700K New Jersey workers face barriers to unemployment benefits, study finds

The unemployment insurance system leaves behind more than 700,000 New Jerseyans, largely due to federal unemployment regulations that put roadblocks between some vulnerable workers and jobless benefits, according to a new report from a progressive advocacy group.

The figure includes people who are eligible for unemployment benefits but don’t know it, self-employed workers, and undocumented immigrants barred by law from seeking unemployment insurance, according to the report from the Center For Popular Democracy.

New Jersey should do more to “meet the needs of a 21st-century workforce and before the next recession, leaders must reimagine the (unemployment insurance) system to increase inclusion and maximize the programs’ ability to act as an economic stabilizer for all working families,” the report says.

The group analyzed data from the U.S. Census Bureau to determine that about 737,400 New Jersey workers are excluded from unemployment benefits.

Robbing them of jobless benefits leads to a loss of potential income that has “devastating and destabilizing effects” on them and on the economy, according to the report.

The report extols New Jersey as a national model for unemployment insurance, saying it has one of the highest average unemployment payments and one of the highest rates of recipiency among the jobless. The report also applauds state-mandated labor protections for domestic workers and an increased minimum wage.

But New Jersey fails to “ensure a robust safety net for all New Jerseyans — especially those in the most vulnerable position of joblessness and loss of income,” the study states. Most people who face barriers to accessing unemployment insurance are low-income workers, people of color, immigrants, and mixed-status families, according to the center.

More than 45,000 people are eligible for unemployment insurance but don’t apply for it, largely because they don’t know they’re eligible, the report says. Low-wage workers are less likely to know they qualify for benefits than higher-wage workers, according to the Economic Policy Institute.

“There are numerous reasons for this, including the lack of ease and accessibility of the (unemployment insurance) application tied to the digital divide in economically disadvantaged communities of color and the lack of accessible program materials in applicants’ native languages,” the report says.

About 6% of the people the report says are excluded from unemployment benefits are the roughly 15,000 undocumented residents currently out of work. Federal and state laws prohibit undocumented immigrants from claiming unemployment benefits, even if they pay taxes. A 2018 study from the Institute on Taxation and Economic Policy found undocumented immigrants contribute more than $587 million in state and local taxes annually in New Jersey.

When the pandemic led to skyrocketing unemployment claims, New Jersey established a fund for undocumented immigrants where they could claim up to $4,000 per household.

“The necessity to establish these supplemental, temporary programs on both the federal and state levels, although in response to an acute crisis, speaks to gaps in the current (unemployment insurance) system that need plugging. New Jersey should address these exclusions permanently,” the study states.

Independent contractors, like freelancers and gig workers, make up another large portion of those who cannot access jobless benefits. New Jersey is currently waging a legal battle against Lyft over unpaid wages and taxes due to allegedly misclassifying drivers as independent contractors, and in 2022 the state settled a similar worker misclassification claim with Uber, though that agreement allows Uber to consider its drivers independent contractors instead of employees.

The study estimates other groups left out of unemployment benefits include: people who willingly leave their current job and look for a new one; people who make too little to qualify; people returning from incarceration and reentering the workforce; family caregivers returning to the workforce; and recent graduates.

Gridlock in Congress has led to little reform in the unemployment arena, leaving the problem to the states. The Center For Popular Democracy points to states like Maine, where a program expanded access to existing unemployment benefits, and Colorado, which created a benefit program for undocumented workers in 2022.

“While federal legislation limits the types of workers who can benefit from unemployment insurance, nothing prevents a state from creating new benefits and programs to reach and cover all unemployed workers to make a truly universal and easily-accessible unemployment benefits system,” the report states.

Make the Road New Jersey, a labor and immigrant advocacy group based in Elizabeth, joined the call for lawmakers to advocate for a better unemployment system.

“Being denied access to these unemployment benefits is unjust and perpetuates economic inequality and social disparities. It is time for New Jersey to lead by example and push for a bold reform that ensures every worker has access to the support and resources they need to thrive,” the group said in a statement. “We can’t meet the needs of a 21st century workforce if 700,000 workers are left in the cold in the next recession.”