Despite economic uncertainty, labor market remains red-hot

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At the halfway point of 2023, the labor market in New Jersey and around the country remains robust. All the numbers bear that out, especially the monthly jobs reports, the most recent of which in New Jersey – the April report released in mid-May – showed an increase of 15,800 jobs, an unemployment rate steadying at historic lows, and the labor force participation rate reaching its highest point in 10 years.

“It’s the best time ever to be a worker in New Jersey,” New Jersey Department of Labor & Workforce Development Commissioner Robert Asaro-Angelo told NJBIZ.

“Our economy keeps firing on all cylinders. Our unemployment rate is down to 3.5%. Our labor force participation rate is up to 65%, the highest since June of ’13,” he explained. “And every single day, I meet more and more employers who are looking to hire more people are having difficulties, which means it’s a better labor market for the workers.”

“The labor market is still going strong. Despite all of the interest rate hikes and all the prognostications from well-paid economists, we still have a relatively low unemployment rate,” Todd Vachon, assistant professor and director of the Labor Education Action Research Network at Rutgers University, told NJBIZ. “We’re still seeing small, not big enough wage gains, in my opinion, to keep up with inflation. But we’re seeing still just a strong labor market for working people right now.”

According to the commissioner, his agency has been working directly with employers, who he said are increasingly willing to cooperate with government on different initiatives, partnerships and apprenticeship programs that have been a key component of the labor strategy under Gov. Phil Murphy’s administration. Since Murphy took office in 2018, nearly 600 new Registered Apprenticeship programs have been created in New Jersey – a 94% increase – and on-boarded 14,162 new apprentices. The state currently has more than 8,000 active apprentices serving in more than 1,100 programs.

“We’ve seen extraordinary growth in the number of businesses. We have more businesses now than any other time in New Jersey history, more workers now than any time in New Jersey history,” Asaro-Angelo said.

And all of these encouraging stats and trendlines come amid the backdrop of post-COVID uncertainty, which has included challenges such as higher costs and interest rates, supply chain disruptions, and a potential recession that – so far – has not materialized.

“I think that just shows the resilience of our state,” said Asaro-Angelo. “We hit full recovery from COVID in February of ’22, and we’re now at 118% of our pre-COVID employment. So, we’ve blown past where we were before COVID.”

As he reflected on this recovery, Asaro-Angelo pointed out that the current challenges in finding workers mirrored many of the conditions his department was seeing back in 2019. He said that one constant in his time as labor commissioner – pre-COVID/during-COVID/post-COVID – has been businesses looking for help to find and train workers — demand that bodes well for the labor force.

“Because it’s such a good time to be a worker, that’s why you see our labor force participation rate climbing up to a high level,” he explained. “People are coming off the sidelines and seeing that it’s a really good time to be a worker right now. Companies are offering really good benefits. They’re offering work-from-home. They’re offering better bonuses, whatever it may be, because of the tightness of the labor market. It’s making it more beneficial for workers to come back in, and there’s plenty of jobs still open.”

People are coming off the sidelines and seeing that it’s a really good time to be a worker right now.
– Robert Asaro-Angelo, New Jersey Department of Labor & Workforce Development Commissioner

While many sectors have recovered, some are still sluggish.

“The service sector, in particular, leisure & hospitality and travel, is booming,” said Vachon. “And I don’t see that waning. I just see that expanding through the summer months. Where we’re not seeing as much growth is in the manufacturing side of things. And I guess that’s to be expected, even as demand for products goes up. We have done so much outsourcing over the decades and just corporations seeking cheaper labor and more lax environmental protections have moved a lot of the manufacturing overseas.”

“The government sector is still far lagging everything else,” Asaro-Angelo explained. “And that’s a real problem for us as a department, as a government, to make sure that we have the skilled employees to be able to serve the public that we’re bound to serve who deserve the best from us.”

He said that segment of the trendline has troubled him the most.

“But everything else is bouncing back,” said the labor commissioner. “I’m glad to see education and health care bouncing back very strongly, especially the education side, which was really low during COVID. And health care is going to have phenomenal growth for a long time in this state and across the country.”

He pointed to New Jersey’s role as a life sciences leader and its ecosystem and talent pipeline as reasons why leaders in that sector find the Garden State so appealing.

“The jobs are following where the workers want to be,” he said. “And right now, the workers want to be in New Jersey.”

Another encouraging area, according to Asaro-Angelo, is workforce development around some of the emerging sectors in New Jersey, such as offshore wind. He was a panelist during last month’s offshore wind conference at the Steve Sweeney Center for Public Policy at Rowan University.

“The coordination and collaboration and excitement about offshore wind and the actual jobs that are going to be occurring is phenomenal,” Asaro-Angelo said. “There isn’t one training program or one state labor department or one community college that has all the answers.”

He said that the only way this type of workforce development effort can succeed is for all of the stakeholders – local, state, county and business – to get on the same page.

“Whether it be the apprenticeship training grants that are going out to different colleges in South Jersey. Whether it be the employers coming to the table, meeting the local workforce boards, meeting at the One-Stops having recruitment fairs, doing trainings in Atlantic City, I just think the whole sector is firing on all cylinders to get this workforce ready,” said Asaro-Angelo, who stressed that a large workforce will be needed to serve this sector over the next decade and beyond. He cited efforts that include outreach to K-12 students via county technical schools ensuring they are aware of the opportunities.

Whether it is offshore wind or another new industry – like legal cannabis or film/television production – Asaro-Angelo said that investors and stakeholders want to make sure there is a workforce ready to help them build these companies and sectors.

“When you’re trying to build new industries, you have to bring everybody to the table and try new things to make an impact,” he explained.

“It’s really good that we’re trying to attract these different industries into the state,” said Vachon. “And I think offshore wind — we’re a prime state for that. The question I always ask, as a labor studies scholar, is it’s not how many jobs, it’s what’s going to be the quality of the jobs?”

Young workers

Earlier this month, the labor department’s new online working papers application portal and process – at MyWorkingPapers.nj.gov – launched. It is the byproduct of a law (Assembly Bill 4222/Senate Bill 2796) Gov. Phil Murphy signed last year to enhance protections for young workers and to digitize and streamline the process, which Asaro-Angelo says is an important initiative for the state labor force, and one that ties into the aforementioned efforts to build up the talent pipeline, especially in emerging sectors.

“Now, the working papers are going to be in an online system that’s going to be statewide, not just sitting in filing cabinets,” Asaro-Angelo explained, noting that it will help streamline child labor enforcement while helping workforce development efforts with young workers who sometimes slip through the cracks during that time from high school to post-high school. “And to be very clear, we take child labor enforcement extremely seriously, and we’re still firing on all cylinders on that front. But now we’re going to be able to know where students are working, what kind of jobs they have, be able to communicate with them about possible training programs, about possible apprenticeship programs; communicate with their parents about possible career paths.”

He stressed that the portal and process are new, having launched June 1, but that so far things have gone smoothly, with initial efforts focused on collecting information and approving paperwork.

“Probably in phase two or phase three, we’re going to start doing more to reach out to these workers individually to connect them with employers looking to hire with skills they might have and make sure that they know all of the opportunities in front of them,” said the labor commissioner.

In early May, some provisions of the “Temporary Workers’ Bill of Rights” went into effect, with the remainder kicking in Aug. 5. The law expands the rights and protections afforded temporary laborers, allowing for greater oversight of temporary help service firms and third-party clients by the state.

“The first part went into effect last month. The real meat of it goes into effect in August. We’re doing a lot of work and training with our staff to make sure they know how to handle these cases,” said Asaro-Angelo. “We’re doing a lot of outreach in the community to make sure workers know what their rights are and how to file a complaint when necessary. And also doing outreach with employers to make sure that our processes are as easy as possible for them as well.”

“I think it’s a really innovative and creative way to basically uplift the working poor in the state,” said Vachon. “We’ve seen the economy shift to being a largely service-based economy. And then within the service industry over the years, the jobs have largely become outsourced and then turned more into like gig economy jobs and informal labor market jobs. So, what happens is you end up with a really precarious sector of the workforce, of the labor market, where people are doing these jobs, piecing together little things here and there to try and get enough money to pay their bills at the end of the month with no long-term job security, no health benefits.”

Vachon said that these workers are then more vulnerable to wage theft and exploitation by bad actors. “I’m not saying all employers are bad. But some will see that as an opportunity to easily exploit some really cheap labor,” Vachon explained. “So, I think things like this Bill of Rights are really important.”

In mid-May, several business groups – including the New Jersey Staffing Alliance, the New Jersey Business & Industry Association, and the American Staffing Association – filed a federal lawsuit to overturn the law, which Murphy signed in February, alleging it represents an existential threat to the state’s staffing industry. A hearing has been set for June 13 regarding a request for a temporary restraining order to pause and prevent the law from taking effect.

What’s coming up

Looking ahead to the second half of 2023, Asaro-Angelo said that the working papers initiative is a big priority along with investments in such areas as apprenticeships, forging community partnerships related to workforce development initiatives and funding offered through the labor department.

He also noted that continuing the efforts to modernize the state’s unemployment system is at the top of his agenda, stressing that many of its issues are not unique to New Jersey and that better efficiency, streamlining and communication is needed to make lasting fixes here that he hopes can be applied nationally. And Asaro-Angelo said that attention is not limited to the unemployment insurance system modernization but extends to all of the department’s work.

“We’re sort of working beyond our borders to make sure that what we’re doing here in New Jersey can also possibly benefit workers in other areas as well,” Asaro-Angelo said.

The labor commissioner said he expects the strong labor market to continue and noted that the Garden State is primed to reap the benefits of federal funding coming through legislation such as the Bipartisan Infrastructure Law, the Inflation Reduction Act, and more.

“A lot of these grants are tied to strong worker protections and apprenticeships, so we’re well-positioned in New Jersey to take advantage of all of this funding,” he explained. “I feel pretty confident and bullish on our job market here in Jersey for quite a while.”

“I think it’s a continuation of what we’ve been seeing for the past 18 months to two years,” said Vachon, who noted that he is watching the unprecedented uptick in union organization activities happening around the country. “Right now, workers have a degree of power in the labor market that we haven’t seen in a long time.”

And while he does not expect huge numbers each month, such as that recent April state jobs report and the May national report, which showed 300,000 new jobs, Asaro-Angelo does expect the momentum to continue.

“Because I see what I’m hearing from employers. They’re still looking for workers,” he said. “I don’t think a short-term hit here or there over the next few months is going to change the overall desire to hire more people.”