COVID pushed NJ unemployment system too far. Now there’s a plan to fix it

New Jersey’s aging unemployment system was pushed beyond the limit over the past two years, with many in the state facing dragged out delays in payments, technical and bureaucratic snags, and the inability to have their issues resolved.

Starting in early 2022, New Jersey is one of two states – the other being Arkansas – that will take part in a federal pilot program to upgrade its unemployment infrastructure, the state Department of Labor announced on Dec. 14.

The new program is called the Claimant Experience Pilot, under which the state Department of Labor and Workforce Development would design a system that “provides equitable and timely access to unemployment benefits,” while “rooting out identity theft and other fraud issues” that bogged down the state unemployment system and held up thousands of applications.

Amid a slew of COVID-19 business restrictions put in place last year, and for half of 2021, that shut down the state economy, an estimated 2.4 million people filed for unemployment since March 2020.

Since then, nearly $37 billion in federal and state jobless benefits have been paid out to more than 1.5 million people employed in New Jersey. Unemployment surged to over 16% last year.

But applicants complained that they waited weeks or months for a single paycheck. Others saw their applications frozen or held in limbo, while some were wrongly told they were ineligible or were not able to get into the weekly certification system. Many had no means to get in touch with a live person at the call center to resolve their issues, or had to wait weeks or months to finally hear from someone.

The unemployment system was heavily-reliant on a decades-old computer mainframe called COBOL.

Gov. Phil Murphy, in a prepared statement issued Tuesday, said that the COVID-19 recession “shed light on the challenges and shortcomings of the federal unemployment system,” but that the pilot program would put the state “at the forefront of modernization, and permanent, meaningful reform.”

According to the New Jersey Labor Department, under the pilot program the state will work to create a “user-friendly entry to the system with an integrated identity verification component,” rather than have that be a separate step.

“No state was spared from the deluge of unemployment claims nor from the difficulties of implementing numerous new federal unemployment benefit programs created to assist workers during the COVID-19 pandemic,” reads a prepared statement from state Labor Commissioner Robert Asaro-Angelo.

He said that while the state could indeed spend its own money to upgrade the unemployment system, the problem lies at the federal level, and the fact that each state has its own independent system. A single nationwide centralized system would go far to fix that issue, he told lawmakers in April.

Meanwhile the deluge of added federal benefits under the federal COVID-19 relief package, and its constantly changing rules – such as benefits for freelancers and gig workers, and extended benefits and added relief money each week – also put strain on the system.

“Our systems had to undergo significant changes with each new provision of the new federal pandemic relief laws, followed by new guidelines, processes, and retraining,” he added in April. “Often, what was true on Tuesday had been overwritten by new federal guidance by Friday.”

Labor officials meanwhile said that many of those delays were “often mistakenly attributed to computer system glitches,” when in reality they “most often occurred because of the web of complex federal laws and processes that require us to verify workers’ information, receive and review wage records – often from multiple parties and multiple states – verify identities, and make sure only those eligible for benefits receive them.”

“Despite all this, the overwhelming majority of unemployment insurance benefits filed in New Jersey are paid without issue or delay.”