Home Part of States Newsroom
News
New Jersey’s rising unemployment makes economic future uncertain

Share

The Deciders series background 1

New Jersey’s rising unemployment makes economic future uncertain

Dec 26, 2023 | 8:00 am ET
By Sophie Nieto-Munoz
New Jersey’s rising unemployment makes economic future uncertain
Description
New Jersey's labor force is growing, but its unemployment rate climbed from 3.4% in January to 4.7% in November. (Photo by Joe Raedle/Getty Images)

New Jersey’s unemployment rose sharply in 2023, leaving economic experts wondering whether a rocky road is ahead in the new year.

The state unemployment rate climbed from 3.4% in January to 4.7% in November, according to the U.S. Bureau of Labor Statistics. November’s figure means New Jersey has the third-highest unemployment rate in the nation. Nationally, the unemployment rate was 3.7% in November, up just 0.3% since January.

And the Garden State’s rising unemployment rate is outpacing the national average by increasing at one of the fastest rates. The majority of states either saw declines in their unemployment rates or stayed roughly even.

“It wasn’t shocking or overly surprising, but it was unexpected to see New Jersey outpace other states,” said William Irving of the New Jersey State Policy Lab at Rutgers University. “My expectation is we either start to see other states follow this pattern, or it’s an indication New Jersey could take a harder landing than the rest of the nation.”

Yet, New Jersey’s labor force keeps growing, with the state adding more than 90,000 jobs in 2023. Three industries — health care and social assistance, government, and leisure and hospitality — account for more than 80% of jobs gained this year. But the business and professional services industry saw the biggest contraction, losing nearly 9,000 jobs. The financial sector saw no gains.

Irving said New Jersey is in a unique position, but it’s unclear what’s causing the Garden State’s rate to go up much quicker than other states. While Delaware and New York don’t top New Jersey’s unemployment rate, they both also exceed the national average.

“No state has been seeing what New Jersey did in the last 12 months. It’s an answer we have to wait for — whether or not New Jersey is a harbinger for what’s about to come. I’m not sure if anyone can predict that,” said Irving, also a professor at Rutgers’ Edward J. Bloustein School of Planning and Public Policy.

To Irving, the data implies that the labor market has likely reached saturation — as new workers enter the market, they aren’t finding jobs. He noted that from August to October, the labor force declined by roughly 17,000 people, but the number of unemployed surged by 33,000.

Kyle Sullender, director of economic policy research with the New Jersey Business and Industry Association, noted that business and financial industries are sensitive to macroeconomic policies, like interest rate hikes from the Federal Reserve. He also said there could be a mismatch between prospective employees’ skills and the jobs available on the market.

“I think in terms of general economic uncertainty as well, this is leading some employers to scale back their hiring expectations and think a little more cautiously moving into the next year,” he said.

He said there are reasons to be optimistic despite negative metrics. A growing labor force means people are newly looking for jobs or are returning to the workforce, he said. Inflation is dropping. And the recession that some have predicted for years has yet to appear, he added.

“It feels like this has been the longest predicted recession that has yet to manifest itself, so on one hand, that’s definitely good news,” he said. “That’s certainly a positive outlook going into next year.”

Irving also noted New Jersey has seen significant job growth since the early months of the pandemic, when the unemployment rate peaked at over 12%. The state lost more than 700,000 jobs when COVID-19 first appeared here in March 2020 — and has now recovered those, plus another 120,000 jobs.

While economic experts continue hoping for what they call a “soft landing” — when interest rates go up and inflation goes down without unemployment rising — in 2024, they stress that uncertainty is always a stipulation in economic outlooks.

“I’m not inclined to think things are dire right now,” Irving said. “But anytime you’re seeing change, the picture ahead can look a little murky. However, there’s no doubt that we’re ahead of the nation in the unemployment rate.”

The state Department of Labor did not respond to a request for comment.