In our spotlight on Business Report.

New Jersey's unemployment system has come a long way since the peak of joblessness during the pandemic.

But a new report finds even with those improvements, the state system is leaving out more than 700,000 residents.

As Ted Goldberg reports, research largely blames the barriers on federal regulations that are more likely to affect people of color, immigrants and low wage workers.

The Center for Popular Democracy wanted to find out how many out of work people in New Jersey are actually collecting unemployment.

How can we really bring people together and make sure everyone is fully covered in a system that is as seamless as possible, that works within the limitations of the law?

After combing through publicly available data, they wrote a report saying New Jersey's current unemployment insurance system still leaves behind more than 700,000 workers.

Despite that, the report compliments New Jersey for being one of the few states to issue unemployment to about half of people who aren't working.

We are consistently one of the best states in terms of access to unemployment benefits and benefit levels.

So it's no accident our staff works tirelessly with claimants to provide benefits whenever possible.

They have a pretty good definition of good cost separation or for when workers leave voluntarily.

So, you know, if there's something illegal going on at a workplace, say they're having their wages stolen, say they there is a threat to their health and safety, they're able to leave that workplace and have a good reason, have a good chance of being able to submit an effective claim.

Julie Diaz is the deputy commissioner for New Jersey's Department of Labor.

She says the state could modernize a bit more to help more eligible people find benefits, but that a revamped unemployment website has been a big help.

One of the drivers of this department is to provide equitable access, and we work hard to reach some of the most vulnerable populations.

Our work through the community partners is doing a lot of that in reaching workers and ensuring that eligible workers are receiving benefits.

Since the program is a state federal program.

The federal kind of limitations and guidelines really do have a big impact on what a state can do directly with that program, since it's subsidized by the federal government.

Being subsidized by the federal government means you have to play by their rules.

That makes it harder for certain groups of people to collect unemployment, including gig workers, students and immigrants who entered the country illegally.

We know that the impacts of unemployment on families are drastic.

Young people, children of unemployed parents have worse test scores.

Sara Cullinane leads Make the Road New Jersey, a group that partners with the Center for Popular Democracy.

She wants to see major changes to how New Jersey gives out unemployment insurance.

And Deputy Commissioner Diaz doesn't totally disagree.

What we can do as a state is start a new program, a permanent program, one that really fits the needs of a 21st century workforce that includes immigrant workers, gig workers, workers who are returning after a period of being a caregiver, students, others that are excluded.

We need national reform to the UI statutes to make everything more uniform and modernization across the board so states can work together.

There are 53 systems in this country right now.

States must be able to talk to each other.

New Jersey's unemployment rate has hovered around 5% since last summer.

Federal data puts that at one of the higher rates for American states.

While this report says New Jersey has done a great job of keeping unemployed people afloat, even if there's still progress to be made.

For NJ Spotlight News, I'm Ted Goldberg.