A deepening recession pushed New Jersey’s unemployment rate to 8.2 percent in February, nearly a full percentage higher than it was in January.  Meanwhile, New Jersey lost 19,200 private-sector jobs last month, bringing the total loss for the first two months of the year to 31,500.

New Jersey's unemployment rate is now higher than the nation’s, which was 8.1 percent in February.  This marks the first time New Jersey’s jobless rate has topped the nation’s since the start of the recession.

Since peaking in January 2008, total employment in New Jersey, both public and private, has fallen by 126,700 jobs to 3,968,100, a drop of 3 percent. About two-thirds of that loss has come in the past five months.

The private services sector, which includes everything from retail to computer services, suffered the biggest loss in February, shedding 10,700 jobs, continuing a retreat that had cost that sector 34,500 jobs in the previous four months.

Construction and manufacturing also got battered in February, with those sectors losing 3,300 and 5,200 jobs respectively.  The recession has done the most damage to these two sectors, each of which has lost more than 10 percent of its employment base since January 2008. (See Table below)
In releasing its monthly employment report on March 24, the NJ Department of Labor and Workforce Development noted that the recession has spared only the education and health services sector, which added 3,600 jobs in February and a total of about 14,000 since the start of the recession.

The avalanche of job losses has caused unemployment to soar.  The current unemployment rate of 8.2 percent shot up from 7.3 percent in January.  The jobless rate has nearly doubled over the past 18 months and is now at the highest level since December 1992.

If New Jersey’s unemployment rate continues on its current trajectory, it could easily surpass the peak of 8.8 percent set in the State’s long and deep 1989-1992 recession. (New Jersey’s unemployment rate peaked at 6.0 percent following the shallow 2001 recession.)

Surging unemployment is also certain to result in an increase in payroll taxes that employers pay to support the State’s Unemployment Insurance (UI) fund, which pays weekly benefits to people who have lost their jobs.  Despite an infusion of cash from the state and federal government, the fund balance is so low it’s close to triggering an automatic payroll tax increase of 25 percent ($350 million) on New Jersey employers. 

NJBIA has been working with the Governor and the Legislature to avoid a huge payroll tax increase.  The UI fund balance is precariously low because the state in past years diverted $4.7 billions in UI tax revenues to help balance the state budget.  Governor Corzine ended this practice.

"A huge payroll tax increase is the last thing New Jersey's employers and economy can withstand right now," Kirschner said.  "It would effectively be a tax on jobs at a time when employers are struggling to hang on to the workers they have.  Governor Jon Corzine and the Legislature must do everything in their power to avoid a payroll tax increase."