Summer Reading 2015: NJ’s Well-Positioned for Success in 21st Century

NJ Spotlight | August 20, 2015 | 2015 Summer Reading
Two Rutgers experts predict the Garden State will thrive in ‘knowledge-dependent’ economy

summer 2015 hughes and seneca
The names James W. Hughes and Joseph J. Seneca will be familiar to anyone who follows New Jersey economics and public policy. Hughes is professor and dean at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. Seneca is Distinguished University Professor of Economics at Rutgers and chair of the New Jersey Council of Economic Advisors. For nearly three decades, Hughes and Seneca have been delivering the Rutgers Regional Report, a look at demographics, the business sector, housing markets, and other economic indicators and trends in the Garden State.

In “New Jersey’s Post Suburban Economy,” released by Rutgers University Press last September, Hughes and Seneca build on their regional reports and historical knowledge to bring context and perspective to recent changes in New Jersey’s economic climate. In the following excerpt from the book’s introduction, the authors examine shifts in New Jersey’s economy since 1960.

In an economy as dynamic and diverse as that of New Jersey, the only constant is change. In 1940, there were 1.3 million jobs in the state. By 2000, total employment had more than tripled to nearly four million jobs, but these were jobs of a much different nature. An ever-expanding and evolving economy and sustained decade-by-decade job growth characterized the sixty-year period.

But post-2000, a new dimension of change introduced itself. Unfortunately, it was negative change. By 2013, thirteen years later, total employment in the state had declined to 3.9 million jobs. The dynamics that had shaped the post–World War II twentieth-century economy of New Jersey underwent fundamental changes as the twenty-first century advanced.

Compositional Shifts

Change takes place not only in size but also in function and structure. A precolonial agrarian economy in New Jersey was ultimately supplanted by an urban-industrial goods-producing economy by the late nineteenth century, which, in turn, was replaced by a suburban postindustrial service economy by the late twentieth century. A goods-producing state was completely transformed to a service-providing state.
New Jersey was once primarily concerned with making things. Now it is primarily concerned with selling things and servicing things and people. One metric of this transformation is the balance between goods producers and service providers:

  • In 1943, the state’s economy had two goods producers for every single service provider.
  • By 1962, there was one goods producer for every single service provider.
  • By 1982, there was one goods producer for every two service providers.
  • By 2013, there was one goods producer for nearly eight service providers.
  • This dramatic shift was due not only to the rapid growth of services but also to a virtual hemorrhage of manufacturing activity; almost three-quarters of the state’s peak number of manufacturing jobs in 1969 had disappeared by 2013. A second set of metrics gauges the specific manufacturing–trade relationship:

  • In 1943, the state’s economy had 4.5 jobs in manufacturing compared with one job in trade (wholesale and retail).
  • By 1963, there were two manufacturing jobs compared with one job in trade.
  • By 1983, there was one manufacturing job compared with one job in trade.
  • By 2013, there was one job in manufacturing compared with nearly three in trade.
  • Production had fully yielded to consumption — and to services, including advanced, highly sophisticated services. As a result of compositional changes during the last three decades, New Jersey now stands as a leading-edge exemplar of America’s knowledge-dependent economy. Within the vast portfolio of services, the state currently has unique concentrations of employment in the following advanced sectors:

  • Logistics and Distribution (technically wholesale trade, transportation, and warehousing)
  • Telecommunications (a subset of the broader information sector)
  • Financial Activities
  • Professional and Business Services (encompasses a diverse range of services)
  • Corporate Headquarters (technically management of companies and enterprises)
  • These potent concentrations are the key locomotives of the state’s twenty-first-century economy.


    The emergence of the new economy brought with it substantial income gains to New Jersey. In the 1980s, the state’s per capita personal income was 16 percent higher than that of the nation. By 1990, it had surged to 26 percent higher; it increased further to 28 percent higher by 2000. But it then slipped to 26 percent higher by 2012. Nonetheless, this income advantage is indicative of the high productivity and quality of the state’s employment base.

    However, lack of employment growth in New Jersey post-2000 has resulted in an erosion in the state’s strong share of the total personal income of the United States. New Jersey accounts for 2.8 percent of the nation’s population. Other things being equal, that should be the guide as to the state’s expected share of the nation’s personal income. But in 2000, the state accounted for 3.8 percent, indicating a strong income concentration tied to New Jersey’s much higher per capita income. Between 2000 and 2012, the state’s income share slipped to 3.6 percent. Despite declining in relative income advantage and in share, New Jersey is still well positioned on these key economic metrics.

    Buy the book.