By Will Irving


Unpredictability has been one of the defining features of New Jersey’s labor market for much of the last two years. As the state’s unemployment rate climbed to among the highest in the nation, payroll employment continued to grow steadily before slowing markedly during the second half of 2023. However, the Bureau of Labor Statistics’ annual benchmark revisions to its payroll employment estimates in March indicate that growth in the second half of the year appears to have been stronger than initial estimates indicated. While the December 2023 employment total was nearly unchanged, employment growth in 2022 was revised downward by 14,000 jobs, while growth in 2023 was revised up by 20,000[1]. As a result, New Jersey’s seasonally adjusted growth rate of 2.1% for December 2022 to December 2023 exceeded that of the nation (2.0%). The revisions also indicated that growth over the year was much more concentrated in the private sector (91%) than in the original estimates (75%). This growth was also more broadly distributed across sectors, while prior to revisions almost all the gains were limited to the government, healthcare and leisure and hospitality sectors.

Since the end of December, total job growth has been relatively strong in the state, though data revisions have continued to blur the picture. In February, the January estimated gain of nearly 21,000 jobs was revised down by 50%, followed by a decline of nearly 3,000 jobs in February.[2] Employment then rebounded with a gain of nearly 14,000 jobs in March. The roughly 20,000 jobs added thus far this year have again been concentrated almost entirely in the education and health and government sectors.

Given the revised growth estimates for 2022 and 2023, it’s helpful to examine the underlying dynamics in the sectors that have added to or detracted from this growth.  Shift-share analysis is a technique that can be used to gain insight into the competitive strength of a region’s industries by decomposing employment growth into national, industrial and regional effects.

  • The national effect represents the portion of regional employment change in an industry that is attributable to the overall trend in total employment growth at the national level. It is measured as the growth in industry employment in the region if the sector had grown at the overall national growth rate for total employment.
  • The industry effect (sometimes “industry mix effect”) represents the portion of regional employment change in an industry that is attributable to the national trend in that industry. It is measured as the growth in industry employment in the region if the sector had grown at the rate of the industry at the national level, net of the national growth rate for total employment.
  • The regional effect (also known as local share, or competitive effect) measures the remaining growth attributable only to regional factors and is measured as the change at the regional level less the change attributed to the other two effects.

The sum of all three effects will equal the total employment change for each sector in a region. Of primary interest is the regional effect. Regional effects that are negative indicate a weakness in the industry compared to the national level, while positive regional effects indicate relative strength.

The chart below shows the shift-share components for selected industries in New Jersey (the table following the chart provides the comprehensive data at the 3-digit NAICS level). Of particular interest are several sectors where New Jersey has historically had a strong employment base. For example, while the state’s wholesale trade sector added 9,500 jobs over the two-year period, this has been primarily driven by the overall national trend, while the negative regional effect and small contribution of the industry mix effect indicate weakening sectoral growth at both the national and state levels. Similarly, the professional, scientific and technical services sector, which added over 10,000 jobs over the two years (all in 2022), has actually had its growth constrained by regional factors.  While the sector would have gained nearly 23,000 jobs based on national and industry trends, regional performance dragged employment growth down by 12,600 jobs.

In the case of the other two subsectors of the professional and business services sector, regional factors compounded industry weakness at the national level. Management of companies and enterprises, a small sector comprised of company headquarters and holding companies in which New Jersey has had a strong concentration, saw local factors limit growth by 4,300 jobs, offsetting any gains that would have resulted from the overall national employment growth trend. The actual decline of 5,600 jobs in the administrative and support and waste management and remediation services sector was largely attributable to industry weakness at the national level. The industry mix component of the shift-share decomposition pulled employment down by over 16,000 jobs, counter to the broader national trend that would have added over 15,000. Regional factors accounted for additional weakness in the sector at the regional level, resulting in the industry’s job losses in the state.

In contrast, region-specific industry factors have bolstered growth in other industries, such as healthcare and accommodation and food services, where regional strength in those sectors largely followed strong national performance.  While the shift-share approach does not speak to the causes of sectoral strength or weakness, it does help to identify sectors worthy of monitoring and further investigation. Future posts will examine these dynamics in more depth.



Shift-Share Analysis for New Jersey, December 2021-December 2023

(Employment in thousands)



U.S. Bureau of Labor Statistics

New Jersey Dept. of Labor:


Examples, variations and critiques of shift-share:


[1] See and

[2] See and