New Jersey has lost 181,200 private-sector jobs since the start of the economic recession two years ago, a 5.3 percent decline, and economists say it could take eight years for the State to recover the jobs that have vanished.

The current employment downturn, which began in February 2008, reached the advanced age of 23 months in December. Over this period, it has reduced total private employment to 3.26 million jobs, an 11-year low, according to preliminary data issued by the NJ Department of Labor and Workforce Development.

Over this same two-year period, the State's unemployment rate has more than doubled from 4.6 percent to 10.1 percent, a 33-year high. (See chart)

The hardest hit industries have been residential and commercial construction, which lost 35,700 jobs over the 23-month period, a decline of 21 percent, and manufacturing, which lost 35,500 jobs or -11.6  percent. (See table)

The service sector, which comprises the lion’s share of private-sector employment, has shed 110,100 jobs, a 3.7 percent decline.

Among the major service-producing industries, financial services has taken the biggest hit, losing 24,800 jobs (- 9 percent), followed by professional and business services, down 44,800 (- 7.2 percent). The only major service industry that has managed to keep its head above water is education and health services, which is up 10,800 jobs or 1.8 percent.

While the private sector has been pummeled in this recession, public-sector employment has remained stable. As of December, employment at every level of government (local, State and federal) was up 600 jobs or one tenth of a percent. Heading into 2010, however, the jobs of many public employees could be at risk.  In the face of a projected $8 billion budget deficit, the State is mulling a 15 percent reduction in State aid to schools and municipalities.

Although it appears the worst of the recession is past, intermittent employment losses could plague New Jersey well into 2010.  Private-sector employment enjoyed a modest gain last summer, but this was more than offset by a loss of 27,300 jobs in the last four months of 2009.

Even after a sustained recovery gets underway, it will take many years for New Jersey to reclaim all of the jobs it has lost.  New Jersey’s last period of employment growth (2003-2007) was anemic, producing an average annual gain of only 13,500 jobs, five times less than the average gain of 66,600 realized in the 1993-2000 expansion.

For New Jersey and the nation, the past decade was in fact a "lost economic decade," say Rutgers University regional economic experts James Hughes and Joseph Seneca.  Their analysis shows that the nation produced a net loss of 2.9 million private-sector jobs in the first decade of the new Millennium, the worst single-decade performance since the 1930s.  New Jersey lost 170,000 private-sector jobs over this same period.

The good news at this stage of the economic cycle is that job losses have slowed, setting the stage for an eventual rebound. New Jersey lost 12,900 private-sector jobs in the last three months of 2009, dramatically less than the 48,400 lost in the final quarter of 2008.

When a recovery does take hold, however, the rate of job growth is likely to be modest. Assuming New Jersey adds about 30,000 jobs per year starting in 2012, as some regional economists predict, it would take the State eight long years--until 2017--to recover all of the jobs lost in this recession.