GSI Analysis: August ’20 Jobs Report – Pace of Hiring Loses Momentum as Reopening Continues

• NJ unemployment rate well above US average

• Rate of hiring falls below pace of June and July results

• State regains less than half of jobs lost in shutdown

• White Collar professions remain weak, down 10% since 2019

On September 17th, New Jersey’s Department of Labor and Workforce Development issued the monthly jobs report for August 2020. Dr. Charles Steindel, former Chief Economist of the State of New Jersey and current Resident Scholar, Anisfield School of Business at Ramapo College, analyzed the report for the Garden State Initiative:

Taken by itself, the August report looks quite good. However, the signs of a slowdown in job growth, with the recovery not even half complete, are somewhat disappointing, especially in light of forecasts that the national recovery will be slowing.

New Jersey gained a substantial number of jobs in August, though the increase was noticeably under the extraordinary increases of June and July. In total, the state’s job count rose by 66,000. By historic standards this would be a remarkable rise, but June and July both saw increases of well over 100,000. Since April the state has gained 409,400 jobs, but that’s still a bit less than half the losses from February to April. August’s total of 3,820,000 jobs is a touch under the average number in 2011, which was the lowest annual job count of the last generation.

Charles Steindel, Ph.D.

The state’s unemployment rate fell 3.3 % in August to 10.9 %. New Jersey’s rate remains well above the national figure of 8.4%, but the gap narrowed from 4 % in July to 2.5% in August. The state’s labor force, which had grown by more than 100,000 from April to July, fell 20,700. The number of state residents who reported they were employed—either working for others or working for themselves, in-state and out-of-state—rose a remarkable 131,800. Monthly changes in the two employment measures (the job count and the resident employment figure) often differ drastically—the national data for August also show a somewhat comparable discrepancy. In general, the payroll figures are thought to be more reliable.

August’s job increases were more mixed than in June and July. There were marked increases (over 10,000) in trade, transportation, and utilities, apparently reflecting some retail hiring, in health care and social assistance, as that sector also continued to rebound, and in leisure and hospitality. Leisure and hospitality was likely the sector of the state’s private economy that suffered the most staggering hit from the pandemic. Despite recent gains, the number of jobs there is still about one-third less than February’s peak of 404,000. The recent partial reopening of indoor dining may help the sector, but there is still a very long way to go to full recovery.

On the disappointing side, construction jobs dropped slightly, even though anecdotally there seems to be home renovation projects going up on every street. Manufacturing, though, picked up 1,400 jobs. Professional and business services—a broad sector which includes the state’s vital corporate headquarters staff, as well as a slew of skilled professionals in areas such as law, accounting, architecture, and IT—shed 800 jobs and is down almost 10 % from a year ago. Stabilization of this sector would seem to be a must for a strong, sustained, recovery.

Government jobs grew a sharp 22,800 in August. While that may look like a hiring spree at odds with private sector belt-tightening, it was basically a reversal of an odd 16,200 drop in July. Movements in government jobs this time of year, reflecting the hiring and laying off of seasonal workers, and preparation for the start of the school year, can be quite erratic. Also, the Federal Government has recently hired large numbers of temporary workers for completing the population census. The total number of government workers in the state in August was more than 30,000 less than January’s peak. At the moment the August move looks like a one-time anomaly; if it continues it would be more disturbing.