Recovering Our Manufacturing Output

In Action on Manufacturing

By Nicole M. Sandelier, NJBIA Policy Analyst On Oct 4, 2018

Despite experiencing a dip in overall economic output since the Great Recession, New Jersey’s manufacturing industry continues to be a dynamic contributor to the state’s economy, driving exports and paying wages that are significantly above average. 

While the industry has experienced an increase in economic output since 2014, New Jersey has yet to regain its pre-recession rates. The lack of full recovery signals that there could be increased trouble for the manufacturing industry ahead if proper attention and support is not given to this critical New Jersey industry.

Contributions to the economy. According to the National Association of Manufacturers, about 7,100 manufacturers call New Jersey home, and they employ 240,500 people. These businesses pay an average salary of $92,046, compared to a statewide average of $54,195.

Overall, the New Jersey manufacturing industry contributed nearly $46 billion (or 8 percent) to the state’s economic output in 2016. Manufacturers also contributed nearly $28 billion in exports, totaling 89 percent of the total share of goods exported from the state. Furthermore, the industry employed nearly 6 percent of the state’s workforce.

Regional competition. In terms of GDP, New Jersey is the fourth largest manufacturing state in the region, behind Pennsylvania, New York and Massachusetts. 

However, most states in the region experienced an overall increase in GDP since 2000, while New Jersey’s has decreased. Delaware is the only other state within the region whose GDP is lower today than it was in 2000. 

Pennsylvania, New York, Massachusetts, Connecticut and Maryland all added billions of dollars to their manufacturing GDP. In fact, New Jersey’s manufacturing sector began the century with the third largest GDP in the region, but slowly fell behind Massachusetts. 

Affordability and competitiveness. While other regional competitors have experienced a substantial increase in manufacturing GDP, one can’t help but ask “Why not New Jersey?” It is no secret that New Jersey struggles to maintain a competitive regional business climate. The disadvantages that come with the high cost of doing business, overregulation and tax environment prevent businesses from enjoying the full benefits of our location, access to markets, and highly educated workforce.

Competitors in Pennsylvania benefit from a lower income tax rate, while corporations in New York have a lower corporate tax rate. And of course, all regional states have lower per capita property tax rates. 

If New Jersey manufacturing is going to exceed pre-recession output rates, the state needs to adopt sound public policies that bend the cost curve downward – namely, fewer workplace mandates and lower taxes – while maintaining what New Jersey does well, such as workforce development.

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