Rutgers Economist Says It Will Be More Than a Year Before NJ Fully Recovers from Recession

NJ Spotlight News | July 18, 2013
Dean of the Edward Bloustein School at Rutgers University James Hughes says New Jersey suffered greatly during the recession and it will take more time to recover than the rest of the nation.

According to numbers released from the state Department of Labor and Workforce Development today, New Jersey’s unemployment rate rose slightly from May to June, going from 8.6 percent to 8.7 percent, but 4,600 jobs were added last month. Dean of the Edward Bloustein School at Rutgers University James Hughes told NJ Today Managing Editor Mike Schneider that the unemployment rate rose because recent college graduates without jobs are considered part of the labor force and unemployed. Because New Jersey fell hard during the recession, Hughes predicts it will take another year and a half before the state returns to pre-recession unemployment levels.

Hughes called the uptick in June unemployment a “seasonal pattern” because of students graduating from college without jobs lined up.

According to the data, 3,300 of the 4,600 jobs added in June were part of government. Gov. Chris Christie has touted the shrinking number of government jobs in the past. Hughes said most of the jobs were in local government and not at the state level, which Christie has discussed. “But sometimes the summer months, public employment numbers behave a little erratically in there. And so they very easily could be counterbalanced by losses next month in July,” he said.

Hughes believes in looking at the bigger picture when studying the economy. “If we actually step back three and a half years, in 2010 we had modest growth of about 7,000 private sector jobs. In 2011, we quadrupled that to 28,000 jobs. Then we doubled that in 2012 to 56,000 jobs. And then based on the first six months of this year, we’re on track to add 70,000 jobs. So sequentially, year by year, we’ve been getting major, major improvements. And that’s sort of the big, broad pattern,” he said. “It could change at any time, but monthly figures there are gonna bounce around and obscure that.”

The growth builds confidence and Hughes said increased confidence in the business community almost parallels job numbers. “So it’s a reflection of businesses, their confidence, their willingness to hire. And then it’s shown as a metric in the job figures,” he said.

Manufacturing jobs in New Jersey have disappeared. Hughes said New Jersey has always been labeled as a blue collar and manufacturing state, but that ended in 1988 when the state started having fewer manufacturing jobs, percentage wise, than the nation as a whole. Now, manufacturing jobs make up 11 percent of the national workforce and just 7 percent in New Jersey, he explained.

“That is a problem with the state economy and it’s one of the reasons we had been lagging. A good part of the national manufacturing recovery was the federal rescue of the automobile industry, which actually turned out to be quite successful and has been a major job generator and has turned around the U.S. based automobile industry. We lost our automobile plants in ’04 and ’05,” Hughes said. “We did not participate in that manufacturing renaissance.”

Hughes said New Jersey is still a bit away from full recovery. “We were deep in the economic abyss. We had lost about 241,000 private sector jobs in the recession and its aftermath. We’ve regained approximately 150,000, 160,000 of those. So we still have to regain 90,000 to 100,000. That’s gonna take us another year and a half to get there,” he said. “The nation’s a little bit ahead of us on that. They may get there in 2014. We’ll get there early 2015. So it’s been a long climb out of a deep hole.”