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Rutgers Economist Says NJ Business Climate on Road to Recovery

6-14-12

Gov. Chris Christie announced today that New Jersey gained 17,600 jobs in May, though the unemployment rate remains at 9.2 percent. Dean of the Bloustein School of Public Policy at Rutgers University James Hughes told NJ Today Managing Editor Mike Schneider that he believes the latest job numbers confirm an “upward trajectory” for the state’s economy. He admits, however, that there is still a journey to recovery.

Hughes said the trend over the past three to four years has shown positive movement. “In 2009, we were hemorrhaging jobs. We lost about 117,000 jobs,” he said. “In 2010, we achieved stability and slow growth.” He said the state tripled the total number of new jobs in 2011 and this year is on track to add 60,000 jobs to the economy.

While Hughes said the numbers refer to the private sector, there’s good news in the public sector as well. “What’s interesting is that despite the public sector contraction in the past 18 months, the proportion of the total workforce which are public sector workers is still higher than when the recession began,” he said. “So I tend to view that as a re-balancing because we hemorrhaged so many private sector workers during 2008 and 2009.”

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Hughes said the economy is improving, though there’s still work to do. “We are still climbing out of a very deep economic hole. We lost almost 250,000 private sector jobs during the Great Recession,” he explained. “We’ve recovered about 80,000 so we still have 170,000 to go. So we’re still two to three years away from full employment recovery.”

The Garden State doesn’t operate in isolation according to Hughes. “We are prisoners of the national economy. We may be able to deflect some of the national trends, negative trends, or capture them and the like. But we contribute to what’s happening in the nation,” he said. “But what happens in the nation is really one of the driving forces to what happens in New Jersey.”

Hughes said New Jersey’s business tax structure is not as competitive as other states, so incentives are necessary to keep corporate entities and lure others to the state. “There [would] be certainly less necessity for having them [incentives] if we had a much more competitive business tax structure,” he said. “Unfortunately we don’t.”

The latest unemployment numbers nationally show 366,000 jobless claims, an increase of 6,000. Hughes said the jobless rate has been hovering at that level. “If they were at 500,000 then we’d know we were in deep recession. If they were at 300,000 it would be a booming economy. So where we are today suggests it’s a modest recovery,” he said. “We’re bouncing along. The growth is not that strong nationally.”

Hughes said he believes the current instability in Europe, the situation in Iran and slowdowns in China and India could affect the U.S. and New Jersey economy by affecting corporate decision making.

Questions in the corporate world can slow down the decision making process. “Is it too risky to hire now? We have all these uncertainties out there,” Hughes said. “We may be overworking our current workforce but if we hire somebody we may have to lay them off, so it kind of freezes decision making and I think that’s reflected in some of the payroll statistics nationally.”

Hughes said overworked employees can become a problem. “Last September, the end of the third quarter of 2011, gross domestic product in the United States finally reached its pre-recession levels, so we recovered all of the lost economic output, but at that same point in time, we had … 6.4 million fewer jobs,” he said. “So we were producing the same level of output with a far reduced workforce and that’s the key problem facing, I think, America’s labor markets today.”


Related: Christie Uses New Jobs Numbers To Push His Tax Cut Agenda