New Jersey has the 7th highest unemployment rate in the country. It’s due to several reasons, experts say.

Posted May 29, 2021

Despite windows plastered with “help wanted” signs and businesses offering incentives for new employees, New Jersey’s unemployment remains among the highest in the nation.

Tied for seventh-highest unemployment rate in the country with Washington D.C., New Jersey has a 7.5% unemployment rate — just a 0.1 point jump from March — and has regained 54% of jobs lost due to the coronavirus pandemic, according to the April Bureau of Labor Statistics report.

The high rate persists even as the staffing shortage in restaurants and shops continues, leaving some businesses panicking during a crucial time in the recovery. But economists said there are reasons for the higher unemployment rate and the state’s continued crawl.

“We’ve been very judicious in terms of reopening and our job growth historically over the past decade has been slower than the nation,” said James Hughes, economist and professor at Rutgers University. “There’s no single answer for the higher rate but multiple possibilities and contributing elements to it.”

The coronavirus pandemic hurt New Jersey’s economy much more than other states, he said, which means it will take longer and take more effort for the state to recover and dig out of its hole, noting New Jersey has been slower in lifting restrictions than states in other parts of the country. Among the other states with high unemployment are California, New York and Connecticut, which were also coronavirus hotspots at the height of the pandemic.

He also pointed to the overall reduction in labor force — many parents have been forced to stay home due to lack of childcare as many schools in New Jersey were on a hybrid schedule, and other workers who have been reluctant to return due to their own health concerns and fears. While the vaccination rates have surpassed 50%, jobs with face-to-face service are still seen as more risky.

Additionally, people who aren’t looking for work aren’t accounted for in the unemployment rate, explained Oliver Cooke, economics professor at Stockton University. There’s also no way to calculate workers whose hours have been cut as a result of the pandemic either.

“That’s the thing about the unemployment rate that makes it hard during COVID — initially all these people lose their jobs, and then there’s a lot of ‘who’s in the labor force and who’s not?’ because technically to be unemployed, you should be looking for a job,” he said.

Both economists agreed that the effect of enhanced unemployment insurance benefits, which come with a supplemental $300 weekly check through Sept. 4, has been overstated.

But what could lead to more people returning to work is easing the mask mandate and the lifting other restrictions on capacity, experts said. Some other states eased those restrictions months earlier. If white-collar workers start heading back to the office and using public transportation, it’ll also bring back more support staff in different service industries.

“The occupancy rate in Manhattan is still well under 20%. Once that office echo system comes back, like the staffers in the restaurant that services lunchtime and happy hours and the tremendous maintenance workers, you’ll start to see these face-to-face service jobs that are linked coming back,” said Hughes, noting New Jersey’s unique position as a commuter state between two major cities may be holding the rate back as opposed to other states that rely on natural resources like oil.

The summer season’s tourist economy will be vitally important to the Jersey Shore, which took a hard hit last year when major restrictions were still in place.

The shore took a particularly harder hit because of the reliance on the leisure and hospitality industry, devastating Atlantic County which relies on year-round conventions and casino goers after shore season. New Jersey is still lagging behind the country in recovering hospitality jobs — 55% compared to the national recovery of 61%, BLS numbers show.

Expert said the staffing troubles down the shore are due to a decline in teens taking jobs, plus a steep drop off in seasonal workers from abroad, who work boardwalk jobs, due to visa backlogs.

“We’re praying for a robust summer here. People who managed to keep their jobs and work remotely have pent up savings and demand for some beach time, there’s a lot of stimulus money pumping through the system, shore houses are in high demand,” Cooke said. “We’ll have to wait and see what happens over the course of the summer.”

Cooke believes New Jersey won’t head back to pre-pandemic unemployment levels — the lowest in the state’s history — but predicts that by late 2022, the unemployment rate will bounce back significantly.

With all schools opening in the fall, parents, who had to stay home to take care of kids, will be able to return to the labor force. Small stores that may have laid off some workers because of social distancing requirements will be able to bring back more workers. And a huge federal infrastructure bill could be on the way, funneling $2.3 trillion into the economy.

“It’ll be a while and it really depends on the basic pattern of job creation to job recovery,” said Hughes. “The question is how many jobs will bounce back as we get into July and August and away from the pandemic, and very soon we’ll start to see.”

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published this page in News and Politics 2021-05-30 03:44:15 -0700