Gov. Chris Christie was elected promising a rebirth of the state’s economy, a promise it was clear he couldn’t keep given the structural changes that have helped to gut the state’s private-sector workforce over the last couple of decades.
According to the Federal Reserve, “a slow jobs recovery and a shrinking manufacturing sector mean the Garden State, which entered the recession six months before the rest of the nation in June 2007, could also be one of the last to emerge.”
“Economic conditions in New Jersey remain essentially flat,” William Dudley, the Fed’s president and CEO, said during a quarterly press briefing on New York, New Jersey and Puerto Rico. “Although activity there is no longer declining, New Jersey has yet to establish a sustained recovery.”
Dudley cited several key issues facing the state — consolidation in the pharmacutical industry and a dying manufacturing sector — that will make it difficult for New Jersey to rebound. What he did not say was that the state was particularly hard hit by the Wall Street crisis, which dried up credit and stalled the housing boom here and also resulted in a chunk of jobs being eliminated both in Hudson County, where financial firms had started settling following 9/11, and in Manhattan, which affected New Jersey commuters.
The governor has blamed the state’s faltering economy on high taxes and red tape, but it is not all clear that tax reform and deregulation will keep companies in New Jersey or attract new ones — especially if services and infrastructure in the state continue to decline.
In the past, the state could point with pride to its roads, but over the last decade-plus, they have fallen into disrepair, as have the state’s bridges and rail network. Schools remain our jewel, at least those in the suburbs, but the assault by the governor on teachers and the uncalled for cuts in state aid for education are likely to create a downward death spiral there, as well.
Fed economists added another factor to the state’s economic woes: “weak job growth in the public sector” (i.e., police officers, teachers, environmental regulators, etc.). Gov. Jon Corzine cut 7,000 jobs from the state payrolls; Gov. Christie has doubled down on that, and is pushing through reforms that have forced and will continue to force local governments to slash jobs, as well.
Reducing the number of public employees may make over-taxed residents happy and could have some short-term fiscal impacts (i.e., balancing local budgets), but it does nothing to aid in the state’s economic recovery. Adding thousands of formerly employed people to the unemployment rolls means that there will be less money being spent by New Jerseyans on consumer goods and services, ultimately spreaading the economic pain beyond that felt by ex-teachers and firefighters.
This is not Christie’s fault and, in many ways, it is not Corzine’s fault either. We have been undergoing an economic restructuring for years that was hidden from view by stock-market and housing bubbles, regulatory changes and a belief that we could live on our credit cards without consequence. As this was happening, governors and legislators of both parties ignored the consequences of their own profligacy, kept spending like drunken sailors and used an assortment of accounting tricks to avoid asking taxpayers to pay the bill that was being rung up.
Now that the bill has come due, we find out we are broke and have no prospect of raising the needed cash to make the payments.
If New Jersey was a household, the bank would be foreclosing.
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