New Jersey's Growth Challenges

A must read piece from the Edward J. Bloustein School of Planning and Public Policy:

New Jersey’s New Economy Growth Challenges (PDF)
By James W. Hughes and Joseph J. Seneca

New Jersey now faces its most uncertain economic future since the Great Depression. Previous economic challenges that arose in the post–World War II period seemingly resolved themselves with minimal public policy direction, and prosperity ultimately reigned in every case. But there have been recent warning signs of a potential gathering economic storm. This is raising formidable challenges that until now have been obscured by the sheer momentum of the state’s affluence. This time, the economy may no longer be able to fully self-adapt successfully, as it has in the past, because the state now faces unprecedented competition for high-quality economic growth. This new reality must stand front and center on the public policy agenda.
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However, recent years have seen signs of an erosion of New Jersey’s once-unique advanced economic assets. There have also been subtle but significant shifts in the state’s employment growth patterns signaling that the positive advances of the past two decades are beginning to retreat.

Key parts of the core economy—including the state’s unique concentrations of technology-based economic specializations—have not only stopped growing in the 2000s but, in a number of important areas, have started to contract.

Consequently, in the 2000–2005 period, the state lost 117,600 high-paying advanced services and manufacturing jobs. The private service-providing job growth sectors in the 2000–2005 period were in he below-average-paying sectors of education and health services (+60,800 jobs), leisure and hospitality (+35,900 jobs), and other services (+16,500 jobs). Employment growth in these three low-paying sectors totaled 113,200 jobs.
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In 1990, New Jersey accounted for 5.2 percent of the nation’s total high-technology employment base, reflecting a significant concentration in the state. But, by 2005, the state’s share had dropped to 4.0 percent. While this still represents an above average share, the scale of erosion is quite substantial. And it has affected every single high technology sector.

Pharmaceuticals are representative of this pattern. In 1990, New Jersey had 20.2 percent of the nation’s total pharmaceutical jobs, slightly more than one out of five. By 2005, the state’s share had declined to 13.7 percent. In 2004, California overtook New Jersey as the state with the most pharmaceutical jobs. For perspective, in 1990, California had only half the number of pharma jobs as New Jersey.
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However, disturbing but clear evidence is mounting that the state’s competitive position in these sectors has eroded. New Jersey needs to pay sustained attention to its economic development policies and its business environment to recapture its former comparative advantages. No less than the future economic well-being of the state is at stake.