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Report: N.J.’s public-sector job loss has created a drag on economic recovery

njpp041912_optBY JON WHITEN
NEW JERSEY POLICY PERSPECTIVE

New Jersey’s slower-than-average crawl out of the Great Recession has been weighed down by the effects of significant job loss at the state and local government level, according to a report released today by New Jersey Policy Perspective.

The report, “Moving in the Wrong Direction” finds that if not for the loss of public-sector jobs, New Jersey’s 2011 unemployment rate would be more than a full percentage point lower: 8 percent instead of 9.3 percent. That rate would be even lower when accounting for the effect of public-sector job loss on private-sector employment.

"Public workers are an essential part of New Jersey's economy. Unfortunately, major state budget cuts and other restrictive policies have contributed to an unprecedented loss in public workers and many of the vital services they provide,” says NJPP Senior Policy Analyst Raymond Castro, the report's author. “This is putting the brakes on the state's economic recovery."

Unlike the previous two recessions, public-sector jobs continued to be lost after the latest recession began. This is a marked change in strategy from earlier recessions, when public-sector jobs were maintained or added during and after the downturn to help the state to recover more quickly.

"Public goods – like education and public safety – are some of New Jersey’s best selling points to attract new businesses,” Castro continues. “They must be supported if New Jersey is going to recover from the recession and compete with other states and countries for good jobs."

The report lays out three key recommendations on how to create a more holistic economic development strategy that includes both the private and public sectors.

Specifically, NJPP recommends that:

- The federal government provide targeted financial assistance to state and local governments that meet specific criteria promoting efficiency in public services;

- The state take employment effects into account when considering and proposing budget cuts; and

- The governor and the legislature pursue joint public-private investment strategies.

“New Jersey's agonizingly slow recovery from the Great Recession turns out to be as much a product of deep cuts in public-sector jobs as it is the snail's pace of private-sector job creation. But New Jersey is in no financial condition to reverse this trend on its own,” says NJPP president Gordon MacInnes. “This report argues strongly for a federal response to restore both public services and jobs. This can be done by insuring that federal aid is matched by New Jersey's assurance that jobs are tied to incentives to create more efficient government services at the state and local levels.”

NJPP will celebrate the report’s release today at noon with U.S. Sen. Frank Lautenberg and hundreds of public workers on the State House steps (or in the State House's Committee Room 4 if the weather is not good). Sen. Lautenberg pledges to continue his work in D.C. to help restore New Jersey’s public-sector jobs.

“Public-sector workers are essential to our economy and our communities, and the NJPP report lays out a blueprint for how to put people back to work and strengthen the middle-class,” Sen. Lautenberg says. “We will continue working with President Obama to pass the American Jobs Act and put more teachers, cops, and firefighters on the job in New Jersey.”

 

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