While New Jersey has been continuing its economic recovery and working to regain the jobs lost due to the pandemic, James Hughes, Rutgers professor and dean emeritus of the Edward J. Bloustein School of Planning and Public Policy, said that the increase in employment is going to be slowing down moving forward.
“It’s a completely different world before from when we started being impacted by the pandemic. I like to sort of joke that in February, it was sort of a Goldilocks economy: not too hot, not too cold, just right. We had record low unemployment rates, there was no inflation and the only thing holding back job growth was a shortage of labor,” Hughes said. “So, it was a wonderland at that point in time, but the next month in March, the world got turned on its axis (and) things fell apart.”
He said the spring’s lockdown shutting down the economy generated the first deliberately engineered recession.
The state lost 800,000 jobs between February and April, which is significant considering the time span from February 2010 through February 2020 created 400,000 jobs, he said. This means the loss being experienced now more than doubles a decade worth of job growth, and we are currently back to employment levels of 1985.
“The strongest growth … was 2014 (and) 2015, 2016 slowed a little bit, but so it was the end result of 10 years of growth,” Hughes said. “That's a very unusual period, be that as it may. So that makes it a very hard benchmark to compare ourselves to, but I think it's gonna take most of 2021 into 2022 to get back to some semblance of what we would consider a new normal economy.”
The summer months allowed for more job growth, particularly with a peak in July, due to companies and organizations reopening bringing back previously laid-off employees and a rise in consumer spending, he said. Although, since August, the job growth has tapered off statewide, nationally and globally, yet a gentle slope upward keeps New Jersey gradually making improvement.
“There's still a possibility before the election there will be some agreement on providing additional support payments and, mainly, what's really needed to those people that got really negatively impacted by the shutdown in the quarantine,” Hughes said. “They need the support payments, and the economy needs their spending to keep us moving forward.”
He said we would need $1 to $2 trillion of new federal support payments in order to aid those harmed the most and to speed up the process of fixing the economy.
He said that despite the recovery taking place, New Jersey’s unemployment rate is just above 10 percent matching the status from the recession from 2007 through 2009, which was the worst downturn of the economy since the Great Depression.
If the coronavirus disease (COVID-19) incidence rates keep declining, more will be able to open up to accelerate the restoration of our economy, he said.
“Whether we get a vaccine, that we're certainly not going to have it in the fall, but for 2021, that will be a major factor that would accelerate improvement. But we're still going to have long-lasting scars because this has been a traumatic event,” Hughes said.
Hughes said that another factor preventing people from getting back into the job market involves parents of children needing to be at home and readily available in the age of remote learning and/or hybrid learning rotations defining when their children physically attend schools or not.
“We're seeing a pattern of some companies thinking of satellites and are doing satellite offices in New Jersey,” he said. “If they have a cluster of their workers living in certain suburban areas, they'll provide sort of an alternative hub where they could go one or two days a week to mix up with working at home, but it's a whole new world that everybody is still adapting to.”
On a positive note, the pandemic has caused the state’s suburban housing market to skyrocket, he said. Experts in the field think that the urban-to-suburban movement will continue even through the fall, which normally causes a decrease in home market purchases due to kids in school, but remote learning could make it way easier for people to get up and go, Hughes said.
“We're gonna see steady improvement, but it's gonna be a slow improvement,” Hughes said. “It's a marathon. We had the sprint in May, June, July and August. Now, we're slowing down, but we're still going to be moving forward.”