From the APP:
Christopher Nagy, a carpenter from Bradley Beach, was called into his employer’s office on Christmas Eve 2009 and told that not only would he not receive a bonus this year, but also he would lose his job.
For Nagy, a single father with a 7-year-old son, it meant life on the unemployment rolls. No cable television and Internet. No movies. No trips to the mall.
“Every single penny, before it comes, is already spoken for,” said Nagy, 37.
Nagy is one of thousands of New Jersey workers who lost their jobs in the Great Recession and are surviving on unemployment benefits. Too many for the state’s trust fund to support.
It has put employers on the hook for a tax hike worth $1 billion and locked Republican Gov. Chris Christie and the Democratic-controlled Legislature in a standoff over how to fix it. No matter the outcome, observers said, the unemployment system could take a decade to recover.
“It’s impossible for many states to recover to positive balances in one, two or even three years,” said Douglas Holmes, president of UWC Strategic Services, a Washington, D.C., group that lobbies for businesses. “This is going to be something that will be addressed at least through 2020.”
New Jersey is one of them. Workers in the state who lose their jobs this year are eligible for 60 percent of their average weekly pay, up to $600. The benefits last for 26 weeks. Once they expire, workers can collect unemployment benefits that can last another 73 weeks from the federal government.
The state-funded benefits come from an unemployment trust fund that is financed by both a tax on employers and a tax on workers. The amount employers pay depends on how often their workers file claims.
The fund, however, crumbled. The state’s unemployment rate skyrocketed from 4.5 percent when the U.S. recession began in December 2007 to close to 10 percent, a 33-year high. Some 490,000 workers in the Garden State are receiving state-funded benefits, according to the New Jersey Department of Labor and Workforce Development.
The result: The state last year paid $3.7 billion in benefits and collected $1.9 billion in revenue, forcing it to borrow the balance from the federal government. New Jersey owes the federal government $1.5 billion as of March 29, Holmes said.
The debt isn’t the only problem. State law calls for employers to stabilize the unemployment trust fund by paying a higher tax. On its current course, employers would see their unemployment taxes increase by anywhere from 32 percent to 225 percent.