Fewer than half the jobs predicted for New Jersey when federal tax cuts were enacted last year have actually been created. And the unemployment rate in New Jersey is higher now than it was at any time during the recession.

Those are key findings of an analysis of jobs data through January 2004, conducted by New Jersey Policy Perspective and the Washington-based Economic Policy Institute as part of EPI's JobWatch program to monitor employment nationwide since the latest round of federal tax cuts. For more on JobWatch, go to http://www.jobwatch.org.

The federal Jobs and Growth Tax Relief Reconciliation Act was passed in May of 2003 and implemented in June. The stated mission of the tax-cut measure was to stimulate the economy and increase jobs. But the increase in jobs is far below what supporters of the act projected. Nationally, supporters of the tax cuts predicted creation of 306,000 jobs per month. That would have meant nearly 2.5 million jobs during the period covered by this data. Instead, job growth nationally during that period was 294,000.

• The tax cuts were projected to create an additional 62,700 new jobs from June, when the program was implemented, through January 2004, the most recent month for which data are available. Instead, New Jersey gained 30,500 new jobs during this time period.
• The shortfall of 32,200 jobs in New Jersey means that under the Jobs and Growth plan, job creation met only 49 percent of the target for the period of June 2003 to January 2004.

Federal "Jobs and Growth Plan" Job Projection Versus Actual, June through January
(in thousands)

• In January 2004, 26 months after the recession ended, the unemployment rate in New Jersey was 5.5 percent. This is higher than the rate at the beginning of the recession in March 2001 (3.5 percent) and at the end of the recession in November 2001 (5.0 percent).
• Although new jobs are being created in New Jersey, it is the lower-wage industries that are growing. From November 2001 to November 2003, the average wage of the growing industries in New Jersey is $34,401, compared to the average wage of $55,952 in industries where jobs were shrinking. That's a difference of 39 percent.
• Job growth has not kept up with growth in the New Jersey working-age population. Since the end of the recession, job growth has been 1.7 percentage points less than working age population growth. If job growth since the recession ended had kept up with working-age population growth, New Jersey would have approximately 68,700 more jobs now that it actually has.

"New Jersey is doing better than some other states, but that's little consolation to all the people not working," said NJPP President Jon Shure. "Trickle-down economics in the form of big tax cuts for the wealthiest people continues to leave others high and dry."

The JobWatch analysis takes into account differences that can be expected among states in terms of job creation. EPI uses state-by-state employment forecasts of Economy.com, a leading forecaster of regional economics. Economy.com provides employment projections for each state for the fourth quarter of 2002 to the fourth quarter of 2004. Using this data, EPI calculated each state's share of the total employment growth and applied it to the projected 306,000-jobs-per month growth rate to calculate how much employment growth each state should experience if the federal government's employment projects were realized.

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