Washington, DC
May 21, 2024
Good morning.
Let me thank Governor Murphy for his leadership both now and through the pandemic. Among all the challenges of COVID, our unemployment insurance system proved necessary, effective—and inadequate to meet the needs of people who were suddenly out of work.
Necessary because the UI system exists precisely as a safety net when working people are unemployed through no fault of their own. When the pandemic hit, unemployment insurance claims spiked 3,000 percent virtually overnight. The benefits paid from the system prevented millions of Americans from further devastation, allowing them to pay the rent or the mortgage, buy food and necessary medication, and get through.
Effective because, nationwide, UI agencies paid about $880 billion to those who needed them between March 2020 to September 2021. For all the stories of fraud and delays, this is an important fact that has been lost. Unemployment benefits kept more than one million children out of poverty. And UI injected up to $2 of economic stimulus for every dollar paid, which sped up the economic recovery. The Federal Reserve called UI the most effective economic stimulus program, dollar for dollar, of the pandemic.
But the pandemic also exposed the tremendous cost of outdated technology and decades of underinvestment from Congress.
State UI teams had been cut to the bone. As challenging as all this was, Congress then asked states to implement four new programs for brand new populations of workers, without the protections against fraud that exists in regular UI. And the lack of a coordinated federal response to implementing UI programs in 2020 when the pandemic hit was one of many reasons the UI system was so vulnerable to fraud.
I often liken the UI system to a house with a leaky roof. It really should be fixed, but during good times, when there's sunshine, you can get away with patching it. Then, when the storm hits, the problem of neglecting repairs and postponing changes becomes clear. Then everyone says, "Why aren't you replacing the entire roof?" But you can't replace a damaged roof in the middle of the storm.
Now is the time, between storms, to fix the roof—when the unemployment rate is at historic lows. Indeed, under President Biden, we have the lowest level of unemployment for the longest stretch since the 1960s.
The storm led Congress to pass The American Rescue Plan Act, which delivered $1 billion for the Department to help states like New Jersey modernize their UI program. This investment recognizes that federal leadership is critical. Since President Biden came to office, just as he led a coordinated federal response that included vaccinations, supply chain resilience policies, and worker safety protocols, we have been hard at work to build a strong, modern, dependable UI system, capable of delivering for workers and their families during the hardest of times.
And we are doing that in partnership with states. New Jersey was one of the first two states that the Department chose to lead the way on this national effort.
With the leadership of Governor Murphy and Commissioner Rob Asaro-Angelo, New Jersey has crafted an online application pilot that uses modern technology. And real users have tested this application to ensure that it's intuitive and truly meets demands.
Rather than waiting for years to replace the entire system—with workers and families struggling in the meantime—New Jersey is deploying improvements like this one piece by piece to make a difference for people right now, while contributing to long-term systemic modernization.
This is consistent with the Department of Labor's vision—a smarter and more cost-effective way to do public technology. Based in large part on New Jersey's success, the U.S. Department of Labor is now funding 18 other states to follow this cutting-edge approach. To build on these grants, my Department has issued a comprehensive transformation plan for the UI system, aptly titled Building Resilience. The success of this plan will require a deeper partnership with the states and new investments from Congress as outlined in the President's Budget.
I know we can count on New Jersey to continue to lead the way.