Income on the rise despite high unemployment
Unlike 2009, when soaring unemployment caused personal income to plummet in New Jersey, increased government assistance during the COVID-19 pandemic increased personal income statewide.
By Kyle Sullender, Executive Director, Focus NJ January 3, 2022
New Jersey has the third highest unemployment rate in the country, according to the October data release from the Bureau of Labor Statistics. Yet thanks to an unprecedented influx of government aid during the pandemic, the state’s total personal income has increased 3.4% since at the end of 2019, according to an analysis published by the Pew Charitable Trusts in November.
Focus NJ’s analysis of unemployment and income measures shows that over the past decade, unemployment and income in New Jersey have had a reliable relationshipation. Under normal economic conditions, the state’s personal income increases as the number of unemployed decreases – a relationship described as a “negative correlation”.
According to Pew, about half of all personal income in United states comes from wages and salaries. Although the unemployed continue to generate income through government assistance and other forms of income, the loss of wages during periods of rising unemployment depresses the state’s total staff inc.ome. When these workers return to their jobs Fr mass, the personal income of the state is recovering or increasing.
During the pandemic, however, the unemployed saw their incomes supplemented not only by traditional state unemployment programs, but also by federal stimulus measures. checks, extended benefits and other forms of assistance instituted to offset the economic consequences of the pandemic. As a result, the correlation relationship between the number of New Jersey unemployed and personal income in the state has been almost zero.non-existent since the second quarter of 2020.
Instead, spikes in personal income throughout the pandemic tended to appear in quarters when many Americans were receiving federal stimulus payments. Following the CARES law in March 2020, personal income in New Jersey has increased by over 40%. A similar wave is observed in the first quarter of 2021 following the adoption of the US bailout.
Personal income is only one way of measuring the fiscal health of the state and the financial condition of its residents. Howeverr, the pandemic’s disruption of previously predictable relationships is a reminder of why it’s important to understand how these numbers are produced and how single data points relate to larger trends.â
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