New Jersey's Economy

Shift in the Employment Environment
The total number of jobs in New Jersey dropped about 6% from 1989 to 1992 and began to increase in the last few years. At the end of 1995 the total job count had rebounded to its 1987-88 level, but there has been a significant shift in the sectors which provide those jobs. The "Goods Producing" sectors, like construction and manufacturing, have been declining over the past decade with over 200,000 jobs lost between 1986 and 1995. The "Service Producing" sectors, like retail sales and health services, have added over 300,000 jobs. Also, various agencies of Federal, State, and local government have added over 30,000 jobs.

The shift from manufacturing to service jobs is of concern because the manufacturing sector has traditionally provided high-paying jobs to people with high school educations and trade skills. Today there are far fewer of these jobs than there were ten years ago. New Jersey's largest employers, the chemical, electronics, and food manufacturing industries, have lost a combined total of over 65,000 jobs over the past decade; the electronics industry alone has lost over 40,000 jobs.

Decline in the Number of High-Paying Jobs

On the surface, a shift of jobs from manufacturing to service does not seem to be a big problem, especially since there are more jobs all together. However, the impact of the decline in the number of manufacturing jobs comes into focus when it is viewed against the backdrop of a family's monetary needs. The NJFPC estimates that a typical family with one or two children needs to earn at least $36,000 per year in order to live comfortably in New Jersey.

To see the effect of the changing New Jersey employment environment on the family, we need to take a close look at what has happened to jobs which pay at least $36,000 per year - enough to support our typical family. The picture is not pretty: over the past decade, the number of jobs which pay at least $36,000 per year in 1994 dollars has declined by almost 180,000. Over 85% of this decline is in the manufacturing sector.

		Average Annual Salary (in 1994)	Change in Jobs Over Past Decade
	Goods Producing Sectors :
	Mining	$42,794	1,000 jobs lost
	Construction	$36,954	29,400 jobs lost
	Non-Durable Manufacturing	$41,852	66,500 jobs lost
	Durable Manufacturing	$38,843	123,000 jobs lost
Total Goods Producing Sectors		---------->>>	219,000 jobs lost
	Service Producing Sectors :
	Communication & Utilities	$55,725	2,800 jobs added
	Wholesale Trade	$42,000	8,900 jobs added
	Insurance Carriers	$45,918	3,300 jobs added
	Insurance Agents	$42,682	4,100 jobs added
	Legal Services	$45,102	7,500 jobs added
	Engineering Services	$50,566	14,000 jobs added
Total Service Producing Sectors		---------->>>	40,600 jobs added
Net Total of All Jobs Paying Over $36,000 Annual Salary		---------->>>	179,000 jobs lost

Increased Job Competition

While the number of jobs paying over $36,000 per year have declined over the past decade, the population of New Jersey has increased by more than 375,000 people. According to the US Census Bureau, the population of New Jersey grew from 7,566,000 in 1985 to 7,945,000 in 1995. The New Jersey Department of Labor estimates that this 1995 population represents 2,861,238 households, with about 2,194,704 householders who are under 65 years old. The heads of these 2,194,704 households are competing for 988,900 jobs which pay enough to support their families.

The Parents Are Not At Home

The decrease in the number of high-paying jobs is having a devastating impact on New Jersey and across the Nation. The Bureau of Justice Statistics estimates that both spouses work full-time in over 40% of US households with children under 18. Another 15% of the children under 18 live with a single working parent. All told, almost 60% of the children in our nation are without full-time parental supervision. 

The NJFPC Viewpoint

Excessive taxation by Federal, State, and local government is a direct cause of the high number of unsupervised children in our society today due to parents' need to provide sufficient income. A $550 per month total tax bill is paid by the typical head of household making $36,000 per year. Most of these taxes are collected by the Federal government with income tax at more than $325 per month (based on 1995 Form 1040 tax tables). Local property tax comes in second at more than $150 per month for the typical homeowner (assuming a 1% of assessed value property tax). State income tax, at about $50 per month (based on 1995 Form NJ-1040), is running right up there with the utility bills. None of these numbers include sales taxes.

Income, property, and sales taxes are not the only problems. Unlike a service enterprise, a manufacturing enterprise requires a manufacturing facility. To build or expand a manufacturing facilty, a corporation must make a large capital investment, secure permits, perform government-requested studies, etc., so it is not surprising to find that the decline in manufacturing employment in New Jersey over the past decade is a concomitant of the highest capital gains taxes in recent history, excessive regulation, and the other spiraling costs of doing business in New Jersey.

Bill Bradley, former US Senator from New Jersey, once said,

"Our income tax system is overly complex. It distorts investment decisions and encourages people to put money into schemes to reduce their tax bills instead of into enterprises to create jobs and help our economy grow."

Mr. Bradley made this statement in 1984, but between 1986 and 1996, when he resigned his Senate seat, capital gains tax doubled for a typical taxpayer (from approximately 14% in 1986 to 28% in 1996) and overall tax burdens were raised to all-time highs.

While our legislators are able to articulate the problem, they seem unable to control the government's appetite. Federal, state, and local government have created about 570,000 jobs in New Jersey, at taxpayer expense, while private corporations have created the other 3,000,000 jobs in spite of the tax and regulation burden imposed by the various levels of government. From an overall economic perspective, today's record levels of property tax and personal income tax are requiring New Jersey citizens to find higher-paying jobs, or multiple jobs, to make ends meet, while capital gains tax, corporate income tax, burdensome regulations, and mounds of paperwork imposed by government, are contributing to the reduction in the number of high-paying jobs available in New Jersey.