by Deborah Howlett, president of New Jersey Policy Perspective
During the recession that officially began in 2007, New Jersey fared better than the rest of the nation, but as other states begin to recover, the Garden State is falling behind.
New Jersey had the ninth-worst job-creation record between June 2010 and June 2011, according to our latest report, The State of Working New Jersey 2011: The Lost Decade. In addition, the state’s unemployment rate — currently at 9.2 percent, according to the state Department of Labor and Workforce Development — has been higher than the national rate each month of 2011. At the current rate of job growth, it will still take another two-and-a-half years for New Jersey employment to return to its pre-recession levels — a total of six years since the recession officially began.
While there is clearly a dire need for jobs in New Jersey, the state’s primary job creation strategy — handing out about $1.2 billion in subsidies to corporations large and small since November 2009 — has thus far had little impact on the state’s bleak employment situation.
Meanwhile, the state has lost tens of thousands of jobs due to the widespread layoffs and retirements of state and local government workers, which have come on the heels of state cuts and budgetary uncertainty.
But a job is a job, whether in the public or the private sector. The teacher who lives down the block drives the local economy as much as the white-collar worker from around the corner; the money in the latter’s wallet doesn’t have any special powers that make it more valuable than the money in the former’s billfold.
And, as many economists note, public-sector spending is a vital component of any economic recovery.
Years of a single-minded focus on cutting taxes and reducing the size of government didn’t avert the most recent economic meltdown, and it hasn’t been able to restore vitality. Investing public resources into public projects for the public good will enable the economy to start rolling again.
At an event earlier this month in Princeton, Nobel Prize-winning economist Paul Krugman pointed out a clear historical precedent for this kind of approach: the Great Depression didn’t end completely until the federal government began spending great amounts on World War II.
“The end to the Depression was war,” he said. “It’s too bad we can spend on destruction, but not construction.”
It’s clear that New Jersey could benefit from increased spending on construction; much of our infrastructure — whether on the roads, on the rails or in the schools — is crumbling, and we have the historic opportunity to not only patch up these problems, but to create whole new sectors of living-wage jobs, in areas like green retrofitting and sustainable construction.
But in order to fund any worthy public projects, New Jersey needs revenue — the too-often neglected, but equally important, side of the economic equation.
Where can we find new revenue?
How about giving up less future revenue via the subsidies we dole out to businesses? Or, more immediately, why not reinstate the income tax levels we had just two years ago, and ask the most well-to-do among us to pony up just a little bit more? A strong majority in public opinion polls favors that option, and the Legislature has twice voted to do so. The impediment has been the governor’s veto pen and his pit bull resolve not to increase a single tax regardless of the circumstances.
Robust and equitable job growth in New Jersey requites a balanced approach by the state in its budgeting and economic development strategy. That approach must include revenues and shared sacrifice across the board. Simply put, there’s just no other way to climb out of this hole we find ourselves in.
This op-ed was originally published in the December 5 edition of NJ Biz.
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