New Jersey’s economy was weak in 2010, losing 42,600 jobs or 1.1 percent of its 2009 employment base jobs after losses of 187,500 from 2007 to 2009. The state’s job picture looked as if it were beginning to improve in the early part of the year, but a major decrease in employment in the summer changed that. The state looks extremely weak in comparison to the activity in the U.S. where employment decreased only a half percent in 2010.
As can be seen in Chart 2, the reason for the recent losses is the cutback in government jobs. Public sector jobs in New Jersey rose through the recession of the early part of the decade and the expansion from 2003 to 2008, finally peaking in May 2010. Between May and November the public sector lost 38,900 jobs— about 15,000 in the federal sector as the Census was finalized and temporary workers let go, 2,100 in state government as it responded to budgetary problems, and 21,600 in the local government sector, which finally started to cut jobs in response to fiscal difficulties.
The New Jersey unemployment rate was lower than that in the U.S. through most of the past decade, and this held true during the recession until 2009. From January 2009 to August 2010 the state and national unemployment rates were close to identical near 10 percent. The state rate fell in the later part of 2010 and was down to 9.2 percent in November, while the national rate was back up to 9.8 percent. (See Chart 3.) In New Jersey the decline in the unemployment rate seems to be the result of people dropping out of the labor force while the recent increase in the national rate seems to be the result of people entering the labor force as conditions improve but not yet finding jobs.
Between January 2008 and January 2010, the state had a net job loss of 242,800. The only growth sectors were educational, health, and social services and government. Between January and November 2010 the state lost 7,800 jobs, most of them in the public sector. The good news here is that the private sector is beginning to show some growth, having added 20,500 jobs since its January 2010 low point.