New Jersey still has billions in unspent federal pandemic aid, but not enough to start picking up the tab for the enhanced unemployment benefits that for months have been funded by the federal government, Gov. Phil Murphy said Monday.

The decision by Murphy to not use the state’s resources to cover the benefits that are set to expire comes as New Jersey has so far regained a little more than half of the jobs lost last year at the onset of the coronavirus pandemic.

The state’s unemployment rate is hovering above 7%, and for thousands of New Jersey residents, the enhanced benefits have been adding $300 to weekly unemployment checks throughout the ongoing health crisis.

It would cost $1 billion per month

But taking over full funding of those benefits after they expire Sept. 4 would cost the state at least $1 billion a month, Murphy said during a pandemic briefing on Monday.

Murphy, a first-term Democrat, also raised concerns that putting such a significant share of the state’s remaining federal pandemic aid into just one bucket could “crowd out” other areas of need.

‘We must ensure that we are appropriating these funds judiciously for the greatest possible long-term recovery.’

“Our federal coronavirus relief pot is intended to support multiple recovery programs that our residents and businesses both need,” Murphy said during the briefing.

“We must ensure that we are appropriating these funds judiciously for the greatest possible long-term recovery,” he said.

New Jersey has distributed nearly $34 billion in unemployment benefits since the pandemic triggered a surge in joblessness last year amid a series of economic shutdown orders that were intended to help slow the rate of new COVID-19 infections.

A good share of that funding — about $25 billion — has been provided by the federal government.

Credit: (NJDOL)
Distribution of unemployment benefits in New Jersey since the start of the pandemic

New Jersey has also received more than $6 billion in federal pandemic aid this year from the American Rescue Plan Act, and only about a third of it has already been appropriated by Murphy and lawmakers.

How to use rest of federal aid

Last month, the Murphy administration invited dozens of groups to provide input on how the state should use the balance of its unallocated federal aid, which must be obligated by the end of 2024.

A state budget enacted in late June set aside a little over $2 billion of New Jersey’s share of federal pandemic aid for items including rent and utility bill assistance and upgrades at trauma centers.

Meanwhile, in addition to providing states with pandemic relief funding, the federal government has also been paying for the enhanced unemployment-insurance benefits and covering the cost of other temporary changes to benefits programs.

But the authorization for the enhanced benefits expires Sept. 4, and the U.S. Congress has decided not to extend them any longer as some have raised concerns that they may be keeping some people from rejoining the workforce amid the nation’s ongoing economic recovery. However, others have argued against halting the enhanced benefits at a time when COVID-19 cases are surging.

Murphy suggested during Monday’s briefing that continuing the enhanced jobless benefits is ultimately an issue for the federal government to determine. He also said that no state so far has stepped in to pick up the tab as the federal authorization is set to expire.

“The proper way to extend federal UI benefits is through federal action, not a patchwork of state ones,” Murphy said.

When residents do reenter the workforce, they will be earning at least $12 an hour thanks to New Jersey’s ongoing ramp-up to a $15 minimum wage. Murphy said. Next year, the minimum hourly wage is scheduled to rise to $13.

State unemployment benefits to continue

Meanwhile, state unemployment benefits will continue to be provided to eligible recipients even as the federal funding for the enhanced benefits dries up, and some New Jersey residents may also qualify for state extended benefits, officials said.

In all, the number of employed people in New Jersey grew by 14,600 in July, pushing the total share of the jobs lost to the pandemic that have since been recovered up to 62%, according to the latest figures from the state Department of Labor and Workforce Development.

But the state unemployment rate also ticked up from 7.2% to 7.3%. That’s well above July’s national jobless average of 5.4%.

Some states decided months ago to stop accepting enough federal funding to provide their respective residents with the enhanced jobless benefits amid concerns that they may be keeping some people from rejoining the workforce. New Jersey was not one of those states.

And even as the Murphy administration has decided not to use state resources to cover the cost of the enhanced unemployment benefits, it’s also resisted calls to use federal pandemic relief dollars to prevent a statutorily required payroll tax increase from being assessed on businesses to help fund a replenishment of the state unemployment fund.

Asked on Monday about that tax hike looming for New Jersey businesses, Murphy said he had “nothing new to report.”

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