Move would affect thousands of workers

CAPE MAY – The governor’s Unemployment Insurance Task Force has recommended ending unemployment benefits for seasonal workers, a change that would affect thousands of people in Cape May County who work in the billion dollar tourism and hospitality industries.

At a New Jersey League of Municipalities meeting in November, Cape May Point Mayor Carl Schupp and Cape May Mayor Ed Mahaney pushed for changes to the state’s unemployment benefit rules that would make public workers hired for a limited season ineligible for unemployment when the season ends.

The change would reduce the amount of money municipalities have to set aside for unemployment benefits. For instance, Cape May's 2011 budget reflected some $31,000 in contributions to the unemployment insurance coffers. Nearly half of that was budgeted under the beach utility that employs a number of workers for the summer season only.

Shore towns like Cape May, Wildwood and Ocean City use many seasonal employees as beach taggers, lifeguards, public works and recreation employees. According to the state Department of Labor and Workforce Development, anyone who works 20 weeks a year with a minimum paycheck of $145 per week is eligible to collect unemployment.

The League of Municipalities endorsed the resolution to change unemployment eligibility requirements for public seasonal workers but the Unemployment Insurance Task Force has gone even farther. According to its January 2012 report, the task force made recommendations to the state Senate’s labor committee to make six changes to current unemployment laws, including the requirement to “identify seasonal industries and end unemployment insurance eligibility for seasonal employees at the end of their work season.”

The task force recommendation suggests that “…New Jersey law be amended to identify seasonal industries, determine industry seasons, and eliminate all end-of-season separation eligibility, reasonable assurance tests notwithstanding.”

Such a change would remove unemployment benefits for thousands of workers at the Jersey Shore, where hotels, restaurants and other tourism businesses hire for the summer season.

The Senate committee heard testimony on the issue on Thursday, Feb 9.

The task force specifically recommended that construction not be deemed a seasonal industry. There was no mention of tourism and hospitality industry exceptions.

New Jersey does not currently restrict unemployment insurance benefits for seasonal workers. According to the 2011 report issued by the New Jersey Unemployment Insurance Task Force, 12 states, including Massachusetts and Pennsylvania, do restrict the payment of job loss benefits to workers who earned some or all of their wages through seasonal employment.

The most common restriction, according to the report, is a provision that provides "seasonal wage credits" are available for payment of unemployment benefits only during the seasonal operating period of the employer or industry.

In Massachusetts, for instance, benefits are restricted for some seasonal wages to the operating period of a seasonal industry. There a "seasonal industry" is defined as operating during a regularly recurring period of 16 weeks or less.

In Pennsylvania, unemployment payments are restricted for seasonal wages for less than 180 days of work in the operating period and the restriction applies only if there is "a reasonable assurance of employment."

School-related earnings are not considered under the Cape May and Cape May Point resolutions. Right now, New Jersey's school employees are ineligible for unemployment insurance benefits during holiday periods, breaks and summer vacation if they are under contract and have the expectation of returning in the next academic year or term.

But, many school-related occupations – including bus drivers, crossing guards and cafeteria workers – are not employed directly by schools and, therefore, do not face the same restrictions.

The Garden State's unemployment benefits are considered among the country's most generous. As of April 30, 2010, the state had borrowed $1.75 billion from the federal government to pay unemployment benefits and projected borrowing another $1 billion to pay claims over the next two years.

New Jersey is one of 31 states with outstanding loans from the Federal Trust Fund. Nationally, more than $42 billion has been lent out to states.

The Unemployment Insurance Task Force was created to reduce the deficit the state is running in its unemployment insurance fund. Due to nearly two decades of diversions from the fund, which totaled $4.6 billion, and because of multiple tax table adjustments, the fund became insolvent in 2009 as the nation plunged into a severe economic recession that resulted in sustained levels of high unemployment and benefit payments.