The knee-jerk reaction to the state jobs report issued yesterday is likely to be a big smile. Afterall, the 12,900 jobs added to state payrolls in February — accompanied by a decline in the jobless rate to 9.3 percent — can be taken as a sign that the state is in recovery.
But before we get ahead of ourselves, we need to acknowledge a few realities.
First, half of the jobs were in the public sector, a direct contradiction of how the governor views the economy. His argument has been pretty straightforward since he took office: Slash the public sector and the private sector will grow. But aside from the December report — which likely benefited from a surge in temporary post-Sandy construction jobs — private-sector growth has remained anemic.
Joseph Seneca, a Rutgers University economist, noted that the state has added just 6,000 private sector jobs in the first two months of 2013, or about 3,000 a month.
“If continued, (that) would be a modest pace for the rest of the year,” said Seneca. “The state’s labor markets are still improving, but the current pace, based on the first two months of data, remains tepid.”
Public-sector growth, if it were to continue (though I suspect it is nothing more than an unexpected blip on the radar screen), could turn out to be the engine for recovery, a fact that would seem inconvenient to the governor.
The other issue, of course, is the unemployment rate, which remains well above the national rate.
Seneca and Patrick O’Keefe, director of economic research at CohnReznick, noted that the drop in the unemployment rate is not a sign of growth, because it wasn’t driven by people finding jobs – but people leaving the workforce.
While the number of people who said they were unemployed fell by 11,700, the number of people who said they were employed rose by only about 300, the figures show. Instead, the size of the labor force fell by 11,300.
“That decline, reflected the exodus of some 11,000 job seekers,” from the workforce, O’Keefe said. They left, he added, “not because they found jobs, but because they stopped looking for work,” because they were discouraged at what they saw as little chance they would be successful.
“So the unemployment rate came down for what I think most economists view as a negative reason – a discouragement rather than a rise in job holding,” he said. He called it a “positive, but mixed report.”
That’s not how the administrative is seeing it. Charles Steindel, the treasury department’s chief economist, issued a press release (quoted by The Record), saying things were looking up.
“This is another solid jobs report that continues the general, upward trend of growth and progress,” he said.
I’m not so sure he’s right.
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Hank Kalet 