New Jersey loses a portion of its senior population every year to less-expensive — and less snowy — states like Florida and North Carolina. But a new study of outmigration trends issued by the New Jersey Business & Industry Association raises new alarms about the number of so-called millennials who have also been leaving the state.
Of all the age groups in New Jersey that experienced a net loss in population from 2007 to 2014, the highest rate was among people between the ages of 18 and 34, according to the business-lobbying organization.
That brain drain hurts the overall New Jersey economy and makes it harder for the state to attract the type of companies that rely on young, skilled workers, the association said.
The new data on millennials leaving New Jersey was included in NJBIA’s broader outmigration study, which concluded that the state had a net loss of 682,062 residents between 2005 and 2014. And from 2004 to 2013, New Jersey lost $18 billion in net adjusted gross income, the NJBIA said.
The organization blamed New Jersey’s high taxes and overregulation for that loss of wealth and residents, and it offered a list of recommendations that ranged from tax reform to better workforce development and making higher education more affordable as remedies.
“The good news is there are some steps that we can take,” said NJBIA President Michele Siekerka while going over the results of the organization’s report in Trenton late last week.
But a liberal think tank cautioned against making drastic changes to New Jersey’s tax policies based on NJBIA’s new data, suggesting the net loss of residents broken down by individual years amounts to just a fraction of the state’s overall population of 9 million.
State Senate President Stephen Sweeney (G-Gloucester) also weighed in, saying lawmakers are already pursuing some of the tax reforms recommended by NJBIA, while also stressing it will take more cooperation from Gov. Chris Christie, a second-term Republican, to enact the investment in higher education that will be needed to retain millennials.
In all, NJBIA reported a net loss of 57,566 residents between the ages of 18 and 34 between 2007 and 2014. High tuition costs and other expenses, including housing and car insurance, were all blamed by NJBIA as reasons for that high number of departures among millennials over the 2007-2014 timeframe.
Joel Naroff, the organization’s chief economic advisor, said the loss of millennials has an impact on the broader state economy because companies are looking to add millennials to their workforce.
“It’s going to be tough to sustain, maintain, and attract the kind of businesses that want to hire them,” he said.
And Siekerka noted that her own millennial-age daughter is settling in Philadelphia instead of staying in New Jersey.
“Cost of living is something we have to take a look at,” she said.
In addition to studying millennials, the NJBIA also looked at the exodus of seniors from 2005 to 2014. The group found Pennsylvania and New York were the top two destinations for departing New Jersey seniors, followed by the warm-weather states of Florida, North Carolina, and South Carolina.
Siekerka said the new data “underscores New Jersey needs to stay competitive with its neighbors and those other states vying for our residents and businesses.”
Pennsylvania has a lower income tax rate than New Jersey, while New York has higher exemptions for estates and retirement income like pensions and annuities, the report noted.
Christie, during his State of the State address last month, called for a repeal of New Jersey’s estate tax, which is one of the specific tax reforms proposed in the NJBIA’s report. The group also called for reform of the taxes the state levies on inheritances; New Jersey is one of only two states to tax both estates and inheritances — and retirement incomes.
Christie, meanwhile, has also repeatedly raised the issue of “tax fairness, suggesting a tax like the estate tax should be cut as Democratic lawmakers continue to press him to increase the gas tax to renew the state’s Transportation Trust Fund, which is on course to run out of money by the end of June.
He’s due to present a new state budget to lawmakers this afternoon, and it could include some new clues on what he plans to do about the transportation fund and the estate tax in the next fiscal year.
But Sweeney, the Senate leader, said lawmakers have already introduced bills that would phase out the estate tax and eventually put New Jersey’s retirement income-tax exemptions on par with New York’s.
“The reality is the tax policy has to change because it really does hurt,” Sweeney said yesterday while speaking to reporters in the State House about the state’s biggest budget issues.
He also called on Christie to heed the NJBIA’s recommendation for more attention on higher education and college-affordability issues, something Sweeney’s caucus tried to highlight during a series of roundtables held last year.
“This is another area where I’m hoping the governor starts to focus on,” Sweeney said.
And a response to the NJBIA’s findings, New Jersey Policy Perspective, a liberal think tank based in Trenton, said there was no concrete evidence in the report that showed outmigration is occurring specifically in response to tax policies like the estate tax.
In fact, citing data from 2012 to 2013, the think tank said roughly 94 percent of those who left New Jersey had incomes below $200,000, suggesting they were unlikely to be subject to the state’s estate tax threshold of $675,000.
“We should design policy solutions that help New Jersey hold on to these people, if they want to stay — but cutting taxes for those at the very top isn’t the solution,” the think tank said. “In fact, it would only compound the problem.”