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-- New Jersey Economy - Overview
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-- Overview Since its early colonial settlement, New Jersey's economy has evolved from its first base in farming and trade, to manufacturing and, most recently, to reliance on service and technology-based industries. The influence of private sector business ventures with New Jersey government also long has been controversial. Commencing in the 1830s, the state government's close--and often corrupt--relationship with the Camden and Amboy Railroad, which financed much of the state government's budget through its operations, led to cynics branding New Jersey as "the state of the Camden and Amboy." Toward the end of the century, the state legislature's approval of laws catering to the interests of giant corporate trusts and monopolies to attract them to legally incorporate in the state brought charges by a leading muckraker that New Jersey was a "traitor state." The state's role as a national leader in manufacturing--which evolved after the Civil War with its key location on the central railroad corridor, access to raw materials and a workforce of recent immigrants--began to erode in the latter years of the last century. In the 1970s, particularly after the spike in energy prices following the Arab oil embargo in 1973, New Jersey lost both existing and potential investment as other locations offered advantages in lower-cost labor, real estate, taxes and energy supplies, resulting in the state experiencing its highest levels of unemployment since the Great Depression of the 1930s. More recent economic trends have seen the growth of technology-based manufacturing industries in electronics, computers and medical devices, as well as a shift toward service industries such as finance and health care. In 2020 and 2021, New Jersey suffered the economic impacts of the COVID-19 Pandemic which led to lockdowns and sharp cutbacks in employment, spending and other activity. In 2022, however, the economy rebounded strongly, resulting in labor shortages and spikes in inflation, particularly in energy, housing and food. By the middle of 2022, New Jersey had regained all the jobs lost in the spring of 2020 and in 2023 had returned to the 3.5% unemployment rate prior to the Pandemic -- Gross Domestic Product
New Jersey had the eighth largest economy of the 50 states in the fall of 2022, as measured by Gross Domestic Product, the most frequent measure of economic activity which includes wages and salaries, income earned by entrepreneurs and corporations and business taxes that count as a business expense. The state’s current-dollar GDP was $ 671,4 billion, and represented 2.9% of total GDP for the nation as a whole. On a per capita basis, New Jersey had $73,451 in GDP for each person in its population in 2019, the ninth highest of the states led by New York with $90,043. * New Jersey Economy at a Glance, Bureau of Labor Statistics, US Department of Labor * Regional Economic Accounts, Bureau of Economic Analysis, US Department of Commerce -- Employment
The average annual New Jersey unemployment rate was 3.7% for 2022, a decline from 6.6% in 2021, just one-tenth of a percentage point above the 2022 national rate of 3.6%, according to the US Department of Labor. New Jersey's total full and part-time seasonally adjusted employment was 4.3 million persons as of February 2023. The leading sectors of private employment were trade, transportation, utilities; education, health services; professional and business services; and leisure and hospitality. Between February 2022 and February 2023, preliminary estimates showed that job growth in New Jersey was broad based, with all nine major private industry sectors recording job gains. In descending order, these industries are education and health services (+47,700), leisure and hospitality (+22,800), trade, transportation, and utilities (+8,400), manufacturing (+6,600), other services (+5,500), professional and business services (+4,100), information (+2,700), financial activities (+2,400), and construction (+1,200). Year-over-year, the state’s public sector added 4,000 jobs. After lagging the nation and nearby states in employment since the recession which began in 2008, the state's unemployment rate steadily improved into 2019, but sharply declined as businesses closed and laid off thousands as a result of the COVID-19 Pandemic. Its unemployment rate spiked in the summer of 2020 to 11%, but had declined to 4% as of August 2022, with many employers reporting difficulty in filling available positions. Even before the impact of COVID-19, New Jersey's recovery from the recession following the 2008 financial crisis had been affected by contraction in financial services, pharmaceuticals and casino-hotels. In financial services, such major state employers as Merrill Lynch merged with other firms resulting in massive job losses. Pharmaceuticals, a traditional leader in both the locations of executive headquarters and manufacturing facilities, has gone through a period of consolidation that has reduced employment; New Jersey pharmaceutical manufacturing employment, which accounted for one-fifth of all jobs in the sector in the US at the end of the last century, has declined so that in 2015 it was less than 10% of the jobs in the nation. Casino-hotels have experienced the most dramatic reversals, with direct employment--which once peaked at over 40,000 jobs--was cut by a third with the closing of four of the City's 12 casinos, resulting in an unemployment rate in Atlantic City twice the level of that for the state as a whole. The re-opening of two of the closed casinos in 2018 under new names--the new Hard Rock and the Ocean Resort--marked a recovery in the Atlantic City employment situation. * New Jersey Economy at a Glance, Bureau of Labor Statistics, US Department of Labor * Bureau of Labor Statistics, US Department of Labor -- Largest industries
The largest sector in New Jersey have been finance, insurance, real estate, rental, and leasing. This industry has accounted for about a quarter of New Jersey GDP, compared to 20% for the nation. The second largest industry was professional and business services. The largest contributor to real GDP growth in New Jersey was non-durable goods manufacturing, with computer and electronic manufacturing comprising approximately one-fourth of all manufacturing output. * Regional Economic Accounts, Bureau of Economic Analysis, US Department of Commerce - Personal income
In 2022, New Jersey had the nation's fifth-highest median household income at $85,239. Educational attainment in the state is high, with 43.1% of residents holding a Bachelor's degree or higher. Unemployment in the state was 4.1%, and 7.6% of residents live at or below the poverty line. In 2021, Somerset County had the highest per capita income at $96,548; Passaic County was the lowest at $48,152. In the third quarter of 2022, state personal income in the US increased at an annual rate of 5.3% across all 50 states and the District of Columbia, with New Jersey slightly above the national average at 5.5%. and a total personal income of $733 billion at an annual rate. Another Census Bureau report providing five-year estimates for the period 2017-2021 for all municipalities showed that median household income rose by more than 17% over the five-year period to, reach $89,296 in 2021. Some 95% of communities registered increases in median income,with the wealthiest municipalities Saddle River, Essex Fells, Millburn and Mountain Lakes, all of which had $250,000 or above--the maximum level measured by the survey. New Jersey had the highest concentration of millionaires in 2018 of all 50 states, with 293,992 millionaires comprising 8.95% of its 3.2 million households, ahead of #2 Connecticut (8.89%) and #3 Maryland (8.85%). As in the nation, the issue of lagging wage growth and income inequality have increasingly become a focus of public policy debate. According to a US Census Bureau study released in 2021, New Jersey has the 11th highest level of income inequality in the U.S among all states and the District of Columbia. The highest income inequality was reported for the District of Colombia, New York, Connecticut and Louisiana, with New Jersey ranked below #10 Georgia and ahead of #12 Arkansas. Within New Jersey, Deal, Far Hills and Millville had the highest income inequality gaps. Leeds Point, a part of Galloway Township in Atlantic County, and Heislerville, a part of Maurice River Township in Cumberland County, had the lowest gaps. In 2022, according to the website PropertyShark, New Jersey had four ZIP codes place among the country’s wealthiest. Deal’s 07723 with a median home sale price of $2.3 million was the state’s highest (and 58th most expensive in the country), Alpine’s 07620 with $2.18 million placed second (and 66th most expensive). Others in the top 100 in US included Avalon's 08202 at $2 million and Short Hills's 07078 at $1.825 million. Nationally, California had the greatest number of ZIP codes in the top 100 list, accounting for 70%, according to PropertyShark, with Atherton California ZIP of 94027 highest in US at median home sale price of $7.9 million. * Income in the United States 2021, US Census Bureau * New Jersey Per Capita Personal Income 1930-2019, Federal Reserve Bank of St. Louis * Bearfacts New Jersey, Bureau of Economic Analysis, US Department of Commerce * Most Expensive US Zip Codes by Median Sale Price 2022, PropertyShark.com * Median NJ income on the rise, poverty declining, Census Bureau data shows, 1/6/2023, NJSpotlight.org * N.J. ranks 11th in U.S. for income inequality. Here’s why that’s a concern, 4/1/2023, NJ.com -- Poverty
The poverty rate in New Jersey went up by 1.1 percentage points to 10.2% in 2021, according to estimates from the US Census Bureau’s American Community Survey Between 2019 and 2021 (2020 data was skipped, due to the pandemic interfering with survey responses), poverty increased more in New Jersey than nearly all other states. The state’s median income dropped by 1.7% in that time. Only Hawaii and Maryland registered bigger increases since 2019. The state’s median income dropped by 1.7% in that time. The poverty rate in New Jersey was roughly 10% among native-born American citizens, 9% among naturalized citizens and 21% among foreign-born non-citizens. Among racial and ethnic groups, poverty rates were around 18% among Hispanic residents, 16% among Black residents, 14% among multiracial residents, 7% among white residents and 6% among Asian residents. A Census Bureau report for the five-year 2016-21 period estimated for single years found poverty statewide was virtually unchanged when comparing 2016 to 2021, when 10.2% of people were living under the federal poverty limit--an income of $26,500 for a family of four. That level, however, was higher than in 2019 when it had dropped to 9.2%. The relatively static poverty level showed a growing gap between lower- and higher-income residents since median household income rose by more than 17% over the five-year period from 2016 to 2021, reaching $89,296. In 2021, the national poverty rate was 11.6%, with 37.9 million people in poverty. This was the first increase in poverty after five consecutive annual declines12.3%, representing 39.7 million people in poverty living below the federal poverty level of $24,000 for a family of four. In New Jersey, the rate over 2019 and 2020 was 7.2%, the third lowest of all states, behind only Minnesota (7%) and New Hampshire (4.9%). Despite recent progress, Newark, Camden and Paterson remain among the poorest large cities in the nation. Poverty levels are above 50% in Passaic, Lakewood, Paterson, Trenton and Newark. * Poverty in the United States 2021, US Census Bureau * Income and Poverty in the US 2020, US Census Bureau * American Community Survey 2013-2017, US Census Bureau * US Poverty Rate by Demographics and State, thebalancemoney.com * Median NJ income on the rise, poverty declining, Census Bureau data shows, 1/6/2023, NJSpotlight.org |
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-- Government subsidies and incentives
New Jersey provides various subsidies and tax credits through several programs, with most of them administered through the state Economic Development Authority created in 1974 by Governor Brendan Byrne. The amount of these subsidies was substantially increased during the Christie Administration; an audit released in January 2019 prepared at the direction of Governor Murphy criticized the lack of oversight of job creation data by the EDA, which has been responsible for nearly $11 billion in grants and tax credits intended to prevent companies from leaving the state or encouraging them to expand. The largest portion of that amount--$3.9 billion--was from Grow NJ, created by a 2013 law under the Christie administration. The report also found little evidence that the incentives had influenced expansion or site decisions and that the program had shifted from its original goal of creating new, permanent jobs to preventing the loss of jobs "at risk" of moving out-of-state. In some cases, the report found that the aid had contributed to companies simply relocating within the state from one town to another. In January 2021, the New Jersey Economic Recovery Act was enacted to reform the EDA financing practices and strengthen its monitoring of job creation and other conditions attached to grants and loans, as well as creating a seven-year, $14 billion package of tax incentive, financing, and grant programs . * New Jersey Economic Development Authority * New Jersey Economic Development Authority, Financing and Incentives * New Jersey Economic Development Authority: A Performance Audit, January 2019, New Jersey State Comptroller * New Jersey Business Action Center, NJ Department of State Economy * Economy * Employers * Growth Companies * Venture Capital * Labor Unions * Real Estate * Transportation * Health * Law Firms |