NJ’s Mixed Economic Message: Low Unemployment Coupled with Job Loss

The state’s unemployment stats lead the national average, but 2,000 jobs went missing in the first quarter of 2016, puzzling Garden State economists

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While the latest national unemployment figures show the jobless rate for the country is stuck at 5 percent, New Jersey’s unemployment rate has spent all of 2016 firmly below that level.

The state’s stronger performance has been a source of pride for Gov. Chris Christie, who has said it’s proof that policies he’s put in place, like business-tax cuts and corporate-tax incentives, are working.

But even as New Jersey’s unemployment rate has been ahead of the national average all year, the state lost nearly 2,000 jobs during the first three months of 2016, stumping New Jersey economists.

“I think this is a real headscratcher,” said James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.

“There is really no easy explanation for this,” Hughes said while speaking Friday during Rutgers University’s Economic Advisory Service’s semiannual conference.

So without a full understanding of what exactly is going on right now, Rutgers economists are pretty sure the unemployment rate here is due for another uptick. In fact, New Jersey’s jobless average nudged up slightly in March, from 4.3 percent to 4.4 percent. That increase ended a long streak of steady decline that lasted for over a year.

And the latest long-range forecast from the Rutgers Economic Advisory Service predicts that, despite receiving a recent boost from mega-online retailer Amazon, New Jersey’s will see its unemployment rate rise again over both the near- and long-term.

Amazon announced last month that it will be adding 2,000 jobs to the 5,500 it already has in New Jersey, with Florence in Burlington County and Carteret in Middlesex County the selected locations for the company’s expansion.

Amazon’s decision to expand here comes as part of a bigger trend in the retail industry as consumers shift more and more of their purchasing online, which increases the need for fulfillment centers and delivery services, said Anne Straus-Wieder, director of freight planning at the North Jersey Transportation Planning Authority.

“It’s all about speed,” said Straus-Wieder, who also gave a presentation at the event in downtown New Brunswick.

“We want it free, and we want it fast because we’re very impatient consumers,” she said.

There have been some concerns that New Jersey has been adding too many low-wage jobs as it continues to recover from the Great Recession, but Straus-Wieder said some of the company’s positions also require advanced training and generate six-figure salaries.

Many traditional retail chains are also evolving, she said, adding distribution centers on-location at their stores to keep pace with the online sales.

“A store is not just a store these days,” Strauss-Wieder said. “It can also be a mini-distribution center.”

Despite those new jobs announced by Amazon, New Jersey during the first quarter of 2016 shed a total of 1,900 jobs, according to the latest figures from the state Department of Labor and Workforce Development. But that followed a year that saw New Jersey add nearly 84,000 private-sector jobs, the best year for private-sector job growth in over a decade.

The up-and-down experience is nothing new for New Jersey in recent years when it comes to economic performance. The state enjoyed steady growth from 2010 to 2012 but then ran into some trouble again in 2013 and 2014, Hughes said.

The rough patches coincided with the substantial damage the state suffered from 2012’s superstorm Sandy. The loss of thousands of jobs after the closure of four of Atlantic City’s 12 casinos has also been “a major drag” on the state’s economy, he said.

“It looked like somebody hit the economic pause button,” he said.

New Jersey is still working to distribute federal money to storm victims who are struggling to rebuild in the wake of the storm. And the local government in Atlantic City remains in danger of sliding into bankruptcy in the wake of the casino closures. Despite making a $1.8 billion debt payment last week, the city will soon run out of money, and politicians in Trenton have yet to come an agreement on what, if any, role the state should be playing to help rescue the struggling seaside resort.

It will likely take a decade for the region to fully recover, said Nancy Mantell, director of the Rutgers Economic Advisory Service. For the state as a whole, the agency’s latest 10-year economic forecast is calling for slow but steady annual growth. The Rutgers economists are predicting roughly 370,000 jobs will be added to state’s existing employment base, with the growth occurring at a rate of just under 1 percent through 2026.

But despite that forecast of steady improvement, the Rutgers economists have set the state’s average unemployment rate through 2026 at 5.1 percent. The long-term forecast also projects the state’s unemployment rate this year will average 4.7 percent. While that would be better than last year’s 5.6 percent average rate, it would also mean there will be more increases from the 4.4 percent jobless average that was just measured in March.

Some of the explanation for the projected increase, at least in the short-term, may lie in the state becoming a victim of its own success. As more of the state’s unemployed gain more confidence in the local economy and start to actively look for work, they can also have an influence on the survey used to determine the unemployment rate.

“They’re going to get back into the labor force, and they’ll be counted as unemployed,” Mantell explained. “I think it will push the unemployment rate back up into the 5 percent range.”