Unemployment expansion cuts could mean long delays, advocates, officials warn

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Democratic lawmakers and labor advocates have argued that the end of $600 in federal COVID-19 unemployment relief could devastate families hit by the virus, amid record-high unemployment levels in New Jersey and across the country.

But the suggested cuts to the weekly amount – from $600 to $200 under a proposed COVID-19 federal relief package that GOP lawmakers rolled out on Monday – could in its own ways upend the unemployment bureaucracy and decades-old computer systems in states like New Jersey that have been already pushed to their limits and struggled to catch up with mounting claims this past spring.

Under the Republican proposal, the $200 in added federal benefits under the Coronavirus Aid, Relief and Economic Security Act would amount to roughly 70 percent of a worker’s weekly wages from before they became jobless. Democrats have balked at the proposal, as tense negotiations pick up for this new iteration of the CARES Act.

“If Congress makes major changes to the $600 weekly supplement,” like through a calculation of the kind Republicans proposed, then “workers across the country could be waiting months for the programming to be available to administer that new benefit at the state level,” said Angela Delli-Santi, a spokesperson for the state’s labor department.

The non-partisan trade group National Association of State Workforce Agencies, which represents the 50 state’s individual labor departments, warned that switching from a flat $600 to a formula-based system could take upwards of between four and 12 weeks.

The state’s unemployment system’s computer programming – which has paid out over $11.6 billion to nearly 1.4 million, or 1 in 4 New Jerseyans – “is already in place for a $600/week supplement,” Deli-Santi said.

Of that $11.6 billion, more than $7 billion came from the CARES Act expansion, according to the state labor department.

“Congress could authorize continuation of the $600 weekly benefit until states can program in the new formula, or it could approve an extension of the current program without changing the amount or other rules governing eligibility,” she added. Both of those routes could stave off  payemweeks or months-long delays.

Advocates in the GOP-led White House and U.S Senate contend that the $600 payments are high enough to discourage people from looking for work.

According to U.S. Treasury Steven Mnuchin, this so-called “CARES ACt 3.0” would pivot the focus of the federal unemployment expansion away from paying “people more money to stay at home,” and toward having Americans “go back to work.”

New Jersey’s unemployment stands at 16.6 percent as of mid-June, making it the highest since the U.S Bureau of Labor Statistics began tracking individual state’s numbers, and second in the nation only to Massachusetts.

In the second half of March, Gov. Phil Murphy enacted a host of sweeping restrictions that barred public gatherings and non-essential travel, and ordered most businesses to close their doors or dramatically scale back operations in a bid to deprive the virus of any in-person hosts.

Many of those businesses found they could not survive at reduced capacity and closed their doors indefinitely. Some permanently. Staff were laid off or furloughed as businesses went under.

Some of the closures were lifted in June, such as on hair salons and outdoor dining. But with businesses operating at reduced capacity, many residents already tightening their belts and consumer spending cascading, the unemployment rate has remained steadily high.

“The fact is, our recovery is going to be slower than people were hoping,” said Christopher Hayes, a labor professor at Rutgers University.

The decade following the Great Recession between 2008 and 2010 was one of the highest periods of economic and job growth in American history. But recovery from the pandemic, like pre-pandemic employment levels, could likely span the better part of the 2020s.

That’s thanks to a nationwide surge in the virus, according to a recent Rutgers University study titled the “Coronavirus Economic Pivot.”

Out of the state’s 1.4 million jobless claimants, at least 96 percent of eligible claimants have gotten pay, Murphy has said.

But that still leaves out upwards of between 48,000 and 57,000 who have been out of work from the pandemic and haven’t gotten any state aid.

“There are people that just have not been able to connect and get that first penny that they’re owed. Overwhelmingly, if not entirely at this point” those reasons are “unique to that individual,” Murphy said at an unrelated event Thursday afternoon in Long Branch.

“Let’s say you live in Long Branch and work in New York City. There are cross-state issues that are complicated,” he said.

He cautioned during a COVID-19 press briefing on Monday that “to leave individuals hanging out there right now who are unemployed is probably the last thing we should be doing.”