Murphy hopeful end of weekly $300 benefit can make dent in labor shortage

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The state opted not to continue a slew of federal unemployment benefits past Sept. 4 that hundreds of thousands of New Jerseyans counted on, and Gov. Phil Murphy said he had hopes that the move could at least play some kind of role to reverse months of labor shortages.

“I hope it helps address the labor market, the challenges that we had,” he said during a remotely-held COVID-19 press briefing on Sept. 15. “I personally think it would have perhaps a modest impact on that.”

Possibly the most notable federal COVID-related unemployment benefit was an added $300 in weekly relief, which businesses and conservative lawmakers contend was the sole driver of hiring shortages.

Since the late spring, businesses in the restaurant, hospitality, retail and entertainment industries have complained about hardships filling their ranks with enough workers to staff reopenings. Many had to reduce operations or hours – or raise prices – especially along the Jersey Shore, which is heavily dependent on summer tourism.

The effects of those moves were muted, according to a joint study prepared by researchers at Harvard and Columbia universities, the University of Massachusetts Amherst and the University of Toronto. States that cut off the benefits saw their employment rates jump 4.4% compared to states that kept the benefits.

The study compared 18,648 claims in states that cut off the benefit and those where it is still in place using data from late April through August. The researchers found that 7 out of 8 people who saw their benefits cut still did not find employment afterward.

New Jersey Business & Industry Association CEO Michele Siekerka said the hiring shortage was essentially a “perfect storm” of different factors working together and worsened by the added unemployment relief.

“I don’t think it was a big driver to begin with. I think it probably was a factor,” the governor added. “We will see.”

The state’s unemployment rate stands at 7.3%, making it the fifth-highest in the nation. It peaked at 16.6% in April 2020, at the height of the COVID-19 business closures put into place.

When the benefits lapsed, they were relied on by 500,000 New Jerseyans. Another 250,000 New Jerseyans receive benefits under the Pandemic Unemployment Assistance program, which provides aid to non-traditional workers such as freelancers and sole proprietors. And 190,000 people receive a 13-week extension under the federal Pandemic Emergency Unemployment Compensation.

Murphy had the option to continue the benefits by using the $6.2 billion that went to the Garden State under the American Rescue Plan, but said that the price tag would be too steep and the state would quickly burn through the money if it opted for the route.

“[T]aking away benefits does not spur job growth, but it does make it much harder for families to put food on the table,” Vineeta Kapahi, an analyst at the progressive think tank New Jersey Policy Perspective, said in an August statement. “Too many workers continue to face the impossible choice of exposing themselves to COVID-19 or losing income, while many others are struggling to juggle caregiving responsibilities with work.”