New Jersey’s unemployment rate dropped from 8.4% to 7.8% in the month of November, according to a new report released this morning from the Bureau of Labor Statistics. This marks New Jersey’s largest monthly drop in the unemployment rate since 1978.
The Bureau of Labor Statistics noted that unemployment rates decreased in 45 states, while staying the same in five. The national jobless rate declined from 7.3% to 7.0% from October to November.
New Jersey’s unemployment rate drop of .6% is tied with Idaho and North Carolina for the largest drop in the past month. New Jersey’s unemployment rate has fallen 1.8% since November 2012. This is New Jersey’s lowest unemployment rate in about five years—it was 7.4% in January 2009.
The reason behind this unemployment plunge is two-fold. First, New Jersey added 16,900 jobs in November. This is good news for New Jersey’s economy, since more people are getting back to work. However, the second reason is that 30,600 residents have left the labor force.
The unemployment rate is calculated by dividing the number of people not working and looking for work by the number of people either unemployed or employed. It does not count people “not looking for work” as unemployed. Thus, when people leave the labor force, (maybe because they are retiring or giving up their job searches) the unemployment rate will go down.
Economist Patrick O’Keefe noted that New Jersey’s employment rate, the percent of work-eligible civilians 16 or older, is only 59.3% -- the lowest in 30 years. This suggests that many formerly unemployed residents have become “disgruntled,” and have stopped looking for work.
However, New Jersey’s labor force unexpectedly swelled in late 2012 with rapid increases in people looking for work even though the national labor force was decreasing. Perhaps this month’s labor force losses are just offsetting the unexplained labor force gains from 2012.
Nevertheless, this month’s job report is excellent news for New Jersey Gov. Chris Christie. Widely expected to make a run for the Presidency in 2016, Christie has been universally praised for his work dealing with Hurricane Sandy. Part of his 2016 appeal also comes from his ability to work with a Democrat-controlled legislature to achieve a balanced budget.
However, his economic numbers have not been as good. Although Christie won a commanding 22-point victory for re-election in November, in exit polls only 40% of New Jersey voters described the New Jersey economy as “excellent” or “good,” compared to 59% who described it as “not so good” or “poor.”
New Jersey still has the 10th highest unemployment rate in the country. Rivals in the 2016 Republican primary such as Rand Paul or Scott Walker could use New Jersey’s poor economic numbers to criticize Christie’s record. However, if the economy continues to recover and the unemployment rate continues to fall in the Garden State, the economy could become Christie’s biggest strength.