In a word, the performance of New Jersey’s economy over the past year has been, “okay.”
“New Jersey has been in a post-recession period where its growth has been modest. It’s been lagging the growth pace of the nation as a whole, and that pattern continued through 2017 and probably will continue through 2018,” says James Hughes, distinguished professor and Dean Emeritus of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.
Hughes adds that New Jersey has been “middle of the pack” compared to its neighbors – performing better than Pennsylvania and Connecticut, but lagging behind New York.
Hughes points out the last time New Jersey did surpass the economic growth rate of the nation, it was due to the state being an epicenter of the telecommunications capital investment bubble of the late 1990s, when the state saw massive growth in high technology, but eventually was hit with the dot-com stock bubble bursting.
“We don’t have to worry about that now,” Hughes says. “There doesn’t appear to be a unique bubble in New Jersey that will come to cause pain in the future.”
Despite modest growth, there is still some optimism, according to Hughes. “The national economic expansion is now the second longest in history, starting in June of 2009 and [continuing to the present].”
“In general, there is a better economic environment,” says Joel Naroff, president at Naroff Economic Advisors. He points to business friendly federal policies such as corporate tax cuts as one single contributor. “Even when you just have slow to modest growth, if you do that for an extended period of time, eventually the level of activity gets to be pretty good – it just took you a long time to get there,” he says.
This slow – but steady – ramping up of the state’s economy has supported some of the optimism surrounding the state’s business climate.
“The state may not be growing as rapidly as other states are, and it may be underperforming the nation, but it has still been growing. A lot of the problems that we face, such as the housing market, are largely behind us or beginning to fade,” Naroff explains. “There’s a much greater comfort level, especially within the business community.”
NJ Unemployment Rate Marks 10-Year Low
According to preliminary estimates produced by the U.S. Bureau of Labor Statistics (BLS) (the most recent data at press time) New Jersey employers added to their payrolls in May while the state’s unemployment rate lowered to 4.4 percent.
BLS statistics show total nonfarm wage and salary employment increased by 4,100 in May to reach a seasonally adjusted level of 4,179,200, with the majority of the increase occurring in the private sector (+3,400) of New Jersey’s economy. The state’s 4.4 percent unemployment rate represents the lowest statewide rate since November 2007, according to BLS.
Looking at the longer term, over the year May 2017 – May 2018, employment in New Jersey was higher by 57,200, with the majority of the gains recorded by private-sector employers (+54,200), according to BLS.
Since February 2010 (the low point of the last recession), New Jersey’s private-sector employers have added 372,900 jobs. In May, employment increases were recorded in seven out of nine major private industry sectors.
The Warehouse State
Both Hughes and Naroff agree that logistics, warehousing and distribution is today the state’s best performing sector – a sector that Hughes describes as “vibrant.”
New Jersey is the third largest warehouse distribution market in the country, and the sector has been growing rapidly, with Amazon’s various fulfilment centers at the forefront. Amazon recently announced plans to open its ninth fulfillment center in the state, a 1-million-square-foot facility in Burlington which is expected to create 600 jobs. This comes on the backs of the company’s plan to build a 650,000-square-foot fulfillment center in West Deptford, which is expected to employ 1,000 people when it opens.
“New Jersey is perfectly situated for a global economy,” Naroff says. “The success of this sector is an indication that the geographic location of New Jersey is having an impact on its economy.”
If New Jersey is to continue on a positive economic path, it will need to take advantage of its geographic location to capitalize on today’s global economy – and that will be buoyed by its warehouse and distribution sector.
Hughes does caution that one potential problem is that the state has been running out of easily developable sites.
“The distribution market is spreading out westward along I-287 from the Turnpike, and we are seeing re-use of older properties,” he says. This will be something to monitor going forward.
Recognizing the Necessity to Adapt
Though too early in the term to have a measurable impact on the economy, the Murphy administration has shown signs of taking steps that could have a long-term effect on the state’s competitiveness when it comes to innovation and high technology, which, in turn, could have positive effects on the overall economy.
“One real positive is a recognition of public-private partnerships, particularly in the high-technology sectors,” Hughes says.
He cites the creation of an innovation hub in New Brunswick (“The Hub”), as one example. The Hub is being viewed as a pivotal redevelopment site in downtown New Brunswick that will support New Jersey’s economic future as the state’s home for research and startup incubation.
“By creating a site where high-growth industry can thrive, New Jersey will begin to foster new ideas and take advantage of the once-in-a-generation chance to remake the state as an engine of economic opportunity,” Governor Murphy said of the project.
“I think the governor recognized that if we are going to be competitive with Massachusetts and the like, [innovative partnerships] need to be one of the feature focal points of the economy,” Hughes says.
“I get the sense that there is recognition from this administration that future growth requires positioning of the economy,” Naroff adds. “It seems to recognize that there are issues out there that we are either well suited to take advantage of or not, and we need to position ourselves to deal with the way the world is changing.”
Presenting the 46th Annual Top 100 Employers Listing
Throughout the month of June, New Jersey Business contacted and researched more than 100 target companies throughout the state (non-profit higher education institutions, non-profit hospitals and government entities are excluded) in an effort to compile information that includes 2018 employment figures (New Jersey and companywide) as well as financial (if applicable) and executive information. The 2018 New Jersey employee numbers were then compared to the previous year’s numbers, both individually and in the aggregate. One must keep in mind, however, that these numbers are only a small sample of the state’s employers and they may not necessarily reflect the overall landscape of the economy and its job losses or gains, among other factors.
From the data received from employers as well as New Jersey Business estimates, 39 percent of the employers in the Top 100 showed an increase in employment in 2018, which equaled the 39 percent that had an increase in 2017. Thirty-six percent of the companies displayed a decline in employment in New Jersey, compared to 29 percent in 2017. Also, 23 percent of the companies in the Top 100 went virtually unchanged from 2017. Due to new companies making their way into the listing, comparative data is not available for 2 percent of employers.
In 2018, the total number of New Jersey-based workers who were employed by companies in the Top 100 was 518,087 compared to 511,007 that were in the Top 100 the previous year. This shows a +7,080 difference in employees and a nearly 1.4 percent increase.
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