From the Home News Tribune:
State’s high taxes, debt contribute to hard times
Despite the recent downturn in financial markets and mounting concerns about the health of this country’s home mortgage and housing industries, the national economy has expanded at a fairly rapid clip for the last five years. Not so in New Jersey, unfortunately.
Fresh evidence of negligible job and income growth for the Garden State showed up last week in reports that New Jersey workers are no longer No. 1 in the nation when it come to the amount of money they earn — Maryland now claims the top spot — and in the news that the state’s unemployment rate had climbed from 4.3 percent to 4.6 percent.
Additionally, the Federal Reserve Bank of Philadelphia forecast that New Jersey’s economy is only expected to grow at a meager 0.7 percent pace through next March, the lowest rate in five years, and the worrisome news doesn’t end there.
A drop in permits for new buildings indicates a further slowdown in new construction, while the number of people living below the poverty level in New Jersey — while roughly equal to the national average — doesn’t take into account that New Jersey’s high cost of living, which is tops in the nation, means that those poorest of families must stretch their dollars more than residents of any other state.
Although these economic indicators for New Jersey are particularly dismal this year, they aren’t of great surprise, historically speaking; state economic performance has lagged well behind the nation’s throughout the most recent five-year period of growth.
…
The average property-tax bill in New Jersey topped more than $6,300 last year, a 7 percent hike over what were already the nation’s highest property taxes.This year, New Jersey was ranked the 48th worst tax climate for business among all 50 states by the Tax Foundation, a nonpartisan tax-research group based in Washington, D.C. Only Ohio and Rhode Island fared worse.
New Jersey’s state and local tax burden on individuals ranks 10th worst nationally, also according to the Tax Foundation.
New Jersey’s state budget was $21.5 billion in 2000. New Jersey’s state budget for the current fiscal year is $34 billion, an astonishing $12.5 billion increase, or a jump of more than 50 percent, in seven short years.
Parallel to direct state spending, New Jersey’s per capita debt as a result of government borrowing has soared. Today, every man, woman and child would have to pay $8,361 to retire the state’s debt, compared to $2,030 at the beginning of the decade.
The effect of government spending and taxes on economic performance isn’t to be taken lightly. High-tax strategies drive away industry, jobs and individuals, crimping innovation and expansion. This state’s government has its work cut out for it to restore balance to its tax policies, lest New Jersey suffer a further erosion of its position in the world of commerce in the coming years.
From MarketWatch:
IKB may lose nearly $1 billion on subprime
IKB Deutsche Industriebank, the troubled German lender that needed a bailout from a government-backed investor, said on Monday it may lose up to 700 million euros ($956 million) this year after making investments in U.S. debt securities tied to the subprime crisis.
IKB, which previously warned about the impact of investing in U.S. subprime mortgages through an off-balance sheet vehicle, said it expects losses of between 600 million and 700 million euros during the fiscal year.
Wall Street hiring machine goes idle
After years of buildup, employment levels flatten and cuts loom
http://www.marketwatch.com/news/story/wall-street-hiring-machine-goes/story.aspx?guid=%7B019FFB06%2DE822%2D4EA0%2D9BE8%2DB48B97F54FA6%7D
“Substantial losses from this credit debacle are unquestionable,” … “If investment banks hire when their profits increase, it’s fair to assume the reverse is true when they suffer unforeseen losses.”
In New York alone, employment stood at 209,000 at the year’s halfway point, close to the record of 216,700 achieved in the fall of 2001. .. but since 2001, the state has added financial jobs at a faster rate than the rest of the U.S. market. Almost all of those jobs — 188,800 — are in New York City.
So now what?
NJ’s economy is stagnant and our “strategy” of mooching off of NYC’s job growth looks like its about to come to an end.
“State’s high taxes, debt contribute to hard times”
The roads as clogged, the bridges are falling apart, the schools are overcrowded and we are broke. If we had any more growth the GSP would be bumper to bumper 24/7. That’s what the voters want, we keep voting for these idiots, so why complaint? It’s like the fat guy complying about his cholesterol while eating a burger.
Pfffft, NJ mooches in financial (R.I.P) sector and the media/advertising arena….we got some great pharma here that pays very well.
#5 Essex Except pharma is cutting too, perhaps you missed the rect announced layoffs at Johnson& Johnson.
You are entitled to your opinion. But forget real estate for a moment, and look at the states picture in its totality.
If you cannot admit that we as a state are in serious economic difficulty, because to admit that would some how (in your mind) endorse the belief that house prices have to come down, than that is just denial.
Our great state is in serious economic trouble. What happens when we have a recession.
I don’t know, I’ve survived meltdowns in Tech….(two IPOs and 13 years in that industry)….I’ve done a career change to a more stable industry, albiet at a pay cut….I’ve relocated due to job loss and lived hand to mouth — there is no denial here. Simply an aversion to panic and hyperbole.
Furthermore….there is no material object…house or car….that you cannot live without…if the state truly implodes…then there are always others places to go. For now, as long as the money is there….it is status quo.
#8 Essex Status quo is not enough. We are not in any shpae as a a state to weather any downturn.
As I have been saying fro the past 2 years, if our state is in this type of condition now, what happens when we have a recession?
Sadly, I cannot say. Life’s a bitch and then you die I guess.
Unfortunately you cannot count on government for anything other than a dip into your paycheck….around here they cannot even keep the roads in repair.
….we got some great pharma here that pays very well.
Pharma is to NJ as automotive is to Detroit
NJ’s pharma industry is a relic of a better time. They are here because for the moment because is easier to stay and just put up with the expense of doing business here than to relocate.
However, if nothing changes here, you will continue to see NJ’s pharma industry erode, as pharma companies choose to expand in lower cost areas and slowly scale back their NJ operations.
In 1990, New Jersey accounted for a 20 percent share of all pharmaceutical jobs in the nation and today that has dropped to a 13 percent share.
I don’t think so renting….you have a fair amount of industry consolidation that has happened since 1990….apples and oranges.
This article should really be put in the number 1 spot, it is a hot topic.
My daughter worked for J&J, in Texas, they are slowly moving more and more of their operations away from NJ.
Gov Corzine, is oblivious to the states problems, and he keeps giving away everything to the unions. He is slowly killing the goose that layed the Golden Egg.
Whats next 8% sales tax? Or maybe just another increase in real estate taxes{ I guess that goes without saying}
People in NJ are voting with their feet.
Jim
In fact R&D has moved east from California, so it seems like ‘they’ are the big losers in the whole location game.
I guess my comments are wating moderation because I put tax increases, Corzine and NJ in the comment.
Jim
Pharma is slowly leaving this state.
Yes, there are still some major players here, which proabley won’t leave.
But, rest assured, they are leaving this area, or nothing new is starting up in this area.
They are all in Ca, Boston, NC, Boulder.
NJ is slipping.
SAS
Show me numbers SAS….I don’t think it is a bad as you say. Considering the critical mass here now.
When One industry leaves another takes it’s place ,With Corzine’s foresight into building research labs for stem cell ,that will take up some slack .With high paying jobs as well
And I think the whole size of shape of the presence here as far as management and marketing and the investment in new bldgs that some of the biggest and best firms in the world are putting up is nothing to ignore!
Here are some quick #s pulled from NJ WARN list.
Johnson and Johnson- 738
Schering Plough-149
Berlex labs-50
Mayne Pharma-67
Biovail-60
Altana Pharma-350
Sandoz-66
Dendrite-80
GlaxoSmithKline- layoffs w/ no specific # given
Pfizer- layoffs w/ no specific # given.
Thats 1,560 people laid off in 06-07.
I am sure if you dig more, you will find alot more.
I don’t see the growth in this sector either, no in NJ, but in other regions…ooohh baby,,, alot of growth.
SAS
Pfizer
Here is a sniglet for clinical health care.
St. Barnabas Health-910
PBI medical center-1536
Thats 2,446 people now looking for a job in health care.
yikes, makes it very competitive.
SAS
JB
I think this article is very important and should be at the top of the discussion board.
My daughter worked for J&J in Texas, they are slowly moving many of the factories out of NJ into cheaper markets. The people there earn half as much money but are very happy to get it.
Housing was also about 40% of what it is here and taxes were pennies compared to nj.
Captain Corzine is happily pleasing all the union members with fat healthcare and great benefits. The common working guy is struggling and within 5 years he will not be able to afford NJ.
Corzine and company will sell NJ down the river to keep all the unions happy, one day he would like to be president…what a joke!
NJ’s debt is just as bad as the real estate bubble has been, maybe worse.
We cannot go on spending like this, it will catch up.
Does anyone realize they are borrowing 2 billion dollars so they can pay the new real estate rebate and continue in office?
Berlex Bought by Bayer last summer….Dendrite bought by someone (and they make s/w anyway)….these numbers look like a culling of the heard…..but thanks.
a layoff is a layoff in my book.
Thats people who now don’t have an income and are not putting money into circulation to buy goods, products, and service.
M/A are overrated in my opinion. Only ones who ever gains are the board members, and the bankers.
IMHO
SAS
I don’t think so renting….you have a fair amount of industry consolidation that has happened since 1990….apples and oranges.
Then why did NJ take a disproportionate share of the pharma job losses?
In fact R&D has moved east from California, so it seems like ‘they’ are the big losers in the whole location game.
I think you might have that backwards:
Between 1990 and 2006, pharma employment nationally grew by 41.1 percent. In New Jersey, it declined by 2.9 percent. In 2004, California replaced us as the state with the largest number of pharmaceutical jobs. In 1990, California had barely half the number of pharma jobs as New Jersey. California’s pharma employment grew by 93.5 percent between 1990 and 2006.
So, New Jersey may no longer be the unchallenged medicine chest of America. Consequently, given the national and global trends in pharma of greater competition and relentless pressures on costs, it is essential for New Jersey to become a more hospitable business environment for pharma to invest in discovering the new drugs of tomorrow
http://blog.nj.com/njv_hughes_seneca/2007/07/the_nations_medicine_chest.html
When One industry leaves another takes it’s place ,With Corzine’s foresight into building research labs for stem cell ,that will take up some slack .With high paying jobs as well
That sounds nice. In reality, NJ’s high paying jobs are being replaced with govt. jobs, retail & chain restaurants workers. Real estate and finance have done well, but that is largely a result of the housing bubble and spillover from Wall Street. Both of those sectors have run their course at this point.
The truth is that Corzine is funding stem cell research to poke the Bush administration in the eye and give liberals something to cheer about. He does not have NJ’s best interests in mind.
Moved to the top.
jb
Renting (24)-
Right you are. Cutting-edge stem cell research is already the province of the EU. They’re light years ahead of us, and we won’t catch up (another thing to thank Dubya for on his way out the door).
However, the US has become adept at turning out lots of bad chefs, surly retail clerks and generaly miserable droids who work really long hours, accept bad pay, no benefits and take very few days off. Somehow, economists deem this “high productivity”.
Seems more like legions of zombies that are concurrently sonambulent and anxious.
Interesting piece from Herb Greenberg.
Why California housing matters
Stephen Levy is worried about the health of the housing market in California.
Even if you haven’t heard of him or are simply tired of hearing about anything having to do with housing, Levy is a man who should be listened to. As senior economist at the Center for Continuing Study of the California Economy in Palo Alto, Calif., which he co-founded more than 35 years ago, Levy has seen more than his share of cycles.
This cycle doesn’t look like it is going to end well, he says. His reasoning is deceptively simple: “There’s a limit to what people can afford.” When the coastal areas of the state were reporting home prices that seemed unrealistically high in the late 1990s, Levy was among those who thought prices throughout the state, on average, could go even higher.
…
Why should non-Californians care about the California housing market, especially when the S&P/Case-Shiller Home Price Index shows year-over-year increases in such cities as Charlotte, N.C., Portland, Ore., and Seattle? Because the Golden State accounts for 13% of the country’s gross domestic product or the total value of all goods and services produced nearly double the No. 2 contributor, New York. That means that what happens in California, home to such growth industries as high-tech, biotech, venture capital and film, doesn’t necessarily stay in California. The impact of slow economic growth, or even recession, in the state will ripple through the rest of the country.
California, alone, wouldn’t be enough to put the country into a recession, Levy says. “What would be serious would be if there are other markets like California.” And based on prices well above the average in places like New York, Boston and Boulder, Colo., and the Miami-Fort Lauderdale area, we know there are.
OT
CF, I feel the need. Defense. Redemption.
http://www.youtube.com/watch?v=YR8F0hkqokg&feature=bz100
Rutgers wants to spend 110+ million on a new football stadium – pending approval by Corzine. Lets see what he does.
This would be the biggest waste of money in a long time in NJ. Rutgers plays maybe 6 home games a year. The stadium they have now is actually very nice – but they say it does not have enough seats :)
JB,
Thanks for moving this up, it is a subject that deserves to be discussed.
NJ is in hot soup but politicians keep spending like tomorrow will never come.
Jim
# RentinginNJ Says:
September 3rd, 2007 at 12:30 pm
….we got some great pharma here that pays very well.
I am in the Pharma industry and do work in both boston and NJ as part of my job. From the projects i have been part of recently and the discussin i have been part of, it is my opinion that the pharma industry in NJ is essentially dead. The death of the industry in NJ will not be instantaneous; This is going to be a slow death. As was mentioned above, some of the companies have facilities that have large amounts of capital invested and hence does not make financial sense to immediately pull them out. However most future plans that i have been made aware of in several different companies (I contract) generally consist of only maintaining current operations in NJ while planning on future activities being placed in NC/Boston/Cali. One of the factors is that the current projections from R&D groups is that a lot of the current traditional pharma products could potentially be replaced by biotech analogs. In a lot of cases biotech analogs are more efficient then traditional chemical synthesis methods of production. There is already a well entrenched biotech base in NC/Boston/Cali so these companies are not going to waste he capital to build redundant biotech facilities in a financially non-competitive environment (NJ). Currently the big discussion in biotech pharma has moved beyond (what state is competitive) and more to (what country is competitive). There will always be biotech and traditional pharma manufacturing in the US due to drug import rules, however due to Import rules of EU and Asia as well as the huge supply of cheap labor and a rapidly increasing technological prowess of asian and indian manufacturers. a lot of the big pharma companies are looking at long term global competetion meaning the movement of production to india and asia simply due to the fac that costs of production iin both the EU and US are not competitive. And for anyone who says that asia and EU are not technologically capable enough, i have been to new facilites in both areas and there is a concentrated effort to pharma industries to rival US and EU quality because they recognize the potential goldmine they have in a cheap labor force if they can match product quality.
So there will always be a small amount of pharma in NJ but my personal opinion is that in 10 years we will not even have half of what we see now in NJ.
Anyone who thinks Pharma will grow in NJ
is in denial.
Companies , including Pharma are leaving
just as fast as they can arrang new quarters and make it look like they are
not leaving.
The only job growth in NJ is : State and
Local, so they can continue to hose the
local homeowner tax payer.
NJ is a Welfare State,
Another thought.
regarding “we got some great pharma here that pays very well.”
I defiantly disagree with this. This might be the case if you are executive management. Outside of that realm then they pay for any professional level job wehter (engineering, production, R&D, Lab tech) is lackluster at best given the cost of living in NJ. Alot of the pharma companies have a pretty flat pay structure throughout the entire company. I have looked at comparable jobs in NJ Boston and NC. All three paid approximately the same for the same positions. But consider the difference in cost of living. Nj and boston are very similar, but NC is significantly less expensive in terms of cost of living(consider someone making 80K in NJ Boston and NC and the standard of living associate with income in each of the three places). This is actually an issue i still trying to come to terms with and may yet decide to move to NC. From talking to people in my field this is not an uncommon sentiment.
2005-2003 ave median income from us cencus.
New Jersey 59,989
Massachusetts 54,617
North Carolina 41,067
consider the move from nj to NC considering your pay stays the same( which is a valid assumption based on “job fishing” i have done in my field, pharma biochem eng). Its very tempting
NC is cheaper for housing, property taxes, and heat. But you will spend more for a/c, gasoline, and groceries are definitely MUCH more expensive. No little Asian groceries with grapes for a buck a pound there.
If you are out in the boonies, this may be offset by the difference in housing costs. But if you are where the jobs are (i.e. Triangle area), you will find that aside from housing costs, everything else is pretty much the same as NJ.
Jill # 38
My brother lives in the triangle area and i compared numbers with him (most of my food is organic CSA stuff so i already pay a premium)and everything comes out cheaper. Yes you use more AC in the summer ( i have lived in the south before so know how much the humid summer can suck).
Current nj gas prices are around 2.39 and raleigh prices are about 2.53. given that fuel costs at this level are not a limiting factor for me this change in gas price is of little impact. consider 50 milees/day round trip commute @ 5 days/wk for 4 weeks. this means i average 1000 miles per month for work and get 30 mi/gal. this means in NJ i spend $80/month on gas and in NC i spend $84 on gas. a difference of $5 per month is irrelevant. The major impact on my income is housing costs and i can rent the equivalent house in NC (RTP more specifically) to what i am renting in Nj for about $500 per month less then in NJ
I just looked this info up.
average Electric rates:
Nj = 13.34 cents/KWH
NC = 9.38 Cents/KWH
data from DOE eia web page
Food costs will stay approx the same for me. I have figured this out by looking at CSA (community Supported Agriculture) rates in the area, most CSA’s have websites with the info.
we already established that the fuel price difference is small relative to normal expenditures.
As far as average KWH/month NC will be more expensive in the summer, bu the winters are warmer so less is pent on heat. Overall my estimates from my own and my brothers utility bills for a year shows a potentially slight increase of annual utility cost.
The main cost differential in my opinion is 1. Housing is much cheaper there 2. culture; i love NYC and while i do not dislike certain areas of the south its just not the same, but i can live with it…
my personal analysis, other peoples situations may cause a different analysis.
average Electric rates:
Nj = 13.34 cents/KWH
NC = 9.38 Cents/KWH
Yep, and NYC electric rates (at least residential) were well into the 20c/KWH before fuel addons.. Probably closer to 30c/kwh..
Oh, and as far as Pharma in NJ goes.. Why not move even closer to PA or DE? AstraZeneca is huge in DE, and according to various rating agencies it’s either in the top 10 (taxfoundation.org) or at the very least far friendlier to businesses than NJ.. Moving built-out labs may take a long time, and companies may use threats of moving in order to extract tax goodies from the gummint, but in the end lower cost structures almost always win out..
And MD (especially eastern MD) is looking to benefit pretty nicely from BRAC, while Ft. Monmouth is still scheduled to close IIRC.. The trend continues..