N.J.’s Vanished Public Jobs Impede Economic Recovery, Study Says

New Jersey’s economic recovery is hindered by the elimination of 61,200 local and state government jobs and Republican Governor Chris Christie’s spending cuts, according to a report issued today.

The 2011 average unemployment rate of 9.3 percent would have been 8 percent with those public positions untouched, according to the study by New Jersey Policy Perspective, a nonpartisan Trenton nonprofit that analyzes issues affecting residents with low to moderate incomes.

“Cuts to the public sector make New Jersey a less attractive state for businesses to locate because they want good schools and safe communities,” the study said. “Eliminating public jobs also contributes to the shrinking of New Jersey’s middle class and increasing income inequality.”

During and since the 18-month recession that ended in June 2009, governments across the nation cut jobs as tax revenue fell. The number of public jobs in 2011 shrank by 1.3 percent, about 280,000 positions, according to data from the U.S. Department of Commerce. More than half those positions were with local and state governments.

New Jersey has the fourth-highest jobless rate in the U.S. The August tally, 9.9 percent, was the state’s worst in 35 years. The national rate was 8.1 percent that month.

“The trend in unemployment is beyond dispute,” wrote Raymond Castro, a senior policy analyst.

Government jobs returned to New Jersey after past recessions, the study said. This time, their failure to reappear is stopping companies from hiring, too, the report said.

Wounded Feelings

Christie, 50, a first-term Republican who took office in January 2010, reduced spending, cut aid to municipalities and schools and signed a law limiting annual property-tax increases to 2 percent. Government job losses that began with the recession in December 2007 continued through 2011, totaling 61,200, the report said.

The study seized on Christie’s “public criticism” of teachers and other workers, saying it increases low morale and the deterioration of services.

Christie, who favors tax cuts to drive job growth, failed to win the Democratic-controlled Legislature’s approval for one for the current fiscal year.

Standard & Poor’s lowered the state’s credit outlook to negative from stable last month because it considered the administration’s revenue projection too optimistic.

Revenue in July and August, the first months of the fiscal year, was 4.9 percent below targets in Christie’s $31.7 billion budget, according to state Treasury Department figures.

Revenue must rise 8.2 percent to balance Christie’s 2013 spending plan, and to make up a shortfall in the year ended June 30, the legislature’s chief budget officer, David Rosen, said last month.

To contact the reporter on this story: Elise Young in Trenton at eyoung30@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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