Home to Thomas Edison, Albert Einstein and Bell Labs; New Jersey now ranks 11th for tech industry employment. Rebuilding what he describes as the innovation and infrastructure economy, Murphy has outlined proposals to spur innovation based businesses and investments in STEM education.
In 1990, Harvard Business School professor Michael Porter published one of the quarter century’s most influential treatises on economic development. “The Competitive Advantage of Nations” observes that different regions can develop unique competencies by taking advantage of local conditions, industry clusters and competition boosting practices, such as anti-monopolistic policies.
The combination of discerning markets and support institutions (such as educational or research facilities) impacts a region’s or nation’s ability to compete and grow.
Public policies should focus on nurturing these factor conditions by investing in education and infrastructure “that significantly affect many linked businesses.” This insight has informed development policies from the Obama administration’s efforts to cultivate “innovation hubs,” to New York Gov. Andrew Cuomo’s Regional Economic Development Council initiative.
New Jersey’s advantage stems from its location, which attracts an educated and diverse workforce. Situated between New York City and Philadelphia, the state has broad access to markets and trade.
The Port of New Jersey/New York is the nation’s third largest in volume and contains the greatest in value of transported goods. The Northeast Corridor, which generates 22 percent of the nation’s GDP, runs prominently through the state.
Despite these advantages, New Jersey’s economy has underperformed. From 2005 to 2015 the state’s economy grew by only an average of .3 percent, compared to the national rate of 1.4 percent.
New Jersey has experienced lower levels of productivity and income growth, while seeing its credit rating downgraded eleven times during the past eight years.
According to a recent McKinsey report, matching the national rate of growth would expand the state economy by more than $150 billion and create over 250,000 jobs over the next decade.
The report identifies several reasons for the state’s mediocre performance. This includes a lack of young businesses, shortage of middle-skilled workers and an aging transportation system.
For example, only 5 percent of companies with at least 500 employees are less than 10-years-old, compared to the national rate of 11 percent. Like other states, New Jersey attempts to attract businesses, but less than 20 percent of incentive deals go to younger companies.
Younger companies create more jobs than older ones. In New Jersey, newer businesses have sustained 15 percent employment growth, compared to a 12 percent loss for older firms.
The state contains industry clusters in areas such as biotechnology and pharmaceuticals, wholesale distribution and cybersecurity with growth potential.
Murphy understands that incentivizing entrepreneurship and attracting high growth businesses are key components of job creation.
In regard to workforce development, the United States spends less on vocational and apprenticeship training then other developed countries, and New Jersey trails the nation in apprenticeships.
New Jersey has a growing need for middle-skilled workers in industries such as healthcare and advanced manufacturing. Other states, such as Pennsylvania, have partnered with the private sector to collaborate on skills training in high growth areas.
Interestingly, Germany has one of the best apprenticeship systems in the world. Germany’s dual system of apprenticeship and classroom learning has produced the lowest youth unemployment rate of any industrialized nation.
As a former Ambassador to Germany, Murphy is intimately familiar with their technical training system. Drawing on this experience, Murphy wants to expand apprenticeship and vocational opportunities and improve access to Community Colleges.
Finally, the most densely populated state has a transportation system in disarray. Congestion costs are high and the average resident spends more on vehicle repairs than any other state.
This year has been particularly hard on commuters due to Penn Station repairs and the Hudson Tunnels are in critical need of upgrades.
Murphy has plans to reform New Jersey Transit and secure funding for the Gateway Tunnel Project and Port Authority Bus Terminal. In addition, Murphy’s bold proposal for a public bank could be a source of capital for infrastructure improvements.
Murphy is a Democrat who understands that economic growth is a vital component of a progressive agenda. Growth and innovation provide the resources necessary to strengthen the middle class and expand opportunity.
Murphy has displayed a remarkable ability to emphasize progressive themes while speaking fluently about economic opportunities. With all the gloomy talk about “secular stagnation” and “new normals”, Murphy has the chance to demonstrate that a stronger and fairer economy provides an antidote to divisive populism.
Douglas Singleterry is counsel at Vasios, Kelly & Strollo and co-author of New Jersey Uniform Commercial Code. He has served on the North Plainfield Borough Council since 2005.
Zenon Christodoulou holds a master’s degree in international finance and doctorate in organizational behavior. He is a management consultant and adjunct professor at William Paterson University’s Cotsakos School of Business.