N.J., Pa. act to cope with insolvency in unemployment funds

Legislators on both sides of the Delaware River took measures Thursday to cope with insolvency in the funds that pay benefits to the unemployed.

Both Pennsylvania and New Jersey have been borrowing money from the federal government to pay benefits. Pennsylvania owes $3.8 billion, New Jersey about $1.4 billion.

In New Jersey, the Senate unanimously approved a measure that would allow employers to spread out payments to replenish the fund over three years, instead of facing a one-time average charge of $300 per employee payable July 1.

In the past, any insolvency triggered an automatic surcharge to replenish the fund. The measure, which the Assembly passed in May, awaits Gov. Christie's signature.

In Pennsylvania, legislators negotiated behind closed doors ahead of a Senate vote Monday. They are working on a system overhaul that would cut unemployment spending $140 million a year by curtailing eligibility, reducing the number of weeks of benefits, and making people use work severances before they can collect benefits.

A Republican analysis of the latest version of the bill says Pennsylvania's employers are paying $500 million a year in extra taxes due to the fund's insolvency. That's 31 percent over normal contributions, it says.

The severance measure, which would kick in for workers who got more than $11,158 in severance, "is hurting those workers with the most seniority on the job most," said Maurice Emsellem, an analyst who follows unemployment issues for the National Employment Law Project.

"That includes lots of workers in manufacturing and other 'displaced' workers already hit very hard by this recession and having an especially hard time finding new work that pays anywhere near their prior pay," he said.

About half the states tie severance to unemployment benefits, but not New Jersey, he said.

If the severance measure would affect those at the top of the wage scale, the eligibility requirements would mostly affect those at the bottom. Minimum-wage employees would need to be working 16 hours a week to qualify.

"This tends to affect low-wage people and people who don't have steady work histories," said employment lawyer Sharon Dietrich of Community Legal Services of Philadelphia.

Employees also would have to work for more weeks to qualify for benefits. That provision would affect construction workers, Dietrich said.

Precipitating all this negotiating is a technical fix that the state's legislators must enact by next Friday to preserve the final 13 weeks of federally funded unemployment benefits for 45,000 Pennsylvanians.

No matter what the legislature does, however, another seven weeks of benefits will end for 15,000 jobless Pennsylvanians on Saturday.

That is because the state's unemployment rate has fallen to 7.5 percent. To be eligible for the federal money, the rate must be above 8 percent.

New Jersey still qualifies for both the seven and the 13 weeks of payments because its unemployment rate is 9.3 percent.