New Jersey Job Numbers Provide Sobering Backdrop to Labor Day

Hank Kalet | September 4, 2012 | More Issues
Population growth helps keep unemployment high, while workers who find jobs often must live with pay cuts

Credit: Hank Kalet
Malik Muhammad, facilitator, at one of 11 Jersey Job Clubs.
Malik Muhammad stands at the front of a small classroom in the New Brunswick One-Stop Career Center explaining the various skills that students will learn in the coming weeks as part of the Jersey Job Club.

The students, 11 men and women who have lost their jobs, sit taking notes. Some ask questions, concerned that their experience may not be sellable in the current job market. Some are concerned about their education; others ask questions about whether the skills they learned in their previous jobs will be transferrable.

But all of them are looking for help finding a new job at a time when both the national and state unemployment rates remain at generational highs and population growth has created more job-seekers for each job opening.

While New Jersey has replaced nearly all of the jobs lost during the first few months of the recession, population growth means that the state has about 60,000 more workers than jobs. This has created an employers’ market and is creating a downward pressure on wages, analysts say.

Running the Numbers

The July jobs report — the last one released before Labor Day — showed a loss of jobs and an increase in the state unemployment rate to 9.8 percent, which is now the fourth highest in the nation. The losses followed two months of solid growth, according to the state Department of Labor and Workforce Development. The department said in an August 16 press release that preliminary figures showed a loss of 12,000 non-farm jobs in July, though the number of jobs grew by 45,500 over the last year. Labor officials said that the previous two months — 22,600 jobs added in May and June — showed the largest two-month gain in 12 years.

Overall, there were 4,143,411 people working in the state in July, compared with 4,286,959 in February 2008, the high-point for New Jersey employment.

State officials’ however, are optimistic about the employment numbers, saying the long-term trends are favorable.

“The national economy has been sluggish and, realistically, we can’t be exempt,” Charles Steindel, chief economist for the state Department of Treasury, said in a press release. “Given the national softness and the strength of our job gains in May and June some fallback was likely,”

He said that the state’s “labor force participation rate and the percentage of our population who are employed remain above the national averages” with jobs being added in nine of the past 12 months.

“We anticipate that job growth should resume and start to put some downward pressure on unemployment,” he said.

Not as Optimistic

Analysts, however, are not as optimistic. While the new jobs are a good sign, the state unemployment rate remains among the highest in the nation, with a job deficit caused in part by the shedding of public workers by state, county and local governments.

Doug Hall, director of the Economic Analysis and Research Network, a national network that reviews state economic data, agreed that there have been positive shifts in the state in recent months, even though the “unemployment rate is going in wrong direction.” EARN is affiliated with the liberal Economic Policy Institute in Washington.

The increased rate, he said, could be caused by a growing optimism among the unemployed who may have resumed job searches after having dropped out of the labor force. That has the initial effect of “bumping up the unemployment rate.”

“In some ways, you can say that this is sort of good news disguised as bad news,” he said.

At the same time, he said, there are troubling indicators in the numbers. The state’s population growth has been strong over the last several years, far outpacing the growth in jobs. That means that the new jobs have barely offset the losses experienced in 2008 and 2009.

“New Jersey has been making slow but steady progress for about 18 months, since mid to late November 2010,” he said. “At the same time the population has grown enough that, to address population growth, the state would have had to create another 55-60,000 jobs.”

Overall, he said, the state is facing a jobs deficit — the number lost during the recession plus the number of jobs needed to address the larger labor force — of 341,400 jobs. When recession started in 2008, the state unemployment rate was 4.6 percent.
The 5.2-percentage-point increase is well above the national percentage-point increase of 3.7 points and trails only Nevada.

The Job Search

Rob Usdin, a 44-year-old Hamilton resident, has been out of work for 25 months after being laid off from an information technology job. He has been working part time, teaching at Mercer County Community College, and sending out so many resumes he has “lost count,” he said by email. The lack of full-time work has been difficult.

“I’m lucky that my wife has full-time with benefits and does pretty well, but I’ve not been saving for retirement at all, nor are we putting much away for my daughter for college,” he said.

“Things are quite tight and there’s little to no saving going on,” he added. “We are extremely lucky that we do get all our bills paid every month.”

Jeffrey Haas, a warehouse manager from Mullica Township, said he has sent out several hundred resumes in the six months that he has been out of work. He has received few calls for interviews and many of the jobs that are out there are offering far lower wages than he had been making.

Join the Club

At the Jersey Jobs Club, one of several new state programs for the unemployed, the stories were similar. Many talked during the orientation meeting about the tight labor market and the difficulty of finding work with wages in a range they were used to earning. Most did not want to talk for publication, but the group included former school district employees, computer technicians, financial analysts, salesmen and marketing professionals.

Jersey Job Clubs were launched by the Department of Labor in July, are now in 11 locations and will be expanded to 23 by mid-September. Each county will have at least one (Middlesex and Union counties will each have two).

They are part of an effort by the department to give jobseekers help in their job searches.

“My department is committed to ensuring that all of New Jersey’s job-seekers have access to the most current job search information, tools and resources,” Commissioner Harold J. Wirths said in July. “The Job Clubs offer unemployed people a structured opportunity to network, listen to expert advice from human resource professionals and industry leaders about job search techniques, and to attend workshops on how to improve their resumes and employment searches.”

Connie Moore, Jobs Club program coordinator, said that about 1,000 people had come through the club by mid-August and she expects about 30,000 to be served by the program this year.

According to the Department of Labor, the clubs will teach skills for becoming self-sufficient and successful in their search for work: resume and cover-letter writing; personal networking; using Linked In and other social media; interview skills; and how the changing job market might affect their employment prospects. Members can participate for six months and will be offered more intensive counseling if they have not found employment within the six-month period.

The goal, however, is to place participants in a job in three months, Muhammad, the facilitator, tells the New Brunswick participants.

“This is an ambitious undertaking in a bad economy,” he acknowledges, but the program will provide job seekers with a “step-by-step plan” that will give them skills and confidence.

Muhammad entreats them to remain positive and outlines the workshops that will be offered: resume writing, personal networking, using Linked In and other social media, interviewing skills and how the changing job market might affect their employment prospects. The goal, Muhammad tells them, is to find a job within three months.

“We’re going to simplify the process to get you going on the right road,” he says.

Finding the Right Workers

The state also recently launched OnRamp, a website for employers looking for skilled workers. State officials say there are numerous high-skill jobs that employers are having trouble filling.

“Many people continue to seek jobs, but many employers are also struggling to find skilled workers for key positions,” Lt. Gov. Kim Guadagno said in August. “While state training programs have helped many workers upgrade their skills for these positions, today New Jersey is making it easier for employers to find and put qualified New Jerseyans to work.”

Gordon MacInnes, director of New Jersey Policy Perspective, a liberal think tank, says the state’s efforts can be useful, but they do not address the larger issues. And there is disagreement over whether there is a shortage of high-skilled workers.

“There are 3.5 million unfilled jobs in the United States,” he said. “You read the stories and read the same thing over and over, that there are people with engineering-type capabilities working on the factory floor, that people with high-level skills are working at lower-level jobs.”

He said several factors that have caused many of what he calls “high-value-added jobs” in the pharmaceutical, financial services and technology industries to leave the state. They include a breakdown in the state’s commitment to public education and the erosion of its infrastructure, both of which contribute to an atmosphere that is not conducive to new research and engineering jobs moving to the Garden State.

“While New Jersey cannot afford to disarm in terms of providing the kind of tax incentives available to retain jobs or add jobs, by itself it is not enough to address this problem,” he said. “We are not having the conversation about what could be done and should be done to rebuild New Jersey as a place where people want to create high-value-added jobs in research and engineering — the kinds of jobs that used to be pretty abundant in New Jersey.”

More than Taxes

He said the argument that taxes — whether income, property, or corporate — are the primary cause for the state’s failing business climate “does not work when you look at where the high-value-added jobs are moving.”

“Roche is basically abandoning New Jersey,” he said. “They moved 4,500 jobs to Northern California and the remaining to Switzerland and Germany. Aventis moved its research facility from Bridgewater to Massachusetts.

“The idea that these employers, with the kinds of jobs that New Jerseyans have relied on, have been drawn to low-tax states is not true. They are moving to high-tax states with research universities where they can find a culture of research and innovation and enterprise.”

The loss of these jobs and the larger unemployment picture are also having an effect on wages.

“This really is an employer-driven market, when you look at job insecurity and the trend in wages,” MacInnes said. “You’re seeing at least a plateau if not deterioration in purchasing power of salary for American workers.”

Hall, from EARN, said that current figures for New Jersey likely will not be available until September. However, it is likely that the state is experiencing the same trends as many other states.

According to 2011 data, the worker at the 20th percentile in New Jersey saw his or her wages fall by 60 cents per hour, while the worker at the median saw his wages fall about $1.20 per hour. That was the fourth greatest fall-off in the nation, Hall said.

“Certainly, during a weak labor market there is not a lot of upward pressure on wages,” he said. “We’ve seen too many people losing jobs in manufacturing sector have to take jobs at the lower end of the service sector. Over time, that has a detrimental effect on the overall wage structure of the state.”

The governor remains positive. On Aug. 20, during a press event on the Asbury Park boardwalk that critics were rooting for failure and that the state was moving in the right direction.

“Why do I think [the New Jersey comeback] has begun?” he said. “Well, in nine of the last 11 months, we’ve added private sector jobs — in nine of the last 11 months. In the last year, month over month in the last year, we have created more jobs in New Jersey – we’re the fourth highest-rated state in terms of private sector jobs creation.

“Does that mean that everyone in New Jersey who wants a job has one, and does that mean that there will not be fits and starts that go along with this? The answer is no, and I’ve never said anything other than that.”