The state’s economy is in decent shape, but old problems persist. Is anyone willing to have an honest debate about how to solve them?
Jeffrey Kanige//February 25, 2019//
The state’s economy is in decent shape, but old problems persist. Is anyone willing to have an honest debate about how to solve them?
Jeffrey Kanige//February 25, 2019//
Even Gov. Phil Murphy’s most vocal opponents would acknowledge that he has succeeded on several fronts in his quest to make the state’s economy more equitable. The $15 minimum wage and expanded family leave go a long way to achieving that goal. Murphy’s critics can now rightly ask whether the governor will exhibit the same enthusiasm for making the state’s economy more robust. In other words, will Murphy pursue policies to stimulate economic growth now that he has mitigated some of the harshest effects of late capitalism in New Jersey?
The question is fair. Workers have been tended to. What about businesses? What’s in the “fairness economy” for them? Republicans in Trenton, rare though they may be now, are the most likely allies for the business community, and Assemblywoman BettyLou DeCroce, R-26th District, has taken up the cause. Unfortunately, her most recent rhetorical effort suggests that she’s not up to the job. Like many lawmakers and bureaucrats throughout the state’s modern history, DeCroce seems to believe that merely listing the problems she sees as economically crippling is sufficient to bring about fundamental changes. She seems unwilling to wrestle with the hard choices necessary to effect those changes.
In a recent guest column for InsiderNJ.com, DeCroce — who runs a real estate business — likens the state economy to a house “in need of significant structural repairs.” Murphy, she writes, is New Jersey’s chief realtor whose sales pitch is that the economy just needs a new coat of paint. But in fact, she asserts, “The reality is the state’s economic house needs a lot more than cosmetic makeovers.”
Let’s stop here for a moment and take stock of the ramshackle edifice DeCroce is describing. According to the Bureau of Labor Statistics, the unemployment rate in New Jersey for December 2018, the latest month for which numbers are available, was 4.0 percent — in line with the national rate and that of neighboring New York and lower than Pennsylvania. New Jersey’s gross domestic product grew by 3.4 percent in the second quarter of 2018, the latest period for which data are available from the Bureau of Economic Analysis. That expansion was better than in New York and just slightly below Pennsylvania.
But let’s also compare New Jersey’s numbers to that of North Carolina, a state DeCroce holds out as a model of business-friendliness. North Carolina’s unemployment rate was 3.6 percent, a tad better than the Garden State’s. But the two states’ GDP growth was the same.
Maybe New Jersey does need more than a coat of paint, but the bones are solid.
So what, in DeCroce’s mind, makes New Jersey such a hellhole for business? Her litany of woes will be familiar to anyone who has followed the issue: high costs, onerous regulations and outsized obligations:
To the nation’s business community, the state is an economic eyesore. New Jersey routinely places at or near the bottom in almost every economic analysis of American states. It has the worst business climate in the country; it has among the highest business and personal taxes; it’s overregulated; its electric utility rates are high and it has one the highest debt loads in the country. And its high property taxes are making home ownership unaffordable for middle-class workers.
Leave aside for the moment the lack of citations here. DeCroce is arguing that New Jersey is a terrible place to do business. What company would ever want to relocate here?
How about Teva Pharmaceuticals? The Israel-based drug giant is moving its U.S. headquarters to Parsippany. And Teva is not alone. New office leasing was 13.2 percent higher in 2018 than in 2017, according to commercial real estate services provider Cushman & Wakefield. The firm also said industrial vacancies hit a record low and net absorption reached an all-time high. In a statement accompanying the release of Cushman & Wakefield’s findings, New Jersey Market Leader Andrew Judd called the period from 2016 to 2018 “one of the most robust stretches for leasing in recent history.”
Those numbers are actually pretty easy on the eye.
DeCroce also faults Murphy’s failed effort to convince Amazon.com Inc. to locate its second headquarters in Newark. “Our Wall Street governor says he is pursuing well-paying high-tech jobs, but he gleefully settles for low-paying, low-skill jobs,” DeCroce writes. “While other states are getting Amazon’s six-figure jobs, New Jersey gets Amazon’s warehouse jobs such as the one opening in Edison, which is staffed by 50 robots and many disgruntled human workers currently making less than $15 an hour.”
But she also calls the state’s Amazon incentive package “outrageous” and fumes that no one knows what’s in it. By the way, those warehouse workers in Edison making less than $15 an hour? DeCroce doesn’t think they deserve a raise.
Still, DeCroce insists that Gov. Murphy has it all wrong. What does she propose as potential solutions? The government must “take the actions necessary to energize the economy: cut spending and regulation, lower taxes and make the state affordable for the middle class.”
And herein lies the problem with all such screeds. Where, exactly, would DeCroce cut spending? How would those cuts affect the provision of services New Jerseyans rely upon? Which regulations would she eliminate? And at what cost to the environment and residents’ health and safety? By how much should taxes be reduced? And how would she balance the budget? More generally, who should bear the brunt of what she admits would be “painful steps”? DeCroce doesn’t say.
These questions are undoubtedly difficult. After all, they have remained unanswered for decades.
No one would deny that New Jersey relies too heavily on property taxes. This reliance distorts the economy by forcing businesses, homeowners and elected officials at all levels to make decisions based more on the tax consequences of any particular course of action than on what’s best for employees, families or constituents.
There’s a constructive debate to be had around that issue and how best to solve it and the myriad other economic and financial difficulties facing the state. We should have that debate. And if we do, fairness dictates that the participants remain grounded in reality and argue in good faith.