, repossession, or getting along a little bit."
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