Evan Soltas
May 27, 2012

Jersey Workers

Paul Krugman has a brief post up on his blog pointing out that the recovery in nonfarm payrolls in New Jersey has been unusually sluggish. He writes that he's "actually not sure why NJ is doing so much worse than New York or Pennsylvania, and I doubt that Christie has much to do with it, but he’s the one trying to claim credit for … what?"

N.J.'s slow growth in nonfarm payrolls, in fact, can largely be explained by changes in government employment since Christie took office in January 2010.

Here's a graph of New Jersey's nonfarm payrolls, its private payrolls, and New York's nonfarm payrolls, indexed to 100 at January 2010, when Christie came into office and also at the trough of the New Jersey payroll numbers.Notice, in fact, that the gap really emerged in late 2010, when the major cuts in government employment occurred. Had N.J.'s government payrolls held constant, the N.Y.-N.J. growth gap would have been half its current size.

Here's a graph which gives you a sense of the magnitude of contraction in government employment in New Jersey as compared to New York. Both states cut back towards the end of the recession, but the former far more so than the latter.I suppose one can read two different conclusions into this post. (1) The Jersey Comeback is happening, but because of public sector cuts, you see it in the private numbers, not the nonfarm numbers, or (2) the Jersey Comeback is being restrained by imprudent public sector cuts. That is a political and normative decision which I'll refrain from making here.