Working harder but getting paid the same or less?
The good news is the stock market is booming. New Jersey has been adding thousands of new private sector jobs every month. And the state now has a lower unemployment rate, 4.1 percent, than the nation as a whole.
But the bad news is personal income in the Garden State, according to data from the Pew Charitable Trusts, has been relatively stagnant, growing only about 1 percent a year, compared to the national average of 1.7 percent over the past decade.
So what’s the problem?
According to Rutgers University economist James Hughes, there are several variables at play.
He said the population of New Jersey is growing slowly, at about one third the rate of the nation as a whole, and “every time you add an additional person you add additional income, so when we look at total personal income, we should be lagging the nation, because we’re not growing as fast in terms of population.”
At the same time, he said, job growth in the Garden State has also lagged behind the nation.
“In 2014 the nation finally recovered all of its recessionary job losses, but it took until 2016 for New Jersey to recapture all of the jobs lost in the Great Recession, so employment-wise we’re about 2 years behind the nation as a whole,” he said.
There’s another fundamental why personal income growth is lagging.
“When we compare the types of jobs being created, we are not really creating a lot of high-paying jobs, and that’s a significant factor relating to income growth,” Hughes said. “Really high-paying jobs would bolster the overall income picture of the state.”
He said if you’re working on Wall Street and living in New Jersey you’re doing quite well, but “if you are a former manufacturing worker in New Jersey now having to work at Walmart or Home Depot, you’re doing far less well.”
Another factor is globalization.
“Certainly a lot of jobs that paid middle class wages have shifted overseas, whether they be call centers, whether they be high tech jobs,” he said.
“As information technology gets more sophisticated, a lot of routine white collar jobs that paid middle class wages have disappeared.”
Hughes said right now we’ve got “very few receptionists, very few secretaries, very few file clerks and the like — all that is done by computer, so what we’re seeing is some disruptions to our economic fabric by technological advances.”
He also noted the lag in personal income growth is contributing to the growing trend of income inequality in New Jersey and across the nation, where we see a widening gap between the haves and the have-nots.
You can contact reporter David Matthau at David.Matthau@townsquaremedia.com
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