November Jobs Numbers: Looking Beyond the Headlines, No Cause for Applause
The headline of November’s employment data released last week – New Jersey’s unemployment rate drops significantly to 7.8 percent – threatens to overshadow the much more significant news behind the headlines: Not much has changed in terms of the state’s tepid recovery.
While the unemployment rate did drop by 0.6 percentage points to 7.8 percent, there are several important facts about the rate to note:
• It dropped mostly due to the fact that 31,600 New Jerseyans gave up looking for work and dropped out of the labor force – the single largest drop among the 50 states last month. New Jersey’s labor force is now the smallest it has been since the depths of the recession in December 2008, and economists at CohnReznick says the state’s labor force participation rate is the lowest its been since 1983. None of these are facts scream “strong, stable, growing economy.”
• Even more New Jerseyans may soon drop out of the workforce due to Congress’ failure to extend emergency unemployment benefits – about 90,000 out-of-work residents will stop receiving benefits next week, and many will likely drop out of the labor force. New Jersey has the highest share of its labor force currently on extended benefits of all 50 states.
• Even with the large rate drop, New Jersey’s unemployment rate remains far above the national rate of 7 percent, and is the ninth highest rate among the 50 states. It’s also higher than our neighbors in Pennsylvania (7.3 percent) and New York (7.4 percent).
On to the jobs added.
New Jersey added 16,900 jobs in November, which is welcomed news. But the rate of job growth needs to be much higher to support a robust recovery. For example, in the last year, New Jersey has added 70,900 jobs. This sounds impressive, but it represents job growth of just 1.8 percent – not all that much more than the growth in working-age population over the same period (1 percent). In order for the state to return to pre-recession job levels by November 2016 – three years from now – we’d have to be adding 144,000 jobs a year, or 12,000 jobs every single month.
When you take a longer view, it is clear that New Jersey still has a long way to go to come back from the losses of the recession. The Garden State has recovered just 59 percent of the jobs it lost during the recession, while our neighbors in New York have recovered 152 percent. Our neighbors on the other side, Pennsylvania, have recovered 83 percent and the nation as a whole has recovered 85 percent.
New Jersey’s jobs deficit – the number of jobs the state needs to get back to pre-recession levels and keep up with population growth – remains large, at 310,400, or 8 percent of the current number of jobs in the state. New York’s is 125,500 (1 percent), Pennsylvania’s is 261,400 (5 percent) and the nation’s is 9.2 million (7 percent).
And what types of jobs is New Jersey adding? Mostly lower-paid ones.
The only major industry categories that have added jobs in New Jersey since the beginning of the recession are Leisure and Hospitality, which has grown by 5.4 percent since December 2007, and Education and Health Services, which has grown by 11.6 percent in the same time frame. And in the past year, 71 percent of all job growth (representing 78 percent of private-sector job growth) in New Jersey has occurred in three sector series with average wages around the bottom half of the spectrum: Health Care and Social Assistance (19,900 jobs added), Food Service (15,700) and Retail Trade (13,600). These sector series have average annual salaries of $52,280, $25,380 and $31,430, respectively.
The November jobs report may end up having a greater significance than most monthly reports, due to the headline it presents and – more importantly, perhaps – because it is the last jobs report before the governor’s State of the State address next month. While we expect the jobs numbers to be spun hard to support the false notion that “Jersey Comeback” is back – and that it only needs the accelerant of tax cuts to really catch fire – the facts suggest otherwise. The state’s economic recovery remains incredibly fragile, and pushing through reckless tax cuts would only weaken the state’s efforts to get back to pre-recession employment levels.
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