Government, Courts, and the World of Work

One of the biggest fiscal problems facing the Christie administration - and there are many - is the insolvency of the Unemployment Compensation Trust Fund.  Under federal law, New Jersey must replenish the Fund or risk penalties.  Worse, tens of thousands of unemployed workers in the state could be left stranded without benefits.

While sharing information with some members of  the Christie transition team last month, I suggested that the new Governor would need to work closely with the Obama adminstration to not only implement a short-term fix, but to make the Trust Fund sustainable over the long haul.  Today, the Star Ledger reports that Christie will be asking for a federal bailout.  Without a bailout, taxes on employers would sky-rocket, thus raising the costs of hiring at the worst possible time.

My advice to the Obama administration is to bailout the Trust Fund, but condition the bailout on a fundamental restructuring of the state’s UI system.

The easy part is a constitutional amendment preventing the state government from raiding the Trust Fund to pay for its Medicaid obligations and other social programs, as it has done for over a decade.  The hard part is laying the foundation for a more sustainable system.

Since UI was enacted in 1935, the economy has changed, the workforce has changed, the workplace has changed, the way we work has changed, and employers’ needs have changed.  The only thing that hasn’t changed is the state’s UI system.

Transforming the system from an unemployment system to a reemployment system requires employers, workers and colleges coming together with government to provide value, not just an unemployment check.

Additionally, escalating health care costs will remain a problem for the foreseeable future.  I have written in prior posts that affordable health care and workforce development are inseparable.  Thus, both the health care market and the job market must be fixed together. 

So far the ideas coming out of the business groups in Trenton - which are populated by retired business executives and career lobbyists - are unimpressive - the usual bromides about New Jersey “being open for business.”

The reality is that New Jersey cannot fix its UI and health care problems on its own.  That’s why the new Governor should be splitting his time between Trenton and Washington, D.C..  Political differences aside, New Jersey is at a tipping point and it will require smart people working in good faith to succeed. �

On January 19th, New Jersey will have a new governor - Chris Christie.  His job will be enormously complex, perhaps more difficult than any predecessor in living memory.

New Jersey faces short and long term economic challenges and potential opportunities.  The two-year recession has accelerated long term trends and its aftershocks will leave a permanently altered business environment for the state.  Chief among these trends are the continued depletion of manufacturing, the decline of private sector labor unions, outsourcing, and the consolidation of big corporations.  

Additionally, the federal health care reform will most likely permit New Jersey to opt out of whatever government- administrated health care exchange is likely to emerge. This decision will be extremely complicated  and will have a big impact on the health and welfare of the workforce. The new Governor will need to collaborate on health care and labor issues.

There is also a massive workforce development component in the health care reform.

Governor Christie has an opportunity to refocus on job training and workforce health, wellness and productivity.  He should look carefully at how existing job training money is being spent and begin an immediate dialogue with Washington, D.C.  The U.S. Department of Labor has a big fund for worker retraining. So there cannot be an adversarial relationship with the Obama administration. There has to be a very close working relationship in order to transform the state’s unemployment insurance program into a retraining and reemployment program.

New Jersey cannot afford to go it alone.  It will require collaboration at all levels of government to succeed.