Northern New Jersey’s economy is improving, but it is not close to recovering from the recession and in some ways is lagging the recovery of the Northeast and U.S. as a whole. According to data from the Current Employment Survey (CES) from the U.S. Bureau of Labor Statistics (BLS), total non-farm employment increased by 16,900 jobs (0.9%) in the 12 months ending July 2012, while remaining 91,500 (4.7%) lower than in July 2007. The private sector gained 21,300 jobs (1.4%) in the most recent July-to-July period, while the Government sector lost another 4,400 (1.7%). Here, as elsewhere, a recession that began in the heavily indebted housing and consumer-driven sectors spread through the rest of the private economy and now lingers in the Government, due to a severe fiscal crisis.
Household-based data from the BLS is at once more optimistic and more troubling than the establishment-based data. The number of employed residents of the State of New Jersey as a whole, including the self employed and commuters to New York and Pennsylvania, increased a solid 39,350 (0.9%) in the year to July. But this increase unleashed a surge of previously disappointed jobs seekers back into the labor force, leaving the unemployment rate at 10.1%, up 30 basis points year-over-year and far above the national average. New Jersey is the nation’s most urbanized state, most suburbanized really, and opportunities for further urban expansion are limited. The urban redevelopment that is driving growth elsewhere is limited by the State’s difficultly in funding its mass transit system, after years of paying for transportation with debt. Moody’s Economy.com predicts the population of Northern New Jersey will rise by just 21,300 (0.5%) in 2012, similar to recent years, and by even less each year thereafter. More optimistically, the relatively high household average income here was up 2.9% year-over-year in the second quarter.
CES data by sector show widespread, if not strong, employment growth. Among office-based sectors, Financial Activities added 1,700 jobs (1.2%) in the year to July, while Professional and Business Services increased by 4,600 (1.5%). The still-large Manufacturing sector here broke even in July- to-July employment, while Wholesale Trade added 700 jobs (0.6%) and Transportation and Utilities added 1,200. A large share of the goods bound for Downstate New York, whose population exceeds the entire State of New Jersey, are distributed in Northern New Jersey, and the Port of New York and New Jersey is located almost entirely on the New Jersey side. Among consumer-driven sectors, Retail Trade added 3,800 jobs (1.9%) including a gain of 800 (1.7%) in the Food and Beverage Store industry. Leisure and Hospitality added 4,300 (3.1%). But Construction and related sectors lost another 1,500 jobs (2.4%), remaining down 21,300 (26.1%) from July 2007. Northern New Jersey’s construction companies do extensive work in New York City, as well as locally.
Still, it is New Jersey’s Government sector that is the most cause for concern. “Major tax revenue in the fiscal year that ended in June fell $253 million short of Gov. Chris Christie’s expectations, delivering a potential punishing blow to the state’s already weak surplus and raising new questions about the governor’s optimistic projections for the current year,” The Star-Ledger reported in September. It appears the problem is businesses located in New Jersey, perhaps financial companies linked to Manhattan earning less than in the past, while New Jersey residents doing better. “The biggest disappointment was the state’s corporation tax, which fell short by $268 million—or 9.0%—of the administration projections, according to OLS. On a positive note, income tax collections came in nearly 5.0% above expectations, but that was offset by disappointing numbers in other categories.” For two decades New Jersey had been able to offer much lower taxes, as a percentage of income, than nearby New York along with good public services. In part by attracting businesses and affluent residents from New York and Philadelphia. In part by increasing debts and not funding its public employee pensions. Businesses and the affluent are no longer fleeing the big cities, and the debts and pensions must be paid. The result, as in many parts of the country but worse here, is an intractable fiscal crisis.