See Update

New Jersey lost 700 private-sector jobs in August, bringing its total employment decline in the private sector so far this year to 14,600 jobs, according to preliminary data issued by the NJ Department of Labor & Workforce Development.

The continued loss of jobs marks an end to the State’s nearly five-year employment expansion, which was one of the weakest periods of job growth on record. 
 
"It's no longer a question of whether New Jersey is entering a downturn. We're there," said NJBIA President Philip Kirschner.  "Any hope of a comeback this year in private-sector job growth has vanished."

Kirschner added that "with the ongoing crisis in the financial sector, we can expect more job losses in the future."  Next to New York, New Jersey has the nation’s largest number of employees in the financial services industry.  Jersey City is nicknamed "Wall Street West" due to its high concentration of brokerage firms and other Wall Street companies.

There are now 3,419,200 people employed in the state’s private sector, which includes all employment sectors except government. (See table)

New Jersey’s most recent employment expansion, which lasted for nearly five years, began in March 2003 and ended in December 2007.   An average of 15,300 private-sector jobs was added in each of those five years, far less than the average of 66,600 jobs added annually in the 1993-2000 expansion. (In the 1980s, New Jersey employment expanded at an even faster pace than in the 1990s.)

Employment grew so slowly in 2003-2007 that New Jersey ended the period with just 3,800 private-sector jobs more than it had in December 2000 at the peak of the previous expansion!  (Private sector employment declined by 84,800 jobs in the 2001-2003 downturn, then added 88,600 jobs in the expansion that followed.  This resulted in a net gain of 3,800 jobs between December 2000 and December 2007.) 

Employment in every major sector of the State’s private-sector economy has lost ground so far this year, more than wiping out the small net gain from 2003-2007 expansion.

Manufacturing lost 7,800 jobs in the first eight months of 2008, a decline of 2.5 percent.  Construction lost 3,100 jobs, a decline of 1.8 percent, and the service sector lost 3,800 jobs, a decline of 0.13 percent.

In the meantime, the State's unemployment rate has surged.  It rose to a five-year high of 5.9 percent in August from 5.4 percent in July.  Since reaching a low of 4.2 percent in December 2007, the jobless rate has risen 1.7 percentage points.

A 1.7 percentage-point increase in eight months is comparable to the upward moves seen in previous recessions.  It also indicates that private-sector payroll losses are likely to be even steeper than are currently being reported.  During recessions, government surveys tend to undercount the number of jobs lost to small-business closings.  Subsequent data revisions, based on more accurate records, frequently show that job losses were bigger than originally estimated.

Over the past several years, New Jersey has also lagged the nation its rate of employment growth.  A Rutgers University analysis (Reversal of Economic Fortune, April 2008, Hughes and Seneca) finds that New Jersey was 41st in its rate of job creation in 2006 and 2007.  (The nation as a whole added 2.74 million private-sector jobs in 2006 and 2007, a gain of 2.4 percent.  New Jersey added 31,000 jobs over the same period, a gain of 0.9 percent.)

Although the last seven years (December 2000-December 2007) were marked by anemic job growth in the private sector, growth in government jobs was exceptional.  With a gain of 54,800 jobs, the public sector contributed 93 percent of the 58,600 jobs created Statewide in this period while the private sector contributed only 7 percent (3,800) of those jobs.  In the first eight months of 2008, however, government employment has fallen by 1,400 jobs.