The New Jersey Business and Industry Association unveiled 12 metrics the state would need to excel in if it were to become the so-called “State of Innovation,” as outlined in Gov. Phil Murphy’s October economic outline.
The NJBIA, in its Indicators of Innovation study released Friday, compiled an “innovation score,” taking into account 12 factors broken into three areas: capital, talent and business.
Overall, New Jersey marked a score of 41 in the study, which looked at what it saw as a business-friendly environment in each state.
In the Northeast, New Jersey ranked ahead of Delaware with a score of 34, and Connecticut with a score of 33. In first place was New York with a score of 71, followed by Massachusetts with a score of 63, Pennsylvania with a score of 49 and Maryland with a score of 46.
“New Jersey’s path to regaining its stature as the ‘Innovation State’ cannot be forged without fixing what is structurally broken to address affordability in our great state,” NJBIA President and CEO Michele Siekerka said.
“Those structural deficiencies,” Siekerka said, “are the pension and health care obligations; the strained condition of New Jersey Transit and infrastructure in general; and taxes.”
“As [Murphy] noted when he delivered his laudable plan, New Jersey has great advantages with its proximity between New York City and Philadelphia and its highly educated workforce,” Siekerka said. “But overall, our tax structure, business climate and lack of affordability all strike hard at our competitiveness,” she added.
As for New Jersey’s economic incentives, which have come under intense scrutiny and criticism following a scathing audit from the state comptroller earlier this week, Siekerka said that had no bearing on the state’s innovation score.
“We believe tax incentives are part of a robust economic development package and we need to have competitive tax credits and opportunity and incentives for businesses,” Siekerka said. “That said, we believe 100 percent in transparency and accountability, so when everybody sits down to say ‘what’s the next wave of these programs’, we’re going to be at the table.”
The Economic Development Authority had little oversight and accountability over $11 billion of tax credits it awarded between 2005 and 2017, making it difficult for the agency to determine if companies actually delivered on their promised jobs and economic activity, according to the Wednesday audit.
According to the NJBIA’s Friday report, capital included venture capital investment; federal dollars to small businesses; and state dollars to research and development.
The state received $781 million of venture capital investment in 2017, while New York received the most at $12.3 billion.
In 2017, New Jersey received $157 million from the National Science Foundation College/University program – New York received $466 million.
The talent section included the number of colleges and universities ranked in the top 100 of 2018’s U.S. News & World Report rankings, the net migration of college students out of state, the percentage of residents with a graduate or professional degree, and the rate of entrepreneurs.
New Jersey saw 28,490 students leave New Jersey for higher education in 2017, compared to 16,802 students who sought higher education opportunities in Pennsylvania.
That same year, 15.6 percent of the New Jersey population had a graduate or professional degree, compared to 19.5 percent of New York residents.
Lastly, the business section included the number of U.S. patents awarded to people in New Jersey, the density of startups in the state, the percentage increase of total business year over year in the state, and the “business-friendly” environment of the state – also known as the “regional business climate.”
The federal government awarded 8,603 patents to New Jersey inventors in 2017, Massachusetts saw the most with 15,144 patents awarded that same year.
“NJBIA’s report underscores what we already know. High taxes make New Jersey less affordable and our investments in higher education and research and development lags behind comparable states in the region,” Senate President Stephen Sweeney, D-3rd District, said in a statement in response to the report. “We have a responsibility to the people of New Jersey to make our state more affordable, to lower the tax burden on our families and to invest in the next generation of innovators through education and technology.”
Sweeney continued: “We can’t make the investments we need, however, until we address the long-term fiscal crisis, specifically the high pension and benefit costs that crowd out critical investment.”