New Jersey...and how it got that way: May

Posted December 19, 2007 by Brett Avery

Situation: The state’s population growth is leveling off at a time when it needs a robust, expanding economy to deal with its fiscal woes.

Cause: For several years, New Jersey bucked the Northeast trend of meager-to-zero population growth at a time when the South and West were making sizable gains. But the state’s consistent gains all but disappeared after September 11, 2001.

According to the U.S. Census Bureau, New Jersey ranked eighth in population in 1950 and had six of the country’s 100 largest urban areas. During the next two decades it grew another 50 percent, approaching 7.2 million residents. But in subsequent years it has increased only 21 percent—and a paltry 3.6 percent since 2000 (8.72 million total). In the past six years alone, the state dropped from ninth to eleventh in population rank and now has only two top-100 urban areas (Newark, 63rd, and Jersey City, 72nd). Demographics point to heavy population losses at the high end of the economic scale since September 11, 2001, while foreign immigration accounts for 92 percent of that 3.6 percent increase since 2000. The state will likely drop to twelve seats in the House of Representatives in the 2010 reapportionment—it had fifteen as recently as 1970. That will further erode its status and power at a time when it pins its economic hopes on technology and white-collar industries.

If you think that sounds bleak: Census projections have New Jersey ranking thirteenth by 2030, but that would mean reaching a population of 9.8 million at a growth rate of 12.3 percent in the next 23 years.

How to fix:

1. Think cost of living. The weather’s not the sole reason tens of thousands of residents have bolted from New Jersey in recent years (see chart). The fact that Pennsylvania and Delaware consistently siphon population as two of the top outflow destinations speaks to the reality of New Jersey’s exorbitant costs. The state borders three of Pennsylvania’s six fastest-growing counties since 2000 (Pike and Monroe are first and second respectively, and Northampton is sixth).

New Jersey needs to get its state and local debt, property taxes, and other fiscal woes under control or it will be increasingly difficult to attract—or keep—residents. That’s especially true of those who work in the state or grew up and have family here, but who reside across the border, and even more so of those on the upper economic rungs who can telecommute from remote locations. The fewer people who live here, the bigger the tax bite for those who remain to service all that outstanding debt, let alone cover annual state and local spending.

2. Think like a collegian. In the unending tide of “best places to live” rankings, the advantages of college towns are often touted as attributes of the most desirable destinations: educational opportunities, improved health care, and athletic and artistic opportunities.

New Jersey has grown one of those places in the past few decades: New Brunswick, home of Rutgers University. It can grow dozens of others, even if they don’t have campuses in their backyards. The young and innovative workers who can bolster the state’s high-tech industries are unimpressed by an endless array of bedroom communities.

Municipalities can thrive in the coming decades by following the example of “best places” communities and reconfiguring themselves as well-rounded downtowns. Pedestrian malls filled with shops and restaurants; lofts and apartments in the core blocks; pocket parks and open spaces; safe streets and even free wireless Internet access can become selling points as important as high-quality public schools—maybe more so.

3. Think green. Energy will become an even more important issue in the coming years, and states in the vanguard of renewable energy can become centers for innovation and production. New Jersey offers rebates and tax exemptions on alternative-fuel and zero-emission vehicles, as well as incentives and rebates for renewable energy production. The state can address several needs by aggressively advocating renewable sources such as solar panels for supermarkets (notoriously large energy users), schools, residences, and office buildings. It can help reduce energy costs for beleaguered residents, improve the environment, and erase its reputation as a landscape of smokestacks and oil refineries. That kind of vibe can draw the attention of potential residents who just might overlook the weather.

The new paradigm for growth

A host of problems emerge when population growth slows  to a crawl. In New Jersey’s case, the underlying causes of the slowdown, bring an entirely different set of concerns-—and require a new way of looking at how the state needs to operate.

1 New Jersey’s population kept pace with U.S. growth until the early 1980s. Even when it slowed down, state and local budgets soared and debt skyrocketed above $100 billion. Consequently, each taxpayer bore a progressively larger financial burden. Population growth slowed enough to drop the state out of the top 10 ranking in state population, which meant less power in the House of Representatives as its delegation went from a peak of fifteen in the 1970s to today’s thirteen (and likely twelve in 2010).

2 New Jersey’s slowdown occurred in the early 1980s, as foreign immigration surged in the United States. The state’s rich heritage includes Ellis Island, through which more than 40 percent of the nation’s population can trace its roots. But even though the image of a nation of immigrants did not hold true for much of the twentieth century, when the foreign-born population shrank as a percentage of the whole, New Jersey remained one of the top six states for immigrants.

3 Three factors contribute to population growth: natural growth (births minus deaths) and two types of migration, internal (state-to-state) migration and foreign immigration. According to the U.S. Census Bureau, from 2000 to 2006 the state experienced a net increase of 310,213 residents to an estimated 8.72 million. How New Jersey achieved that growth is surprising.

Census estimates show a net natural growth of 254,766, below the U.S. average by more than 8,700 births each year.

Internal migration has been a continual drain out of the state for decades, but New Jersey used to have the Northeast’s best retention rate. That changed in the last few years as the exodus to other states increased, leading to a net loss of 277,900 from 2000 to 2006. Most people think of the U.S. as a mobile society but the opposite is true: less than 14 percent of U.S. residents moved in 2004 and only about 3 percent of the entire population changed states. Once again, New Jersey is on the wrong side of the average.

The most popular destination is income tax-free Florida. According to the Internal Revenue Service, which tracks state-to-state moves, 115,000 New Jersey tax filers and their dependents fled to Florida since 2000.

Pennsylvania, which gained 34,000 New Jerseyans, ranks second, which also speaks to the high cost of living here. On a state-to-state migration basis, New Jersey does have one saving grace: a steady inflow from New York (147,000) from 2000 to 2006. That said, New York’s fastest-growing county (Orange) also borders New Jersey.

The state’s population would be flat without foreign immigration, both documented and undocumented, and its net gain of 357,111. Only four other states had immigration numbers top their net growth: New York (491,000), Massachusetts (112,067), Rhode Island (3,795), and Louisiana (9,997).

People from across the economic spectrum migrate from state to state, but there are signs that a hefty proportion of people leaving New Jersey belong to the middle and upper classes. Foreign immigration, however, typically brings in people at low economic levels. The resulting net growth means a reduced number of residents who are sufficiently educated and affluent to pay those rising state and local costs.

The state is struggling to assimilate immigrants when traditional occupations for new arrivals, such as manufacturing jobs, are greatly reduced. Some municipalities embrace the vibrancy immigrants bring to the community by setting up hiring sites where workers can meet employers.

Others move aggressively to prevent day workers from clustering. That hinders an immigrant¹s ability to find work and, if employers abide by the law, can prevent their paying much-needed tax dollars.

If society doesn¹t welcome its growing immigrant population, established residents will be left to subsidize immigrants¹ standard of living by paying for uninsured hospital visits, school costs for English-language instruction, and anti-poverty assistance. In New Jersey¹s case, federal laws limiting immigration are no help: the total population could begin decreasing, especially if even greater numbers of residents decide to leave, introducing another set of vexing problems a financially compromised state may not be able to handle.

For more stories about: population growth, U.S Census Bureau, internal migration, immigration, immigrants, Ellis Island