New Jersey's Lackluster Job Growth Rate Makes it 41st among the 50 States
But Government Job Growth Was Exceptional in 2004How the mighty have fallen. At the end of 2004, state government leaders were touting New Jersey's reputation as a job-growth leader. But revised data by the NJ Department of Labor shows that New Jersey created only half as many jobs in 2004 as originally reported. And so far this year, employment growth has been anemic.
Thus New Jersey, once thought to be a leader among the states, has fallen to the lowly status of a national economic tortoise. The state added a mere 4,700 private-sector jobs in the first quarter of the year. This translates into an annualized growth rate of one half percent, far less than the national employment growth rate of 1.5 percent for the same period.
And the New Jersey's lackluster performance in private-sector job creation last year placed the Garden State 41st among the 50 states .
The sluggish pace of growth in 2004 and in the first three months of this year has given two prominent forecasters a case of the economic jitters.
Rutgers University economists Jim Hughes and Joe Seneca said in a recent report: "New Jersey's March and first-quarter employment data raise real questions about the strength of the state's economic expansion. Without a solid pickup in coming months, the data will point to a faltering economy."
In all of 2004, New Jersey added 31,300 private-sector jobs, an increase of less than 1 percent. This trailed the growth rate enjoyed by the nation (1.9 percent) and most other states, including our mid-Atlantic neighbors. ( See Table 1 )
Earlier estimates by the NJ Department of Labor (DOL) showed New Jersey enjoying a much faster rate of job growth in 2004, one that would have put it ahead of most other states. But the DOL's annual data revision (made in February) showed New Jersey to be 41 st among the 50 states in its rate of job creation last year, trailing New York, Pennsylvania, Connecticut, and all but nine other states.
"We thought New Jersey was the regional economic locomotive," Hughes told legislators in recent State budget hearings. "Based upon the revised economic data, it looks like we were the regional economic caboose."
As a result of this weak performance, New Jersey has yet to recoup all of the private-sector jobs it lost in the recession. As of March, the private sector was still 33,900 jobs shy of the peak of 3.43 million jobs reached in December 2000. ( See Table 2 )
But at least some jobs were created in the State's private sector last year, and as such this is an improvement over the previous three years. That said, the rate of job creation remains exceedingly weak.
The 31,300 private-sector jobs added in 2004 remain well below the historical average of 50,000 new jobs created annually over the last 50 years. And this is not even half of the 66,500 jobs added annually during New Jersey's most recent expansion (1993-2000). ( See Chart )
The biggest force behind holding back New Jersey employment growth since 2001 has been manufacturing. Manufacturers have lost close to 90,000 jobs over the last four years, a reduction of 20 percent. Although two other major sectors, construction and services, have seen gains, these have not been robust enough to offset losses in the goods-producing industries.
Table 2 shows how the State's major private industry sectors have fared over the last four years. Construction employment jumped smartly in the 2001-2004 period with a 12.5 percent gain, while the combined service industries (accounting for 85 percent of private sector employment) gained a modest 1 percent. Within the service industry sector, education and health services, as well as leisure and hospitality, have seen the largest gains (nearly 10 percent each), followed by financial services (5.5 percent).
Outside of manufacturing, the biggest employment loss has come in information services, which includes computer technology, software and telecommunications. This sector has lost 30,300 jobs over the last four years, a 25 percent decline.
Ironically, one of the biggest gainers over the last year has not been business, but government. Total government employment soared by 15,000 jobs or 2.4 percent in New Jersey last year. More than half of this gain came from a sharp rise in the number of state government jobs. As shown in Table 3 , government employment grew three times faster in New Jersey in 2004 than it did in the nation as a whole.
Return to text
Return to text
Return to text
Return to text
Back To News Center
New Jersey's Lackluster Job Growth Rate Makes it 41st among the 50 States