GSI Analysis: Dec. ’20 Jobs Report – NJ’s Job Growth Stalling with Labor Force Reversing Recent Growth

• 93,900 leave the workforce, driving unemployment lower

• 7.6% Unemployment rate remains 0.9% above US average

• NJ remains 350,000 jobs below pre-pandemic 2020 peak

• State loses 7,700 jobs, led by 8,900 drop in leisure and hospitality

• Construction bucks trend with 3,100 jobs added

On January 21st, New Jersey’s Department of Labor and Workforce Development issued the monthly jobs report for December 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:

New Jersey payrolls fell by 7,700 in December, bringing the job count down to a bit less than September’s level. An 8,900 plunge in leisure and hospitality employment was the main factor behind the aggregate job loss. The upsurge in the virus surely played a large role in depressing activity in that sector, and one hopes as the supply and application of vaccines ramp up, this sector will revive. However, hiring in other sectors, with one exception, was at best lethargic, with most declining. The major exception was construction, with a strong gain of 3,100, obviously reflecting the upsurge in housing.

Our December job numbers were not materially out of line with the poor national results. Once again, we were at odds with the nation in our unemployment figures. New Jersey’s unemployment rate fell sharply to 7.6%—still higher than the national figure of 6.7%, but not markedly so. The drop in unemployment was primarily due to a 93,900 drop in the state’s labor force. (Over the last 4 months of 2020 New Jersey’s unemployment rate was whipsawed by large erratic movements in the labor force: a plunge of more than 250,000 in September reversed by large increases in both October and November, then December’s drop. It is notoriously hard to measure—and understand–monthly movements in a state’s labor force, and our recent experience reinforces that view.)

On the whole, the December numbers do show that New Jersey’s job count has levelled off at around 350,000 under the early 2020 peak. The labor force and unemployment rate figures are hard to interpret, but it does seem that any signs of growth in the labor force that seemed evident in the middle of 2020 are gone.