New Jersey jobless rate now second highest in U.S.

By: - November 23, 2021 7:00 am

A Belleville tire service station is one of countless businesses seeking help. (Photo by New Jersey Monitor)

New Jersey’s unemployment rate is now the second highest in the nation at 7%, compared to the national rate of 4.6%, according to federal data released Friday. And while 81% of jobs have been recovered nationwide, the Garden State lags at 71%.

Yet the pace at which New Jersey is recovering is better when compared to previous recessions, economists say. The state Department of Labor touted the Bureau of Labor Statistics’ October jobs report as the 10th consecutive month of employment gains.

“We have a deep hole we’re still climbing out of. It’s a unique, pandemic-driven phenomenon, because in the last 10 months we’ve added 16,000 jobs per month. Pre-pandemic, we’d be doing a happy dance,” said James Hughes, an economist and professor at the Rutgers University Bloustein School of Planning and Public Policy.

The coupling of high unemployment rates with record job openings across the country has puzzled economists. Dwindling coronavirus cases, a largely reopened economy, and quick job growth should result in a strong recovery from the economic fallout of the COVID-19 pandemic.

It’s confusing, Hughes said, and still not a surprise. Typically, a labor shortage would mean companies are so desperate to find workers that the unemployment rate would be low. But because of the historic nature of the pandemic, some people are choosing not to return to work, leading to the high unemployment rate.

New Jersey’s dependence on New York City’s economy — roughly 400,000 New Jerseyans work for New York City businesses — is not helping, Hughes said. With so many office workers still working from home, there is less of a need for maintenance staff, security guards, workers at nearby restaurants — many of whom could be out-of-work New Jerseyans.

The unemployment rate in New York City stands at 9.4%, compared to 5% in counties outside the city, according to BLS. And according to the New York Times, a survey found just 8% of Manhattan office workers are back to work full time, and 40% are hybrid.

The same thing is happening in Philadelphia — where the unemployment rate was at 8.1% in September  — but on a much smaller scale, according to Hughes.

The unemployment picture in nearby states is not much better than in New Jersey. New York has the third worst jobless rate in the nation, at 6.9%, with Connecticut at 6.4% and Pennsylvania at 6.0%. Nevada and California are tied for the highest rate, 7.3%.

Still, Hughes stressed, the recovery now is strides ahead of the 2007 recession, when it took roughly five years for New Jersey to recover. And considering the skyrocketing number of COVID-19 cases and widespread business shutdowns in 2020, the gap between the national rate and New Jersey isn’t that large, he said.

Some potential workers that are sitting on the sidelines might have to go back to work, but on the other side of that, people have built up savings from not spending money. We don't know how significant the economic desperation will be.

– James Hughes, economist and Rutgers University professor

Right-leaning think tank Garden State Initiative released an analysis of New Jersey’s jobless situation by Charles Steindel, a former chief economist for the state, who called the sixth straight month of 17,000-plus job increases “an unprecedented streak,” adding “the recent gains need to be balanced against the losses during the pandemic.”

Steindel found North Jersey’s recovery is slower compared to South Jersey, other than Atlantic City. Leisure and hospitality saw the biggest job losses at the height of the pandemic, and cities dependent on casinos and tourism are struggling to reach pre-pandemic numbers.

“There’s no obvious smoking gun. … We don’t have a complete answer, seeing some (relatively) good numbers in parts of the state that have long been troubled may be a hopeful sign,” Steindel said.

Will people ever return to work?

With 10.4 million job openings available nationally and 7.5 million people looking for work, what will it take to get workers back?

Hughes points to people who are looking to change career paths. And several studies have shown that women are leaving the workforce in droves due to lack of child care and remote schooling.

He also noted inflation could have an effect on the jobless rate. If prices continue to rise, people in households facing a financial squeeze may decide to seek employment again.

“Some potential workers that are sitting on the sidelines might have to go back to work,” Hughes said. “But on the other side of that, people have built up savings from not spending money. We don’t know how significant the economic desperation will be.”

New Jersey has created programs to entice people back to work, like the state’s Return and Earn program, which gives $500 to unemployed people who get hired and provides subsidies for employers who retain those workers. Launched two months ago, it hasn’t been enough of a driver to make a major shift in the unemployment rate. The expiration of extra unemployment benefits didn’t lead to a spike in job growth either.

Getting back to the record-low unemployment rate New Jersey had in February 2020 will take a long time, Hughes said. He predicts there will be “substantial improvement through 2022, certainly into 2023,” but stressed there’s still a lot of uncertainty.

“We certainly do not have a playbook to follow on this. It’s an unusual situation, so I don’t think we know what will work and what will be the silver bullet to change the situation,” Hughes said. “It’s kind of wait and see, for now.”

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Sophie Nieto-Munoz
Sophie Nieto-Munoz

Sophie Nieto-Muñoz, a New Jersey native and former Trenton statehouse reporter for NJ.com, shined a spotlight on the state’s crumbling unemployment system and won several awards for investigative reporting from the New Jersey Press Association. She was a finalist for the Livingston Award for Young Journalists for her report on PetSmart's grooming practices, which was also recognized by the New York Press Club. Sophie speaks Spanish and is proud to connect to the Latinx community through her reporting.

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