3. NEW JERSEY POLICY PERSPECTIVE
ew Jersey Policy Perspective is a nonprofit, nonpartisan research and educational organization established in 1997 with the
N mission of promoting broad, vigorous debate about important issues facing the people of New Jersey. Our goal is a state
where everyone can achieve to his or her full potential in an economy that offers a widely shared, rising standard of living.
BOARD OF TRUSTEES
Kate Atkins Rona Parker
John Atlas Bruce S. Rosen, chair
Tim Carden Richard V. Sinding
Henry A. Coleman Deborah Spitalnik
J. Kelly Conklin Diane Sterner
Debby D’Arcangelo Gerald R. Stockman, vice-chair
Amy Goldsmith Irwin S. Stoolmacher
Herbert Greenberg SusieWilson
ADVISORY BOARD
Benjamin A. Barber
Albert Burstein
Horace J. DePodwin
Richard C. Leone
Martha Z. Lewin
Richard I. Male
Jimmy Tarlau
Betty Wilson
INTERIM PRESIDENT
Mary E. Forsberg
SENIOR POLICY ANALYST
Raymond Castro
POLICY ANALYSTS
Sarah Stecker • Anastasia R. Mann • Naomi Mueller Bressler
OUTREACH DIRECTOR
Karen Lagerquist
OPERATIONS MANAGER
Janice Conklin
Author’s Note
This report is part of a national collaboration led by the Economic Policy Institute (EPI) and its Economic Analysis and Research
Network. The goal of the State of Working New Jersey and parallel efforts around the country is to provide objective information on
state economies. EPI publishes The State of Working America every two years. See Lawrence Mishel, Jared Bernstein, and Heidi
Shierholz, The State of Working America, 2008-2009 (Washington, DC: The Economic Policy Institute, preliminary edition). For in-
formation on the other state reports, see http://www.earncentral.org/swx.htm. I thank Jon Shure and Mary Forsberg of New Jersey Pol-
icy Perspective for their support; Luis Palacios-Saiguero, Dane Devonseh, and Maryam Zarnani for research assistance; Peter Yerkes
for editorial assistance; and Will Irving for providing needed data.
4. Contents
KEN THE REP (AND TWELVE AND A HALF MILLION
OTHER UNEMPLOYED AMERICANS) ........................................................................................4
THE VERY FRAGILE AMERICAN ECONOMY ..........................................................................6
HOW ECONOMIC DECLINE AFFECTS WORKING FAMILIES...............................................7
Jobs are disappearing and unemployment is rising rapidly.....................................................7
Part-time work increased dramatically and many left the labor force....................................7
Assets and corporations disappeared ........................................................................................7
Income and wealth gaps grew ..................................................................................................7
Public services declined and state and local taxes increased ..................................................8
Health care costs exploded........................................................................................................8
In hock to the rest of the world................................................................................................8
Globalization hurt many American workers ............................................................................8
The social safety net has frayed ...............................................................................................8
WEALTH AND HARD TIMES IN NEW JERSEY ........................................................................9
New Jersey’s good news ...........................................................................................................9
New Jersey’s not so good news................................................................................................9
WORKLIFE IN NEW JERSEY: WEALTH AND
ECONOMIC STRUGGLE SIDE-BY-SIDE ....................................................................................11
Industrial change and jobs .....................................................................................................11
Increasing inequality................................................................................................................12
Wage inequality .......................................................................................................................13
Poverty .....................................................................................................................................14
Unemployment ........................................................................................................................15
Housing and housing costs .....................................................................................................15
Foreclosures .............................................................................................................................16
Fiscal distress...........................................................................................................................16
Social services .........................................................................................................................16
WHAT CAN WE DO TO IMPROVE THE ECONOMY?............................................................17
ABOUT THE AUTHOR ..................................................................................................................18
5. 4 A NEW JERSEY POLICY PERSPECTIVE REPORT
Ken The Rep (And Twelve And A Half
Million Other Unemployed Americans)
he U.S. economy is badly broken:
T
FIGURE 1
Americans have lost 4.4 million jobs
The Great Recession Cost Americans
since the recession began in Decem-
4.4 Million Jobs
ber 2007 (Figure 1). Unemployment reached
8.1 percent in February 2009, the highest in -700
-651
a quarter century—and many economists
-597 -577 -598
expect it to keep rising at least into 2010. -600
Welcome to The Great Recession.
-500
LOSS OF JOBS, THOUSANDS
New Jersey’s once-prosperous economy is
-380
also in trouble. Good jobs are disappearing, -400
often replaced by low-paying positions -321
without much prospect for advancement. -300
In 2008 and early 2009, New Jersey lost an
-175
astounding 99,400 jobs (Figure 2), and the -200
-161
-160
-144 -137 -128
unemployment rate vaulted to 7.3 percent -122
-72
from 4.7.1 Twenty-four of the state’s cities -100
had double-digit unemployment rates, led
by Trenton’s 17.5 percent. 2 The state’s 0
Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb 09
weakness did not begin with the current re-
UNITED STATES
cession: job growth has flat-lined during
this decade and, since 2003, wages adjust-
ed for inflation have fallen. This means that FIGURE 2
workers’ living standards have declined
The Great Recession Cost New Jersey
(Figure 3).
Nearly 100,000 Jobs
Even these dreadful numbers do not fully -25
portray the personal experiences of New Jer- -22.8
seyans and others across the country. Ken
Stelma of South Plainfield was a customer -20
representative. However, he was laid off
LOSS OF JOBS, THOUSANDS
more than a year ago and his unemployment -14.1
-15
benefits have run out. He has applied for
dozens of jobs, to no avail. Mr. Stelma has
-9.9
lost half of his income and can no longer af- -7.9 -9.2
-10
-7.2
ford health insurance.
-6.3
-4.0 -8.9
-4.5
-5
“Ken the Rep” is not a political prop, like
-3.4
“Joe the Plumber” in the 2008 presidential -1.2
campaign. He is a real, middle-class guy, 0
Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 Jan 09
and he has suffered greatly in the very deep
recession that has engulfed the world.
6. ECONOMY IN CRISIS 5
Ken is not alone. Dana Stevens of West FIGURE 3
Deptford, a human resources expert, also
Real Wages in New Jersey Fell Between 2000 and
lost her job. She has sent her resume to hun-
2007, Steeply After the 2001-2003 Recession
dreds of firms. With her savings gone, she
struggles to pay her $2,400 monthly mort- $20.00
gage. Although she made $60,000 a year at $19.61
$19.50
her last job, she has been told by other firms
$19.00
that she cannot expect more than $40,000 in $18.71
the current job market, even if she were $18.50
lucky enough to find a new position.3 $18.00
$17.71
$17.50
$16.86 $16.99
$17.60
The Great Recession has also brought hard
$17.00
times to older workers. The Wall Street Jour- $16.84
$16.50
nal reports on a “new class” of workers: $16.51
$16.00
people in their 70s and 80s competing for
jobs with those in their grandchildren’s gen- $15.50
eration, so that they can pay their rent and $15.00
doctors’ bills.4 Many are in job training pro- $14.50
2000 2001 2002 2003 2004 2005 2006 2007
grams and looking for minimum wage posi-
tions. Lois Humphrey, age 80, who suffers Hourly Wages
from cancer, diabetes, and arthritis, says, “I
still need to work because of medications,”
and to pay her rent.
ing workers and will set the stage for a sec- In response to unprecedented financial prob-
ond report that outlines solutions to the lems, the Bush Administration brought forth
Worse, unemployment also often means
state’s economic struggles. a massive $700 billion bailout plan called the
loss of the family home, as foreclosures
Troubled Assets Recovery Plan, or TARP,
loom for people like Dana Stevens. Layoffs
The downturn is widespread. Besides job for financial institutions in the fall of 2008.
usually also mean the end of health insur-
cuts, trillions of dollars have been lost from The goal of TARP was to clean up “toxic as-
ance and the rise of family stress.
retirement accounts, putting Baby Boomers sets” (highly leveraged, usually worthless
and others planning retirement in deep trou- paper assets, such as mortgage-backed secu-
More than 12.5 million Americans are now
ble. Blue-chip companies, like Lehman rities) on the books of the nation’s banks.
unemployed and, like Ken and Dana, have
Brothers, have gone under or were effective- When the Bush administration ended, it was
little support from the social safety net that
ly nationalized by the federal government. clear that TARP was not working: credit
once protected Americans during reces-
Others, including the Big Three automakers, markets remained frozen and unemploy-
sions. The unemployed represent the entire
teeter on the brink of disaster. Even once ment continued to climb. The “troubled as-
economic landscape, from Big Mac flippers
high-flying technology firms are laying off sets” that were to be helped by TARP re-
to investment bankers, to checkout clerks, to
staff. Banks are unwilling to make loans, mained troubled.
car salesmen. They are our neighbors and
even to people and companies with good
relatives.
credit; the breakdown of credit markets President Barack Obama enacted a stronger,
means that more workers will lose their jobs. more targeted version in February 2009 to
This report analyzes the main issues facing
provide what he called “a jolt” to the sag-
both the U.S. and New Jersey economies. It
The Great Recession has taken a greater toll ging economy. TheAmerican Recovery and
focuses mostly on the problems facing
on men than women. People in manufactur- Reinvestment Act (ARRA) is a $787 billion
working people, but also addresses other el-
ing and construction—male-dominated in- stimulus package, consisting of tax cuts,
ements of the economy as the state and the
dustries—have been hit harder and have spending on infrastructure, health care tech-
nation limp through 2009. It will start with
done worse than those in education and nology, education, Medicaid, children’s
an explanation of why the national economy
healthcare, which hire many women; Lati- health and other items. It is too soon to know
has tanked and see where New Jersey stands
nos have suffered disproportionately because if ARRA will work. Some economists be-
because of these problems. It will give read-
of their concentration in the same industries. lieve it is too small to stem the economy’s
ers an understanding of the conditions fac-
7. 6 A NEW JERSEY POLICY PERSPECTIVE REPORT
decline; others hold that it is a mistake for equal income distribution and expanded so- gains went to the top 10 percent of families.
the government to make these investments cial services—that we had as a nation In this decade, the best-paid one percent of
at all. through the mid-1970s is gone. In the past earners took in 23 percent of all income. The
thirty years, nearly all of the gains from the result: too many people are falling too far
Beyond the loss of jobs and economic secu- economy have gone to a very small propor- behind in trying to pay their bills and main-
rity lurks an insidious set of problems facing tion of the workforce. For instance, between tain a decent lifestyle.5
the country: the shared prosperity—a more 1989 and 2006, fully 90 percent of income
The Very Fragile American Economy
merica’s woes began on Main 2000 and mid-2006 these more than dou- sent. They were wrong. When more and
A Street with a consumer-led boom bled. Then the bubble burst and prices plum- more mortgages went into default, trillions
in the second half of the 1990s, meted. The housing “bubble” was furthered of dollars of these mortgage-backed securi-
when people snatched up homes, cars, flat- by lax regulation and unwise, cheap-money ties lost value, and the financial markets
screen TVs, and other goodies. Unfortunate- monetary policy. When the housing market swooned.
ly, too many people bought more than they collapsed, millions ofAmericans found their
could afford using the cheap credit that was houses were “under water” (worth less than These financial problems bled throughout
lavishly available. Consumers borrowed their mortgages) and lost their homes. Some the U.S. and the international economy, in
prodigiously, and the national savings rate engaged in “jingle mail”—they put their large part due to the mortgage instruments
fell to near zero. house keys in envelopes, mailed them to bought by investors who were entranced by
their mortgage service firms, and moved the prospect of high yields and ignorant of
Next, and related, came an unsustainable, away. Sheriffs then foreclosed and pad- the high risk they were taking. In September
speculative housing binge. Home purchases locked their front doors. Unfortunately, their 2008, the international financial system
were greased by tempting mortgages that neighbors suffered property value declines came unhinged: caught in a swirl of mort-
encouraged buyers to believe they were pay- because empty houses cause problems gage foreclosures, investment house and
ing relatively little for their homes because around them—unkempt lawns, stolen cop- bank failures, and stock market collapses,
early monthly mortgage payments were set per and wire, and fires. Working people saw the world financial system froze up. Trust
artificially low. However, much higher pay- their primary assets lose value. In all, fore- died, as lenders throughout the world re-
ments followed when mortgages reset at closures rose by 81 percent in 2008 and by fused to lend to long-term customers, even
higher rates. Working families paying, say, more than 200 percent between 2006 and those with pristine credit records. Unable to
$600 a month at the beginning of their mort- the beginning of 2009. secure short-term credit, firms accelerated
gages, suddenly found themselves scram- layoffs and the recession deepened.
bling 18 months later to come up with Mortgage lenders thrived on these loans be-
$2,000 payments or face foreclosure. These cause they could make a quick buck on The U.S. quickly became Bailout Nation.
contracts included various high-risk sub- them. Brokers quickly sold the mortgages to The federal government issued a bewilder-
prime and exotic mortgages that did not re- Wall Street firms that created an array of ing set of bailouts (the various iterations of
quire income or job or asset documentation mortgage-backed securities in which good TARP) aimed mostly at stopping the col-
(known as “NINJA” loans).6 Many were and bad mortgages were commingled. lapse of financial firms like Goldman Sachs
predatory loans made by unscrupulous Through these mechanisms, mortgage bro- and Morgan Stanley. The Treasury pumped
mortgage brokers who sold loans that paid kers and financial giants passed the risk of $700 billion into the financial system. The
them high fees, but were structured in ways bad mortgages on to unwitting investors Federal Reserve began printing money in an
that made them almost certain to fail. worldwide. Bank regulators were asleep at effort to recapitalize the banks. However, lit-
the wheel, paying little attention to the grow- tle attention was paid to helping families in
In the early 2000s, housing prices rose ing financial storm: to them, “the market” trouble with their mortgages.
rapidly to unsustainable levels. Between would solve whatever problems were pre-
8. ECONOMY IN CRISIS 7
How Economic Decline
Affects Working Families
he effects on working families four million workers were forced into part- Strength To Be There,” suddenly was barely
T across the country have been enor- time status, bringing the total to 8.6 million. there at all; the federal government bailed
mous. To understand what has gone The rate of hidden unemployment was 14.8 out AIG to the tune of $180 billion.
on in New Jersey, it is useful to look first at percent in February 2009, up from 7.8 per-
the national collapse. cent at the beginning of the recession.8 This The carnage was not limited to the financial
is the largest number of part-time workers sector: the sputtering engines of the Big
Jobs are disappearing and on the rolls since 1995. In addition, the dura- Three automakers threatened millions of
unemployment is rising rapidly tion of unemployment skyrocketed by 31 workers’ jobs. Cookie maker Mrs. Fields
America’s employment problems did not percent. crumbled, Linen ‘n Things folded, and Pep-
begin with the current recession. The recov- si canned at least 3,600 workers. Technolo-
ery from the 2001-2003 recession was large- However, that tells only part of the labor gy giants Microsoft and Intel each an-
ly one without new jobs.7 Productivity—the market story. In addition to the number of nounced layoffs of 5,000 workers; during
amount that workers produce each hour— unemployed and the hidden unemployed 2008, job cuts in technology were up 74 per-
has been relatively strong. But the growth of comes another group that has dropped out of cent from 2007. Given emptying bank ac-
productivity was not accompanied, as in the labor force entirely.9 These people have counts, Spam and Jell-O, at the bottom of
past business cycles, by commensurate in- looked for work in the last year, but gave up. the food chain, reported robust sales.12 The
creases in jobs and wages. Since the 2001- In December 2008, there were 1.9 million of Conference Board’s well-regarded con-
2003 recession, there was remarkably little them. The federal Bureau of Labor Statistics sumer confidence survey fell to its lowest
job growth—a minuscule 0.6 percent a year, does not count them as unemployed, even level in history.13 As a result, retail spending
only one-third of the growth rate during the though they certainly would like to work if fell of the cliff and retailers suffered: Macy’s
1990s. It took until 2005 to return to pre-re- jobs were available. These details mean that fired 7,000 employees and Circuit City spun
cession job levels, a very long time com- the officially reported unemployment rate, into bankruptcy.
pared with previous economic cycles. More- which does not include part-time workers,
over, real wages (wages adjusted for severely understates the true unemployment At the beginning of 2009, the jobs situation
inflation) fell after 2002, so most workers problem. deteriorated further: On January 26, in what
were worse off. Unfortunately, this bad situ- became known as “Bloody Monday,” sever-
Assets and corporations disappeared
ation occurred before the current recession, al large corporations fired more than 50,000
when things got very ugly andAmerica shed The collapse on Wall Street cost millions of people. This took place along a wide spec-
more than four million jobs. hard-working people at least $2.9 trillion of trum of American industry: Caterpillar
their savings and retirement funds.10 An ad- (20,000 jobs cut), Sprint Nextel (8,000), and
Part-time work increased dramatically ditional $6.1 trillion disappeared in lost Home Depot (7,000) led the way, but the
and many left the labor force housing values. Hard-pressed families January list read from Alcoa to the World
In addition to increasing unemployment, thinking of sending their children to college Wrestling Federation.14 First-time claims for
there has been a sharp increase in the or mellowing into retirement have had to re- unemployment benefits reached historic lev-
amount of part-time work and of “hidden vise their plans. els later in that week.
unemployment”—people who want full-
Income and wealth gaps grew
time work but cannot get it and are forced to Corporate bankruptcies tripled over the past
work less than 35 hours a week. This has oc- two years.11 Financial giants like Fannie The differences in income and wealth be-
curred because employers face slack de- Mae, Freddie Mac, Lehman Brothers, and tween the rich and poor—and, indeed, be-
mand for their products or because they do Bear Stearns disappeared, were merged, or tween the richest and everyone else—have
not want to pay the benefits required by a got bailed out by the federal government. In- widened, and incomes have become more
40-hour week. In the past year, more than surance giant AIG, whose slogan was “The unstable. Over the past 25 years, income
9. 8 A NEW JERSEY POLICY PERSPECTIVE REPORT
flowed uphill: Most of the rewards of the na- percent of the wealth—in other words, they alone (in addition to real estate debt) comes
tion’s economic growth have gone to the top have more than the rest of the population to $2.5 trillion, about $8,200 for every man,
one percent of households, reflecting a combined.18 MostAmericans have no mean- woman, and child. With financial institu-
“pulling apart” of the income distribution.15 ingful assets besides their homes—which, tions in trouble, families have been forced to
The incomes of the country’s richest fami- of course, are losing value rapidly. cut spending. At the same time, because of
lies have climbed substantially over the past two expensive foreign wars and tax cuts for
Public services declined and state and
two decades, while middle- and lower-in- the wealthy under President George W.
local taxes increased
come families—the heart of the working Bush, the federal budget deficit has grown
class—have seen modest or no increases. Because of the financial implosion, tax rev- dramatically to $9.7 trillion, with much of
enue to states and localities from income this debt owned by foreign institutions.20
In 1973, families in the top five percent of and sales taxes has declined, making it diffi- TARP and ARRA will increase that figure
the nation had income 11 times greater on cult for public service providers to maintain enormously in the near future. This public
average than those in the bottom 20 percent. needed services and float bonds. As a result, debt will have to be paid by the next two
By 2006, the richer group’s income was 22 taxpayers are getting fewer public services generations.
times higher. Since 2000, those in the lower and facing the possibility of higher taxes as
Globalization hurt many American
60 percent of all families (those making less governments contract. According to the
workers
than $47,000) lost real income. Only the top Center on Budget and Policy Priorities
40 percent had more real income in 2006 (CBPP), 46 states and the District of Colum- Millions of manufacturing jobs have migrat-
than in 2000.16 Everyone else lost ground. bia face budget shortfalls this year and next, ed overseas in part because of lower wages
The United States has reached a level of in- amounting to a combined budget deficit of there. They are unlikely to return to our
equality not seen since the GildedAge when more than $48 billion.19 shores in substantial numbers. Imports of
John Rockefeller and Andrew Carnegie goods from abroad cost working families in
Health care costs exploded
ruled. This picture differs greatly from the these industries their livelihoods. Gains to
broadly shared prosperity the nation enjoyed Health insurance premiums have shot up the U.S. from trade were mostly in the finan-
between the end of World War II and the late more than $370 billion since 2000. Higher cial and high-tech sectors. Wage pressure
1970s. prices drain family incomes, forcing con- from other countries reduced many workers’
sumers to cut spending on food and other wages in the U.S., especially those with less
Not only have incomes grown more un- necessities or—as many do—jeopardize education.21
equal, but they also have become more their well-being by forgoing medical care.
The social safety net has frayed
volatile and unstable. The share of working- Problems related to health-care costs are
age people experiencing the loss of half or made worse by the fact that fewer people Since the early 1980s, funds for programs
more of their household income in a year have health insurance: out of a population of that support the nation’s neediest people—
rose to nearly 10 percent in the 2000s from 305 million, 46 million Americans are with- for affordable housing, income support,
less than four percent in the early 1970s.17 out health insurance—eight million of them health care, and other areas—have been
This makes economic life insecure, espe- children. This is due largely to the continued drastically cut.22 Private firms, which tradi-
cially since for so many people the loss of decline in employer-sponsored insurance tionally provided health insurance and re-
income means losing health coverage too. and higher unemployment. tirement benefits, cut back substantially,
leaving people less able to cope in difficult
In hock to the rest of the world
Differences in wealth are even more un- times. The proportion of employer-provided
equal. The top one percent of the U.S. popu- American families have spent more than health care—long the main source of such
lation holds 38 percent of all wealth; the top they earn and are deep in debt. According to insurance—has fallen dramatically over the
five percent of the wealth holders have 59 the Federal Reserve Bank, consumer debt last two decades.23
10. ECONOMY IN CRISIS 9
Wealth And Hard Times In New Jersey
orking men and women in New going on in the economy. Let’s start with the union membership, which helps keep wages
W Jersey are hurting because of the good. strong and growing. It has the nation’s fifth
very weak American economy. lowest percentage of people in poverty. The
New Jersey’s good news
When industries lay off workers or cut their unemployment rate was 7.1 percent in De-
wages and benefits, employees everywhere The first thing that pops out of Table 1 is that cember 2008, slightly below the national av-
feel the consequences. New Jersey is relatively well off: it ranks sec- erage; child poverty was 11.3 percent, less
ond in the nation in median family income than the average for the United States as a
New Jersey has never been a backwater ($67,035) and first in the percentage of mil- whole.
when it comes to people’s ability to make a lionaire households (seven percent). Figure 4
living. The state has a strong economic histo- shows that New Jerseyans earn higher wages These numbers would seem to reflect
ry going back to the nineteenth century. It has than the averageAmerican does, and that gap healthy economic conditions, at least for
usually had high-wage industries and reason- has widened during this decade. New Jersey some of the state’s population.
ably stable employment. However, as we is sixth in the nation in people with college
New Jersey’s not so good news
will see, the Garden State faces problems as degrees, so there is a lot of well-educated lo-
it tries to move ahead. A few basic numbers cal talent. But, there are less flattering numbers that
tell New Jersey’s economic story. Table 1 show the contradictions of economic life in
presents a snapshot of the state in compari- The state is high in the concentration of doc- 2009.
son with the rest of the country. It shows the tors and correspondingly low in infant mor-
mixture of good things and no so good things tality. New Jersey is sixth in the nation in For instance, New Jersey is a very expensive
place in which to live, so those high wages
don’t go as far as in most other states. Dis-
TABLE 1
tressingly, employment growth is relatively
slow, both over the last year (New Jersey was
The New Jersey Economy vs. the 34th nationally) and from 1998 to 2008
Nation's at a Glance (29th). That last number is particularly wor-
risome: during the 1990s, New Jersey added
Variables Value U. S. Rank
more than a half million jobs; by compari-
Median Household Income (2007) $67,035 2
son, employment has grown by a measly
Millionaires as a Percent of Households (2007) 7.1% 1
5,600 jobs since 2001 and New Jersey has
Percent with Bachelor’s Degree (2006) 33.9% 6
THE GOOD
lagged the nation in employment growth
Doctors per 100,000 (2006) 311 8 since 1990 (Figure 5). The state seems to
have lost out to other parts of the nation and
Infant Mortality Rate (2005) 5.2 47
to high-growth areas elsewhere in the world.
Percent of Population Below Poverty Line (2007) 8.6% 47
If the current recession continues, there will
Percent of Workers Represented by Unions (2007) 19.2% 6
likely be fewer jobs at the end of the decade
Growth in Nonfarm Private Employment (11/07-11/08) -0.7% 34
than in 2000.24 This has not happened since
Growth in Employment (12/1998-11/2008) 5.4% 29 the 1930s.
THE NOT SO GOOD
Growth in Population (2000-2007) 3.2% 37
Housing is the fourth most expensive in the
Median Monthly Housing Costs (2005) $2,503 1
country—median housing costs are $2,503
Property Taxes Per Capita (2006) $2,372 1
per month, 52 percent higher than the na-
State Tax Revenue as % of Personal Income 6.1% 9
tional average.25 Taxpayers also pay the
Federal Spending Ratio (2008) 0.6% 50
highest property taxes per capita in the
Percent without Health Insurance (2005-2007) 15.2% 32 country.
Source: New Jersey Policy Perspective, New Jersey Snapshots 2009 (Trenton, NJ: NJPP)
11. 10 A NEW JERSEY POLICY PERSPECTIVE REPORT
The American Society of Civil Engineers FIGURE 4
gave New Jersey a C- grade (what the ASCE
deemed “mediocre”) in evaluating the state’s
New Jersey Workers had Higher Wages than
infrastructure.26 New Jersey’s bridges are rat-
the Nation's and the Gap has Grown
ed ninth worst in the country and roads are
fourth worst, a serious problem for truckers $20
$19.05
$18.88
and private car owners alike. Of most con-
$18
cern for the economy is the ASCE’s grades
$15.54
$15.62
of D for aviation. Newark Liberty Interna- $16
tional Airport accommodates 96 percent of
$14
the state’s airport traffic but is a victim of its
own success. According to the ACSE, it $12
ranks third in the nation for the most delayed $10
airport departures and, with the anticipated
$8
projections for air travel growth, the lack of
available land to expand the current facility $6
presents a problem.Yet modern, easy-to-use
$4
airports are vital in today’s global economy.
$2
Much of the state’s economic history ex-
$0
plains the current situation. New Jersey made 2002 2007
a transition from an old manufacturing base,
I United States I New Jersey
built during the first half of the twentieth cen-
tury, to one focusing on information, tech-
nology, and finance—industries that require
intellectual capital and innovation. Pharma- earned by some residents come from indus- Johnson, and Merck have become dominant
ceuticals and telecommunications replaced tries at the forefront of science and engineer- in the state and global economies.27
autos and ceramics. The high incomes ing, as companies such as AT&T, Johnson &
However, globalization, mergers, new tech-
nologies, and decaying infrastructure have
FIGURE 5 taken a toll in recent years. Rising housing
costs, persistent race and class disparities,
New Jersey Employment Grew Quickly in and uneven urban development patterns
threaten the state’s economic future. Em-
the 1990s, But Lost Jobs Since 2000
ployment growth has slowed considerably,
500,00
in large part because massive shifts of tech-
450,000
nology investment made locations outside
496,000
400,000 the Northeast more attractive to firms—
shifts occurred to California and to technol-
350,000
ogy centers in North Carolina, Maryland,
300,000
Texas, and Florida.
250,000
200,000
Significantly, some of New Jersey’s former
150,000
employment strength is being redeployed
100,000 globally, to places where costs are much
lower and where there is an increasing sup-
50,000
5,600
ply of engineers and scientists. As Bruce
0
Katz and Robert Puentes of the Brookings
2001 - Jan 08
1991-2000
I Employment Growth Institution say, “New Jersey is beginning to
lose its competitive edge.”28
12. ECONOMY IN CRISIS 11
Worklife In New Jersey: Wealth And
Economic Struggle Side-By-Side
ome elements of the New Jersey ly one in five in the industry) will lose their New York pay their income taxes to New
S economy require special attention jobs in the financial services industry be- York State (not New Jersey), history shows
in understanding the state of work tween 2008 and 2011. Other estimates of the state’s fortunes are linked to New York.
life: industrial change, housing and housing employment loss are considerably higher, After the Wall Street bust in 2001, New Jer-
costs, income distribution, poverty, and oth- ranging up to 240,000.29 sey’s state income tax revenues fell by 16
ers. The gap between high incomes and percent over two years—or about $1.25 bil-
poverty-level wages is substantial. The immense bonuses of past years will dis- lion. This spells trouble for the state’s fi-
appear as the collapse continues. In 2008, nances in fiscal years 2010 and 2011.
Industrial change and jobs for instance, bonuses fell by 44 percent from
The state is bleeding jobs. As noted, New the previous year.30 The impacts on New Jer- New Jersey’s recent employment problems
Jersey lost 85,700 jobs and the unemploy- sey will surely be severe, if these forecasts go beyond the unemployment numbers. As
ment rate jumped in 2008; joblessness is at prove correct. New Jersey workers represent noted above, many workers are underem-
its highest since 1996 and is expected to about 20 percent of Wall Street employees, ployed—they are unable to work 40 hours a
grow further (Table 2). The main recent job so between 20,000 and 60,000 relatively week although they want to. The true picture
losses have been in manufacturing (30,100 high-paid finance industry employees in of the New Jersey labor market is clear from
jobs), construction (20,700), business and New Jersey will likely lose their jobs. Al- Figure 7, which shows that in 2007, before
professional services (22,700), and trade, though New Jersey residents who work in the recession began, 4.2 percent of the
transportation and utilities (41,600). Many
of these jobs were cut in relatively high-
wage industries, while gains were registered FIGURE 6
in some lower-wage sectors (e.g., education
and health services), meaning that many
Manufacturing's Dominance Continues to Fade
people who are still working are being paid
Manufacturing Employment as a Percent of Total Non-farm Employment
less than before. Job decline is spreading to
professional occupations like law, engineer-
16.0%
ing, and pharmaceutical research. 14.57%
14.0%
Looking at the long term, manufacturing’s
decline is strikingly evident in Figure 6. Be- 12.0%
tween 1990 and 2007, the proportion of 10.55%
workers in manufacturing fell by nearly 10.0%
half: from 14.6 percent of all workers to 7.5
7.68% 7.50%
percent. 8.0%
6.0%
Finance is important to the state, in large part
because of ties to Wall Street, where firms
4.0%
are failing and employment is plummeting.
The effects of the meltdown in this sector,
2.0%
where more than 70,000 high-paid New Jer-
seyans are employed, are only beginning to 0%
be felt. New York City’s Independent Bud- 1990 2000 2007 Feb 09
get Office projects that 82,300 people (near-
13. 12 A NEW JERSEY POLICY PERSPECTIVE REPORT
state’s workers were unemployed.31 Howev- FIGURE 7
er, another 3.2 percent were underemployed,
bringing the total amount of slack in the la-
Slack Labor Markets in New Jersey:
bor market to 7.4 percent. The numbers dif-
Unemployment and Underemployment Rates
fer markedly among groups within the labor
in New Jersey by Race and Ethnicity in 2007
force: 6 percent of white workers were either
unable to find work or were underemployed;
14.0%
for African-Americans (12.8 percent) and 12.8%
Hispanics (10.6 percent) the problems were
12.0%
greater. 10.6%
5.2%
10.0%
Unemployment varied throughout the state.
7.4%
In December 2008, the state average was 6.8 4.7%
8.0%
percent. However, Cape May (12.4 percent),
6.0%
Cumberland (11.1 percent), and Passaic (8.4 6.0% 3.2%
percent) had higher unemployment rates; at
2.5%
the same time, Hunterdon (4.7 percent), 4.0%
7.6%
Morris (5.0 percent) and Somerset (5.1 per- 5.9%
4.2%
cent) fared better.32 2.0%
3.5%
The nature of job cuts has changed drastical- 0%
All Workers White African-American Hispanic
ly in recent months: many more layoff no-
I Underemployment Rate I Unemployment Rate
tices result from “mass layoffs,” where em-
ployers fire 50 or more people at one time.
Between September and November of 2008,
TABLE 2
monthly mass layoffs tripled in the Garden
State. Many blue-chip firms have announced
Led by Manufacturing, Most Industries job cuts: nearly all of Lehman Brothers’
Have Lost Jobs Since the End of 2007 1,700 workers in the state have been let go.
Merck, with 7,000 workers in the state, an-
November January Percent Job
nounced cuts of some 7,200 worldwide in
Industry ‘07 ‘09 Change Change*
October; the firm has not confirmed the
Total Nonfarm 4,108.5 4,000.5 -2.63 -108.0 number of New Jersey jobs lost, but it is ex-
pected to be substantial. The January 2009
Construction 174.4 153.7 -11.87 -20.7
buyout of Wyeth, headquartered in Madison,
Manufacturing 311.4 281.3 -9.67 -30.1
by Pfizer will surely result in substantial lay-
offs. Business analysts believe that many ad-
Trade, Transportation, and Utilities 894.1 852.5 -4.65 -41.6
ministrative jobs will be cut at Wyeth’s main
Information 98.6 90.4 -8.32 -8.2
office. Merck’s acquisition of Schering-
Finance 270.6 256.0 -5.40 -14.6 Plough in February 2009 means more losses
of headquarter and administrative jobs.
Professional and Business Services 615.3 592.6 -3.69 -22.7
Throughout the state, thousands of jobs,
Educational and Health Services 588.3 602.6 2.43 14.3 from boat building to building supplies to re-
tail, have been lost.
Leisure and Hospitality 330.6 325.8 -1.45 -4.8
Other Services 163.0 164.1 0.67 1.1
Increasing inequality
Government 660.6 652.8 -1.18 -7.8 Not only is there a major economic slow-
down in the state, but there is also growing
*Jobs in thousands
14. ECONOMY IN CRISIS 13
inequality. New Jersey has among the most FIGURE 8
unequal distributions of income in the na-
tion. The Center on Budget and Policy Pri-
The Rich Got Richer and the Poor
orities (CBPP) and the Economic Policy In-
Got Left Behind
stitute (EPI) report that New Jersey has the
ninth biggest gap between the richest and 100%
90.8%
poorest quintiles of the population of all the
90%
states.
80%
Moreover, income differences in New Jer-
70%
sey increased at the fifth fastest rate among
all states during the past 20 years. While 60%
there is concentrated poverty in cities like
Newark and Camden, the state also has the 50%
44.8%
largest percentage of millionaires (Table 1),
40%
as noted earlier. Changes in the fortunes of
different income groups are shown in Figure 30%
8. Between the late 1980s and the early
19.7%
20%
2000s, the incomes of the lowest 20 percent 14.2%
10.4%
of the families grew by 10.4 percent; the 10%
5.9%
next three-fifths of the income distribution
increased by percentages ranging from 6 0%
Lowest 20% Second 20% Third 20% Fourth 20% Highest 20% Highest 5%
percent to nearly 20 percent. The big gains
I Growth of Income Groups, 1987-89 to 2000-04
came for the top quintile (which grew by
44.8 percent) and the highest 5 percent (90.8
percent). For every one percent of income
1960s and 1970s found themselves facing pared to $16.56 for women, a nearly 25 per-
growth going to the state’s poorest people,
lower living standards as America and New cent premium. However, that is far less than
the richest got nine percent more income.
Jersey de-industrialized. the 32 percent premium held by men in
1991 and 60 percent premium in 1981.
Why did inequality grow so dramatically in
Other forces were at play: public policies Thus, women made relative progress over
recent decades? Several factors stand out.
frayed the social safety net—there were time.
First, the manufacturing base that propelled
fewer protections during periods of unem-
the state and nation throughout the twentieth
ployment, and labor laws protecting workers Wages also differ based on race and ethnici-
century declined markedly. Heavy indus-
were discarded or undermined. The mini- ty. Whites are the best paid, averaging
try—autos, airplanes, steel, and the like—
mum wage, long a protector of the working $21.24 an hour in 2007 compared with
was the source of many high-wage, secure
poor, declined dramatically when adjusted $14.36 for African-Americans, and $12.24
jobs in the first 30 years after World War II.
for inflation. At present, the federal mini- for Hispanics. Unlike gender differences,
Technological change and globalization
mum wage in real terms is less than what it racial and ethnic inequality has not been re-
helped shrink this base, as manufacturers re-
was during the Eisenhower administra- duced over time. Whites’ median wages
duced employment and shifted much of it
tion—true even in New Jersey, which has a have grown faster than the others. In fact, be-
overseas to low-cost locations. In New Jer-
higher-than-average minimum wage. tween 1990 and 2007, Hispanics suffered
sey, this affected many economic leaders, in
wage reductions of 43 cents an hour after ac-
fields such as pharmaceuticals, chemicals,
Wage inequality counting for inflation. African-Americans
telecommunications, printing and publish-
Differences in wages are the major determi- gained only 24 cents an hour over those 17
ing, and electrical equipment.
nants of income inequality. There are several years.
ways to look at this. First, there are differ-
Many of these good manufacturing jobs
ences between genders, with males making Another way of looking at differences in
were replaced by service employment at
more than females on average. New Jersey wages is by education level. Not surprising-
lower wages. People who could earn a mid-
males made $20.62 an hour in 2007 com- ly, those with college degrees had the high-
dle-class living working at a plant in the
15. 14 A NEW JERSEY POLICY PERSPECTIVE REPORT
ferent living costs across the country. Since
FIGURE 9
it is more expensive to live in New Jersey
More Education Means Less than in most other states, the federal poverty
line (the basis for eligibility in many public
Unemployment in New Jersey assistance programs) disqualifies many peo-
ple who are truly poor. A dollar earned in
10.0%
this state does not go as far as a dollar earned
9.0%
9.0% in, say, Mississippi.
8.0%
A family of three is not considered to be in
poverty anywhere in the 48 contiguous
7.0%
states if it made more than $20,614 in 2008.
Clearly, that is not nearly enough to live on
6.0%
in New Jersey, so the official standard under-
5.3%
counts those who work but earn too little to
5.0%
4.6% support themselves and too much to receive
many forms of assistance.
4.0%
Even using the suspect federal standard,
3.0%
however, poverty rates in New Jersey in-
2.1%
creased during the past decade, to 8.6 per-
2.0%
cent in 2007 from 7.9 in 2000.And, as might
be expected given the differences in wages
1.0%
Less than High School High School Some College Bachelor’s or Highter
detailed above, minorities face higher pover-
ty rates: In 2005-2006, 15 percent of
African-American and 15.4 percent of His-
est wages in 2007 ($29.86 per hour) com- manufacturing, where there are many union panic families were in poverty compared
pared with workers with some college members. But union members’ ability to with 5 percent of white households. The
($15.08), high school ($14.03), and less than bargain collectively also helps non-union plight of people trapped in low-wage jobs in
high school ($10.18). Importantly, the pre- workers get higher wages. today’s weak labor market is bleak. It is dur-
mium going to people with more education ing times of rapid economic growth—such
Poverty
has widened over time. Education pays off as the 1990s—that poor people make their
in higher wages, as scores of studies have Many poor people struggle in New Jersey— greatest strides. Indeed, during the second
shown. despite the high overall wealth around them. half of the 1990s, national poverty fell by
One in five working families is classified as two and a half percentage points nationally.
A final element explaining wage distribution low income.33 The state has relatively low When labor markets are buoyant, there is far
in New Jersey is union membership. Al- poverty rates, as Table 1 showed. However, more bidding for labor; with that come high-
though the number of unionized workers nearly three-quarters of a million New Jer- er wages and less poverty. In a state with
has declined over time, the benefits of seyans remain poor. such high living costs, the problems stem-
unionization to workers are clear. Union ming from poverty will increase in the years
workers earned 23 percent more on average The official definition of poverty has been to come.
in 2007, and the amount of additional wages widely and justifiably attacked as inade-
accruing to organized employees increased quate: It is based on a living standard set in It is interesting to look at the poverty status
by 1.1 percent a year since 2000 compared the early 1960s and has been adjusted only of immigrant workers, an increasing share
with 0.8 percent annually over that time for for inflation, not changes in living standards of the state’s workforce. These men and
non-union workers. Some of the difference that are dramatically different today.34 As a women are a mix of many low-skilled work-
between unionized and non-unionized result, fewer people are categorized as poor ers in construction and other industries, with
workers can be accounted for by the indus- than would be under more modern and in- fewer numbers of high-end workers in in-
tries in which they work—for instance, clusive definitions. In addition, the official dustries like engineering and business.
wages are generally high in industries like federal poverty level does not reflect the dif- Overall, immigrants are more likely to be
16. ECONOMY IN CRISIS 15
poor than the native-born. A recent survey FIGURE 10
showed that 15.5 percent of those speaking
Younger Workers Had the Highest
Spanish at home were living in poverty.35
While the native-born population in poverty
Unemployment Rates in New Jersey
that year was 8.4 percent, the poverty rate
13.0%
for immigrants was 9.9 percent.
Unemployment 11.0%
Some of the differences in poverty levels can 9.9%
be explained by rates of unemployment.
9.0%
Figure 9 shows that New Jerseyans with col-
lege degrees have lower unemployment
rates (2.1 percent) than others in the work- 7.0%
force; for instance, those without a high
school degree were more than four times as
5.0%
likely to be out of work (9.0 percent) in
2007.Young people are far more likely to be 3.6%
2.9%
unemployed than older, more experienced 3.0%
members of the work force. Figure 10
shows this dramatically: those 16-24 years
1.0%
old have nearly three times the unemploy- 16-24 yrs 25-54 yrs 55 yrs and older
ment rate of those who are 25-54 years old.
Race and gender also help explain unem-
ployment.AfricanAmericans and Hispanics
FIGURE 11
have far higher unemployment rates than
whites (Figure 11).
African-Americans and Hispanics Had
Higher Unemployment Rates Than Whites
Housing and housing costs
For the poor, high living costs are particular- 9.0%
ly burdensome. While incomes have stag-
nated (or declined) for many in the state, the 8.0%
7.6%
cost of living continues to rise. Housing is
particularly burdensome for many, as are 7.0%
health care and commuting costs. Median
5.9%
monthly housing costs for New Jerseyans in
6.0%
2005 were $2,503 (Table 1), 43 percent
higher than the nation’s average.36 For many
5.0%
renters, New Jersey is truly out of reach. It is
the fourth most expensive state for renters
4.0%
and the most expensive for low-income fam- 3.5%
ilies with children. To afford a two-bedroom
3.0%
apartment, a family would have to earn
$43,000 a year, well beyond what many are
2.0%
paid.37 Significantly, 38 percent of families
pay more than 30 percent of their incomes
for housing—what the federal government 1.0%
deems to be a reasonable limit. New Jersey
is third highest in the country in this dubious 0%
White African-American Hispanic
category.
17. 16 A NEW JERSEY POLICY PERSPECTIVE REPORT
Homelessness is also a large problem: about jobs themselves. Public employment, once a years, of which about $6 billion will flow to
12,000 New Jersey men, women, and chil- rare source of increased work, is not likely to the state with the remainder to local govern-
dren were homeless in January 2009. These grow in the future. ments, schools, businesses and individuals
numbers are rising as people lose jobs and (including $7.5 billion in tax cuts).
cannot afford decent housing. Increasingly, On March 10, Governor Jon Corzine intro-
renters are forced from their homes; be- duced a budget he said would protect chil- Funding for programs will be distributed di-
tween 2007 and 2008, there was a 70 per- dren, the elderly and the working poor. His rectly to individuals already receiving bene-
cent jump in evictions of renters.38 FY 2010 $29.8 billion state budget was $7.2 fits, to various entities by formula, or by ap-
billion less than what would be expected plication often in competition with other
Foreclosures from current year spending trends. Just over states or agencies. Individuals, businesses
The poor economy and the bursting of the 50 percent of his budget balancing would and governments will need to apply for the
housing bubble have resulted in an increase come from program cuts; another 30 percent many tax and other benefits. Flexibility in
in foreclosures. In September 2008, one in from federal fiscal stimulus funding and the how the funds can be spent varies greatly,
every 453 homes in the state was in some final 15 percent from tax increases. with most of the give in Medicaid and the
stage of foreclosure,39 slightly higher than State Fiscal Stabilization Fund. Since these
the national average and increasing rapidly. In January 2009, Corzine announced an 18- funds can be used to replace state funding,
The state’s courts are clogged with foreclo- month suspension of pay increases for state how the state eventually uses them has ma-
sure cases. Foreclosures were up 91 percent workers (something that the unions oppose) jor implications for the state budget.
in the third quarter of 2008.40 Between Sep- and proposed cuts of $812 million for the
Social services
tember 2007 and September 2008, 46,130 current fiscal year. In February, he an-
foreclosures were filed. February 2009 nounced a two-day furlough for state work- The social safety net—the combination of
alone saw 5,000 new cases. Sussex, Union, ers to try to save more money—although unemployment, health and other benefits
and Passaic counties had the highest rates of this too will be hotly debated with the built up since the New Deal and the Great
foreclosure per household. unions. Towns and cities also face declining Society eras—has been shredded over the
revenues as their ability to raise property last two decades. With cuts by governments,
Fiscal distress taxes is limited by caps and their state aid many New Jersey families have become de-
The recession has taken a toll on the state’s appropriations are either flat or declining. pendent on the support of non-profit organi-
already shaky government finances. State zations and charities. However, these groups
tax revenues have fallen considerably below The state is hoping Washington will provide are running out of money. The demands on
expectations, and the already immense pro- much needed assistance through the Ameri- food banks from hungry people have risen
jected budget shortfall seems to have grown can Recovery and Reinvestment Act dramatically, up by 250,000 in 2008—an
weekly. Part of the deficit results from the (ARRA), which was signed by President increase of some 30 percent. Donations,
recession: the state has had to increase Obama in February. Funds from this legisla- meanwhile, are down by 25 percent.41 Re-
spending by $800 billion on unemployment tion will be critical to help lift New Jersey cently unemployed professionals are in-
insurance and related expenses. There is also out of one of the worst recessions since the creasingly making use of the health-care
growing pressure on long-underfunded state Great Depression. New Jersey is expected to programs and clinics traditionally used by
employee pensions and on public-sector receive about $17 billion over the next two low-income people.
18. ECONOMY IN CRISIS 17
What Can We Do To Improve The Economy?
I More should be spent on training for
bility and by raising the amount a
his analysis shows that New Jersey,
T family would receive. Another anti-
although relatively wealthy, faces workers who could use it to move
poverty measure, the minimum wage,
some serious problems along with into middle-class jobs. Emphasis
remains far below a living wage de-
the rest of the country. Employment growth should be on adult basic education
spite a small recent increase. It should
was slower than the nation’s before the re- (using community colleges and other
be increased to at least $8.50 an hour
cession; reviving the state’s past glory will providers) for low-wage workers.
and automatically raised every year to
not occur without significant change in pub- More education and training will re-
keep up with the cost of living.42 At
lic policy. sult in greater probability of self-suffi-
the same time, the state can raise ciency for these workers. State busi-
more revenue and contribute to an
When NJPP last published a State of Work- ness subsidies should be aimed at en-
equalization of incomes by increasing
ing New Jersey in 2002, the author found couraging development in fiscally
taxes at the upper end of the income
that a decade of boom times had in fact not struggling cities where many of the
range.
produced widespread prosperity. Instead, state’s most at risk residents live.
relatively few working men and women
I Target funding expected from the I With jobs declining, businesses and
shared most of the gains in income. Today,
American Recovery and Reinvestment
New Jersey confronts an economic situation public institutions in New Jersey
Act to invest in human and physical
as grim as any in the past 75 years. The stim- must attempt to find new sources of
capital. Much of the ARRA money
ulus package that emerged from Congress in employment and revive existing jobs.
will be for prescribed categories of
February 2009 will provide nationwide Several options come to mind: New
spending. Within these categories, the
nearly $800 billion in federal spending and Jersey is well situated to develop
state will have some discretion over
tax cuts aimed at helping to stem the down- “green industries,” with its current
specific projects. These expenditures
ward spiral of jobs and incomes. But even if array of small alternative-energy com-
must be made with great care, since
the program works as hoped, New Jersey panies and research strength at Rut-
the ARRA money is a rare opportuni-
and other states will have to do more to fight gers, Princeton, and other universities.
ty for investments in New Jersey from
their way back toward shared prosperity. The federal Green Jobs Act of 2007
the American taxpayer. Education
When this now-deepening recession ends, could provide $120 million for train-
money should go to low-income,
steps must be taken to ensure that work pays ing a new cadre of workers for a vari-
high-need school districts that are
enough for working people to support their ety of green industries. With some
ready to spend it on programs that
families and build a future. seed capital from the state and, per-
will make important differences in haps, from ARRA funds, the potential
learning. Infrastructure funding meant
Some basic principles should guide future for thousands of green industry jobs
for the most “shovel ready” projects
policies: exists through subsidies and grants.
should be targeted to those that do the These green jobs are important be-
I Help restore shared prosperity. The most good for the state’s economy in cause they could pay living wages,
the long term. Rebuilding the state’s
Earned Income Tax Credit (EITC) is and cannot be outsourced to other
infrastructure—rebuilding schools,
one of the most successful programs countries.44
road repair and improving mass transit
helping low-wage workers escape
systems—will produce long-term ben-
poverty and should be aggressively These are but a few recommendations for
efits in the future.43 All of these end
expanded and indexed. It provides a the state to consider in the next year. If
uses will improve the state’s economic
refundable credit based on the amount adopted, they will lead to a fairer and more
efficiency.
a low-income worker receives from buoyant economy and increases in the wel-
the federal EITC. In 2008, New Jer- fare of working New Jerseyans.
sey took a step forward by accepting
the federal definition of income eligi-