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-- Economy- Overview
* Economy * Employers * Growth Companies * Venture Capital
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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 a target of criticism. 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. Hospitals, nursing homes and other health care providers also have grown as major sources of employment, particularly with the surge in the share of older persons in the population and the expansion of health benefits and insurance.
-- Gross Domestic Product
New Jersey had the eighth largest economy of the 50 states as of July 2016, 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 $584.2 billion in July 2016, 3.2% of the total national GDP. Over the ten-year period from 2004 to 2014, the state’s growth rate also was .4% compared to 1.4% for the nation. On a per capita basis, New Jersey had $56,405 in GDP for each person in its population in 2014, the eighth highest of the states led by Alaska's $66,160 and compared to the national average of $49,469.
* 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
In January 2017, New Jersey's labor force was approximately 4.5 million persons. The leading sectors of employment were health care and social assistance; retail trade ; and professional, scientific and technical services. From 1990 to 2010, the health care industry added nearly 160,000 new jobs in New Jersey, growing at an annual rate of 2.4%; accounting for 3 of every 5 new jobs statewide since 1990, while combined annual job growth for all other industries was about 0.2%.
The unemployment rate in December 2016 was 4.7%, the same percentage as for the nation as a whole. From 2000 into 2008, the state unemployment rate was below 5%, but following the financial crisis which began in late 2008 it spiked to peak at 9.8% in January 2010, only again dropping back below 5% in 2016. Since the recession began, New Jersey had replaced as of the end of 2016 about 75% of the 258,000 jobs it lost; in contrast, the nation as a whole had recovered all lost jobs by June 2014.
New Jersey's lagging recovery from the recession has been affected by contraction in financial services, pharmaceuticals and casino-hotels. In financial services, the financial crisis which began in 2008 forced major employers like Merrill Lynch to merge with other firms resulting in severe job cutbacks. Pharmaceuticals, a traditional leader in both the locations of executive headquarters and manufacturing facilities, has gone through a period of consolidation and mergers 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 2017 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 over the 2012-2016 period with the closing of five of the City's 12 casinos, resulting in an unemployment rate in Atlantic City that was twice the level of that for the state as a whole. Overall, however, an annual state report on the economic impact of tourism throughout the state concluded that in 2014 the tourism industry generated $2.1 billion in economic impact, a 3.8% increase over 2013, although noting that there had been a loss of 7,000 jobs of the total of nearly 316,000 among all tourism-related employers.
* Bureau of Labor Statistics, US Department of Labor
* Unemployment Rates by State, National Council of State Legislatures
* New Jersey Economy at a Glance, Bureau of Labor Statistics, US Department of Labor
* Economic Impact of Tourism in New Jersey 2014, Tourism Economics
-- Largest industries
The largest industry in New Jersey in 2016 was finance, insurance, real estate, rental, and leasing. This industry accounted for about a quarter of New Jersey GDP, compared to 20% for the nation, and had a 0.8% real decline from 2013. The second largest industry was professional and business services, which accounted for just over 15% of New Jersey GDP, compared to 12% for the US, and had 1.0% real growth. The largest contributor to real GDP growth in New Jersey was nondurable goods manufacturing, with computer and electronic manufacturing comprising approximately one-fourth of all manufacturing output.
-- Personal income
In 2014, New Jersey had a per capita personal income of $56,807. This ranked third in the United States behind $62,467 for Connecticut and $59,182 for Massachusetts and was 123% of the average for all states of $46,129. The 2014 PCPI was an increase of 2.6% from 2013, below the national growth rate of 3%. For the ten-year 2004-2014 period, the compound annual PCPI growth rate was 2.8 % for New Jersey compared to the national rate of 3%.
For tax year 2013, individual taxpayers in the state reported just under $340.8 billion in total income, according to the Internal Revenue Service.
Median household income over the 2009-2013 five-year period was $71,629 in New Jersey, second only to Maryland's $73,538, according to the US Census Bureau's American Community Survey. The national average for the period was $53,046. The highest median household incomes among counties were reported for Hunterdon ($106,143), Somerset ($99,020) and Morris ($98,663), with all three counties ranked among the top 15 counties in the US. The lowest incomes were in Cumberland ($50,070), Atlantic ($54,235) and Essex ($55,095).
The average annual salary in New Jersey is $52,800, which ranks seventh among all states behind leading Massachusetts at $56,410, and is 14% higher than the national average of $46,440. The median salary (50% earning more, 50% earning less) in New Jersey is $40,250.
As in the nation, the issue of income inequality has increasingly become a focus of public policy debate. To be in the top 1% in income nationally, according to a study released in June 2016 by the Economic Policy Institute based on 2013 data, a family needs an income of $389,436. For states, the highest thresholds for inclusion in the top 1% were in Connecticut ($659,979), the District of Columbia ($554,719), New Jersey ($547,737), Massachusetts ($539,055), and New York ($517,557). The average income of the top 1% of New Jersey's earners was $1.45 million in 2013 compared to $57,447 for the bottom 99% during the same year. New Jersey ranks as one of the 10 states where the top 1% in income's share jumped the most from 1979 to 2013, which is largely attributed to the presence in the state of high-income financial sector and investment firm employees. It's also one of the 15 states where the top 1% captured all income growth between 2009 to 2013. The bottom 99%, in contrast, actually lost income during the recovery, showing a decline of 1.4%.
From 2000 to 2013, there was a 4.2% increase in New Jersey gross domestic product per capita while median household income declined by 5.9%. When adjusted for inflation, median household income in the state in 2013 remained about $4,500 a year below the level it was at before the most recent recession and less than the level it was at in 2000.
Over the three-year 2013 through 2015 period, the US Census Bureau estimated that 47.8 million people in the nation lived in poverty--defined as incomes at or below $24,000 for a family of four--when taking account the cost-of-living. The national poverty rate was 15.1%, the same rate as that for New Jersey. In New Jersey, some 1.3 million people lived in poverty, an increase of nearly 250,000 people in the past 10 years, according to Census data. The rate remains well above levels since the last major recession of the 1970s; in 2007 the rate was 8.6% and in 2000 it was 7.9%. Poverty levels for minorities are significantly above the state average; about 20% of African-American and Hispanic New Jerseyans live below the federal poverty level.
Camden is the poorest city in the nation, with nearly 32,000 residents, or 65% of its population, living below the poverty line. Poverty levels were above 50% in Passaic, Lakewood, Paterson, Trenton and Newark. Six counties--Passaic, Cumberland, Hudson, Essex, Atlantic and Salem--had more than 30% of their population in poverty in 2014, according to an annual survey conducted by Legal Services of New Jersey.
* Poverty, US Census Bureau
* Poverty Benchmarks 2015, Legal Services of New Jersey
* State of Poverty, Poverty USA
-- Government subsidies and incentives
New Jersey provides various subsidies and tax credits, with most of the programs administered through the state Economic Development Authority created in 1974 by Governor Brendan Byrne. The amount of these subsidies has substantially increased in recent years; a study by the nonprofit New Jersey Policy Perspective found that of the $5.4 billion in tax subsidies and credits awarded since 1996, $4 billion of that total was approved since 2010. The report also found little evidence that the incentives had produced positive economic returns or influenced expansion or site decisions; 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; that the aid had helped companies move from one New Jersey town to another.
* New Jersey Economic Development Authority
* New Jersey’s Surge in Business Tax Subsidies Reaches New Heights, June 2014, New Jersey Policy Perspective