Wednesday, November 15, 2017

They are Staying Away in Droves: How NJ's Outmigration Problem is Really a Lack of In-Migration


Demographically, New Jersey is a state in a long, steady slowdown.
  • In the 1990s New Jersey's population increased by 9%, or 684,162 people, or 68,000 a year. 
  • In the 2000s New Jersey's population increased by only 4.5%, or 377,544, or 37,000 a year.  
  • In the first half of the 2010s, from 2010-2015, New Jersey only increased by 62,000 to 8,854,363, or barely 12,000 a year.  
  • From 2015 to 2016, New Jersey only gained 9,000 people.
After years of slowdown, after 350 years of growth, in 2016, New Jersey's population growth reversed altogether and the population fell by 2,000.

There have been momentary dips in population before, so we don't know if
population decline will be an enduring trend, but given the fact that over 60,000 people immigrate to New Jersey per year and births exceed deaths by 25,000, actually losing population for even a single year is quite a feat.

And even if population growth turns positive again, one thing is clear: New Jersey's Era of Robust Population Growth - and thus Robust Economic Growth - IS OVER.

So how did New Jersey lose population despite natural growth and immigration?

Simple.  Because tens of thousands more people moved out of New Jersey than moved in.
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New Jersey's Net Outmigration Rate is Among the Country's Worst

According to the Census's State-to-State Migration Flows, for the last five years, for every five New Jerseyans who left New Jersey, barely three people came from somewhere else in the United States to replace them.

New Jersey's net outmigration rate is higher than states with industrial contraction, like Kentucky, West Virginia, and Michigan.  It is higher than the highest poverty states, like Mississippi, New Mexico, and Alabama.  It is higher than the bitterly cold states of northern New England, the upper Midwest, and Great Plains.  It is higher than the states with the highest costs of living, like Hawaii, California, and Massachusetts.

In 2015-2016, the most recent year for which we have that authoritative Census data, 226,830 people left New Jersey and only 144,359 moved here from elsewhere in the United States. The resulting -82,471 person deficit between in-migration and out-migration is almost 1% of our population. The gap alone is equal to the population of Trenton.

(I am putting the Census data in the format I used it here.)

(the Census numbers include anyone over age 1 and are based on statistical sampling.)

The United Van Lines Survey has ranked NJ's net outmigration as the worst in the country for five years in a row, but the Census's more authoritative State-to-State Migration Flows for the last five years only has us at the third worst, with in-migrants equaling 63% of out-migrants, with only Alaska and New York worse off. 

When net domestic outmigration is calculated as percentage of population, we are in second to last place, behind only Alaska, which never had a diversified economy and is reeling from the decline in oil prices.


And no, immigration doesn't save us.

If you factor in international immigration New Jersey's demographic decline is the third worst in the country, after Illinois and Alaska.


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The Causes and Implications are Hotly Contested

So what is causing our net outmigration and what are the implications?

On one side are groups like the New Jersey Business & Industry Association who say that our high tax burden is a major cause.  The NJBIA warns that net outmigration damages New Jersey through the loss of workers plus pulling billions in income out of our state.

Starting with a statement that 2 million people left New Jersey from 2005 to 2014, the NJBIA's 2016 report "Outmigration by the Numbers: How Do We Stop the Exodus?" argues:
The outmigration of New Jersey residents has had a substantial and continuing negative impact on the state’s economy. As New Jersey’s leave the state they not only take their income with them, but they take income taxes, sales taxes, property taxes and purchasing power with them as well. The $18 billion in net adjusted gross income that left the state between 2004 and 2013 resulted in lost household spending of $8.4 billion; total lost economic output of $11.4 billion; total labor income of $4 billion; and 75,000 lost jobs. ...

It is commonly believed that most people leaving New Jersey are headed for the warmer climates of Florida and North Carolina. While these two states are in the top five, the No. 1 outmigration state is Pennsylvania and the No. 2 state is New York; certainly an indicator that weather is not driving location decision-making alone. Rather, this pattern reflects that while people leaving the state would like to lower their tax burden, they want to do so while staying relatively close to family and friends.
On the other side is the New Jersey Policy Perspective, which through writer Sheila Reynertsen, say the causes are everything other than high taxes and that there are no economic implications.  Reynertsen, in fact, will not use the word 'outmigration' without putting it is quotes, as if it were not a real thing.  (eg,  "Setting the Record Straight on New Jersey ‘Outmigration’")

Although it was undeniable that NJ's population growth was already slowing down, writing in June 2016 Reynertsen attached great importance to the fact that NJ's growth was positive due to immigration and births exceeding deaths.
"The 'Exodus' is More Like a Trickle"
New Jersey’s Population, Number of Wealthy Residents and Income Are All Growing – Not Shrinking 
Proponents of cutting taxes for the wealthy have framed the so-called “exodus” of New Jersey residents and income as a serious crisis that policymakers ignore at the state’s economic peril. They do so, in part, by ignoring the fact that New Jersey’s population and income are actually growing, not shrinking – leaving policymakers and the public to ponder solutions to problems that don’t actually exist. 
The claim of business lobbying groups that New Jersey 'lost more than 2 million residents' between 2005 and 2014 is simply untrue. 
In fact, the 2,090,786 people who left the state over that time were replaced by 1,408,718 who moved here from other states and 596,279 who did so from abroad. So if you only look at people who moved, New Jersey – the nation’s most densely populated state – 'lost' 85,789 people over the decade. That comes to less than 9,000 a year, less than a tenth of a percent in a state with nearly 9 million residents. 
And, that count doesn’t include New Jerseyans who were born here and stayed here; if you also factor in growing families, the state’s population has consistently grown over the same decade, to 8.9 million in 2014 from 8.7 million in 2005.

There are some things that both sides misrepresent.  I think the New Jersey Business & Industry Association too closely juxtaposes net outmigration and high taxes and exaggerates income loss, but the New Jersey Policy Perspective is significantly off-base because it denies that outmigration is legitimate concern at all.

Net outmigration may be a symptom of our economic problems, and not the underlying disease, but it is a phenomenon NJ cannot afford to ignore because Population Growth ≈ Economic Growth and without Economic Growth, New Jersey's debt burdens will become unsustainable.
NJ Needs Faster Economic Growth
to Pay its Debts, to Grow its Economy,
NJ Needs Population Growth.

Although economies also grow due to productivity growth, the lack of population growth is echoed in New Jersey's stagnant economy, since the workforce barely grows.  According to the Pew Fiscal 50 from 2007 to 2017,  total personal income only grew by 1% a year, the 10th worst rate in the United States.

NJ's jobs problem isn't only one of quantity too, it's of quality as well. Since the end of the Recession, New Jersey now has approximately 100,000 fewer jobs paying above-average wages and 135,000 more jobs paying below-average wages.

However, anxiety about our net outmigration is based on comparing the number of out-migrants we lose to the low number of in-migrants.  If you compare the number of out-migrants we have lose to our population and then to what the average state loses, New Jersey is average.

As the title of this blog post says, the problem isn't people leaving New Jersey. The problem is people not coming here in the first place.  

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New Jersey: A Product Finding Few Takers

What gets the most attention is people leaving New Jersey.  This gets a lot of attention because a move from New Jersey is a discernible action.

We all know people who have quit the Garden State and some of us wish we could do that too, but New Jersey's net outmigration rate is so extreme due of too few people moving here, not too many people moving out.

In terms of move-out rate (as in move-outs compared to our population), New Jersey was at -2% per year for 2011-12 to 2015-16, which is actually only the 17th highest in the United States, so actually better than the median.


However, in terms of domestic move-in rate, New Jersey is an abysmal +1.15% a year.  That's just ahead of California, New York, and Michigan for worst in the nation.



If you factor in the 314,495 immigrants who came to New Jersey in the last five years, New Jersey's ranking is only the 9th worst in the United States.  (not graphed.)

So, the New Jersey Policy Perspective is right that the departure of people from New Jersey should not be called an "exodus," BUT since the people leaving New Jersey are not replaced by many people coming into NJ - from either the US or abroad - New Jersey faces a demographic headwind that cannot be ignored.

The New Jersey Business and Industry Association also says that out-migration cost $18 billion and this should not be taken literally, although I think the claim has much truth to it.

First, the following is the data from the IRS (with additional years included by me) that the NJBIA used to calculate the $18 billion cumulative net loss from 2004-05 to 2013-14.  The years in italics were not used by the NJBIA, but I want to include them to provide historical context for our income outflow has increased.


# of Tax Returns, In-Migrants# of Tax Returns, Out-MigrantsIn-Migrant Returns as a % of Out-Migrant ReturnsAdjusted Gross Income of In-Migrants (in '000s)Adjusted Gross Income of Out-Migrants (in '000s)In-migrants Income as a % of Out-migrants
1992-9374,08890,86381.5%$3,109,968$3,740,19383.1%
1993-9472,17988,57581.5%$3,080,073$3,720,33582.8%
1994-9576,09291,71483.0%$3,168,906$4,023,47778.8%
1996-9771,95790,70179.3%$3,665,025$4,569,00680.2%
1998-9976,68091,05384.2%$4,437,332$5,227,10684.9%
1999-0078,92393,49484.4%$4,668,916$5,834,69080.0%
2000-0181,57494,14986.6%$5,271,005$6,713,49278.5%
2001-0282,30894,33587.3%$5,119,710$5,808,32588.1%
2002-0379,04994,60683.6%$4,591,525$5,446,91284.3%
2003-0477,66798,42278.9%$4,613,696$5,726,31180.6%
2004-0579,062104,01476.0%$4,859,034$6,661,06772.9%
2005-0680,561109,46173.6%$5,190,136$7,149,85772.6%
2006-0776,751102,94074.6%$4,860,283$6,948,13170.0%
2007-0879,519101,09178.7%$5,232,255$6,814,36276.8%
2008-0977,10692,41283.4%$4,765,374$5,968,43579.8%
2009-1073,24187,63083.6%$4,277,277$5,542,16777.2%
2010-1174,34393,87279.2%$4,486,058$6,091,11273.6%
2011-1290,339107,41584.1%$5,766,367$7,863,77073.3%
2012-1387,796106,74982.2%$7,108,936$8,717,71981.5%
2013-1479,397103,38076.8%$5,769,268$8,806,48865.5%
2014-1562,79183,29575.4%$4,646,875$7,078,18365.7%
TOTAL1,631,4232,020,171$98,688,019$128,451,138

Sheila Reynertsen of the New Jersey Policy Persepective disagrees that there is any significant income loss:
....the vast majority of income counted by the IRS as “lost” due to out-migration does not depart the state, as the report notes. When most residents leave New Jersey, either for a job in another state or to retire, they don’t actually take their income with them. Instead, that income usually stays with its employer in New Jersey, and is earned by other residents already in the state or by those who move in. Of course, some income, like investment income for example, does move with an individual, but this represents only a small share of the total income “lost.” And by no means does it justify the exaggerated arguments about economic harm caused by out-migration.
I think that both the NJBIA and Reynsertsen are wrong here. 

Reynertsen is right that "the vast majority" of income stays in a state when people leave, but vast majority means "75%."

The other 25% of NJ's income is investments, royalties, capital gains, annuities, pensions, and business profits that can usually leave when an individual moves.  25% of such huge income figures is itself a huge amount exceeding $4 billion in cumulative annual loss.

From the NJ Treasury's Statistics of Income breaks down NJ's income as follows.




Also, sometimes wage income can be taken out of New Jersey if the out-migrant became a commuter from another state, has a work-from-home arrangement, or the business itself moves.

So the NJBIA should not claim that all the income of out-migrants leaves NJ.  25% of their income would be a better guess.

But a quarter of $18 billion is $4.25 billion - and that's a substantial amount (~1.2% of NJ's total AGI).  Factoring in commuters, work-from-homes, and transferred employees would add to that total of lost income, the amount of lost income could be higher.

Then again, the NJBIA juxtaposes NJ's high taxes with outmigration, but taxes are not the only reason people leave NJ or don't come here in the first place, so one should consider the actual income loss (directly due to having high taxes) to be smaller than $4.25 billion.

What should be noted is that there is a trend of diminishing in-migrant income relative to out-migrants:


  • From 1992-1993 to 2003-2004, in-migrants had 82.1% of the income of out-migrants.
  • From 2004-2005 to 2014-2015, in-migrants only had 73.5% of the income of out-migrants, with the last two cycles being the worst yet, with in-migrants barely having 65% of out-migrants' incomes.
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Taxes and Net Outmigration

Some writers cited by Sheila Reynsertsen of the NJPP say there is neglible connection between taxes and interstate moves, but looking at comparative tax burdens there is a correlation between having high taxes and having high-outmigration.

In order to nullilfy the weather-advantage many low-tax states have, and exclude outlier Alaska, I am only including states in the Northeast and Midwest below.

(there is also a correlation between outmigration and the Tax Foundation's Business Tax Climate rankings, but it is not as clear)

Source for Tax Burden Rankings,
https://files.taxfoundation.org/legacy/docs/State-Local_Tax_Burden_FY2012.pdf

Since high tax states often have colder weather and higher costs of living than low-tax states, there are certainly factors at play other than tax burdens, but still, a correlation exists.

Gallup also found a correlation between the percentage of people who want to leave a state and its tax burden.

Approximately a quarter (26%) of residents who live in states with the lowest tax burden say they would like to leave their state. And this rate generally holds for residents in the second and third quintiles. However, there is a three-percentage-point increase to 31% among fourth-quintile states and an even greater jump to 36% among the fifth quintile. Even after controlling for various demographic characteristics including age, gender, race and ethnicity, and education, there is still a strong relationship between total state tax burden and desire to leave one's current state of residence.
Gallup also found that New Jersey and Connecticut were the two states that had the most residents wanting to get out, at 46% each.

What might be a bigger factor in low-tax states tending to have net in-migration is that their economies are growing more quickly and that economic growth pulls other Americans (and immigrants) in who aren't consciously looking for low taxes.  As people move to low-tax states just for the jobs, they form households, spend money, and so create a feedback loop of population growth and economic growth feeding into each other.

There are certainly several factors that lead to a state having high-growth or slow-growth, but taxes seem to be one of them by the correlation between slower-growth in high-tax states and faster growth in low-tax states.


California is an important exception to the tendency of high-tax states to have slower growth, but even California has significant net-outmigration (the 7th highest in the US and the highest of any warm-weather state), so California's high taxes, combined with extremely high housing costs, may be preventing California from thriving even more.

"Low Taxes for Whom?"

This theory that economic growth itself is what is pulling people into low-tax states is bolstered by the fact that some high-growth, low-tax states have very regressive tax systems that impose significant taxes on low-income people

Low-income residents of states with low, but regressive, tax systems would pay more in taxes there than they would in high-tax systems like New Jersey.  For instance, a low-income person in Washington State would pay 16.8% of his income in taxes, in Florida 12.9%, and in Texas 12.5%.  By contrast, someone in the bottom 20% of income in NJ would pay only 10.7% of income, in Connecticut 10.5%, and in New York 10.4%.

And yet low-income people are moving to Washington State, Florida, and Texas anyway despite those states having high taxes on low-income people, so it seems they are being pulled in not by low taxes for themselves, but job opportunities and/or lower cost of housing.

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New Jersey is Losing its Young

One valuable contribution the NJBIA makes is pointing out that the biggest generational cohort to depart New Jersey is actually Millennials, not retirees.

The departure of Millennials starts with college, in which New Jersey leads the nation in terms of the percentage of students going out of state and the absolute net deficit of students going out of state. 

Source, http://bit.ly/2ib9Zmb.  NCES.

Even after age 22 when traditional students are done with college, NJ young people in their mid-20s are disproportionately likely to leave.

Source: http://www.njspotlight.com/stories/16/02/15/new-report-warns-that-new-jersey-is-in-midst-of-millennial-outmigration/

The immediate economic effects of the net migration of Millennials is that NJ's employers have fewer people to potentially hire, the Treasury has fewer people to tax, and eventually fewer babies are born here.

Partly due to falling fertility rates, but also because so many Millennials have left New Jersey altogether, 20,000 fewer babies are born in NJ now than were born in 1990.

NJ's public school enrollment actually peaked in 2006.  

Since the smaller cohorts born in the 1990s will soon be in the prime of their child-bearing years, the trend of declining births should accelerate after 2020.  



--------------

Net out-migration and population loss aren't entirely due to taxes, but NJEA-funded groups like the New Jersey Policy Perspective doesn't like to acknowledge that taxes have any role at all.

When confronted with the fact that New Jersey actually lost residents 2015-16, the NJPP's Vice President, Jon Whiten, cited the diminished appeal of auto-centric suburbia as the main reason:
"My gut says that much of the stagnation we continue to see is driven by a combination of factors," said Jon Whiten, Vice President of New Jersey Policy Perspective. "Among them would certainly be the broad trend away from sprawl and unchecked suburban development, which was New Jersey's stock in trade for some time." 
Whiten noted since the recession, counties on the outskirts of the New York metropolitan area have struggled mightily to retain tax ratables and residents while those with access to public transit have thrived. 

There is some truth in Whiten's statement and Whiten suggests there are other factors, but completely auto-centric exurban parts of low-tax states, particularly Texas, are thriving.

For instance, the Census is non-partisan and says "Southern Cities are Growing Quickly," but what the fastest growing cities also have in common is low taxes.  

Delaware is the fastest growing state in the Northeast and it's completely auto-centric and boring too.  Could having low taxes be an advantage?  Hmm.  

Some public-transit cities like Boston, Washington DC, San Francisco, and New York City are doing great, but Chicago is doing very badly and Philadelphia is lagging national jobs growth.  

"Suburbia" in general isn't in trouble.  High-cost suburbia is.

Anyway, whatever the causes are, we are screwed.

Net outmigration, combined with declining number of young people even entering the labor force, will create a demographic headwind for New Jersey that will further stifle economic growth.

The combination of a demographic headwind from net outmigration, fewer natives entering the workforce and the inexorable devouring of the budget by debt payments will create a crisis that the state cannot solve without a federal rescue and/or default.

Although net out-migration may be more a symptom of New Jersey's profound problems rather than the disease itself, and outmigration is due to factors other than high taxes, I cannot believe that increasing taxes even more won't have a accumulating negative effect on our population and economic growth.

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Sunday, November 12, 2017

NJ's Uneven Fall in Births Foretells Starker State Aid Inequalities, Economic Stagnation


Since the 1980s the number of births in New Jersey has been steadily falling year to year, but not steadily falling place to place.

According to state statistics, The number of births in NJ peaked in 1990, when 123,125 babies were born in the Garden State.  Despite the overall growth in our population,  in 2015, only 102,199 babies were born here, a 17% fall.

The slowdown in births since 1990 has only had momentary and tiny letups since 1990. The number of births has fallen a little more steeply during recessions than in times of growth, but never picked up after recessions.


Without going too far into the causes, I think there are two major ones:
1.  The disproportionate departure from New Jersey of Millennials, the largest generation in
Millennials Are Abandoning NJ.
American history.
2.  A cultural trend toward having smaller families in general.

New Jersey's Total Fertility Rate has fallen from 2.09 in 2007 to only 1.8 today, which is the 15th lowest in the United States.

Given that populations grow and shrink exponentially, the decline in the Total Fertility Rate will have accelerating demographic consequences for NJ.  If a society's TFR is 1.8 instead of 2.0, then in two generations it will have 19% fewer children, not 10% fewer.  (81% = 1.82/2.02)  Thus, the number of births in New
Jersey should decrease further as the steadily smaller cohorts of children born in the 1990s and 2000s enter their childbearing years.

So, unless there is a massive increase in immigration, the demographic challenge will not end.

(The difference in two generations between 2.09 and 1.8 is 25%.)

---------

As you would expect, the decline in births has been highly uneven.  Since 1990, Sussex County's births have fallen by 49%, from 2,274 in 1990 then to 1,154 per year today.  Warren has fallen by 45%, Hunterdon by 38%, and Monmouth by 30%.


199020002015Change Since 1990Change since 2000
Ocean62776542849435.3%29.8%
Hudson98288868103905.7%17.2%
Cumberland234820261958-16.6%-3.4%
Gloucester353831782805-20.7%-11.7%
Passaic841479366982-17.0%-12.0%
Middlesex10346105909313-10.0%-12.1%
Union7,6537,7276,782-11.4%-12.2%
Bergen10,50710,8979,413-10.4%-13.6%
Mercer507746724027-20.7%-13.8%
Atlantic4,0703,4212,936-27.9%-14.2%
Camden8,8697,0286,020-32.1%-14.3%
Essex144691215610294-28.9%-15.3%
Cape May1,3731,043881-35.8%-15.5%
Burlington5,9495,1864,353-26.8%-16.1%
Salem899811649-27.8%-20.0%
Somerset403144253297-18.2%-25.5%
Morris588264384717-19.8%-26.7%
Monmouth837980515849-30.2%-27.4%
Sussex227417781154-49.3%-35.1%
Hunterdon14871441916-38.4%-36.4%
Warren14491328792-45.3%-40.4%

The only two counties that have had growth in births are Ocean County and Hudson County, both of which are demographically and educationally unusual.

If Lakewood were excluded from the Ocean County count, Ocean County's number of births would have declined by 12% (there were 4,598 births to non-Lakewood Ocean County women in 2000 but only 4,030 in 2015)

Obviously, most of the children born to Lakewood-resident mothers will not go to public school.  This will create strain on the Lakewood Public Schools for transportation and Out-of-District tuition, although the strain would not be as much as it would be if those students were enrolled in public schools.

Hudson County's family size is average, but it has a disproportionately large population of people of child-bearing age.  What I see as educationally unusual about Hudson County is that many of the parents there move out before their kids enter public school.

For instance, there have been over 1,000 babies born to women resident in Hoboken for the last five years, but the first grade cohort in Hoboken (charter and public), has about 350 kids.  Likewise for Jersey City - although not as extreme - there 4,300-4,400 babies are born per year, but the first grade cohort there has about 3,000 kids.

---------

Implications for Public Schools

Due to the fall in the number of births, New Jersey's student population actually peaked in 2005-06 at 1,393,782.  It has fallen now to 1,373,267.

That decline is only 1.6% and may not sound like a lot, but it occurred despite a lower drop-out rate, closings of Catholic schools, and some PreK expansion.  (source, NJ Enrollment Files)

The chart below shows the percentage change in births from 2000 to 2015, with 2000 used because that is the year that today's seniors were mostly born in.


There are many implications of the decline of births for New Jersey's public education system, state aid distribution, and the economy.

1.  The State Aid Distribution Will Become Even More Uneven

As the populations of rural districts fall, their formula aid will decline even more and be replaced by Adjustment Aid.  This enrollment decline will continue to push up the state's total of excess aid, even as the deficit grows for underaided districts.

SFRA, as it was written in 2008, does allow a district to lose state aid if its post-2008 enrollment loss exceeds 5%.  It is likely that more districts will encounter the enrollment loss threshold that allows some aid loss under SFRA's status quo.

Since the state has severe budgetary problems, the huge excess aid totals of permanently shrinking districts will be harder to justify when scores of other districts are severely underaided.

The distribution of PreK aid will also need to be redistribution.

Some districts will need more PreK money, like Hoboken and Jersey City.

 In 2015 there were 1,124 babies born to Hoboken mothers, up from 729 in 2005.  In 2015  there were 4,495 babies born to Jersey City mothers, up from 3,733 in 2005.)

On the other hand, other Abbotts have had a decline in births.  In 2015 Union City mothers only had 954 babies, compared to 1,119 in 2005.  In 2015 Pleasantville moms only had 303 babies, compared to 363 in 2005.

2.  Shrinking Areas Will Continue to Shrink

Consolidating New Jersey's rural counties into superdistricts won't just be a "could do" or "should do," but a "must do."  Cape May, Salem, Hunterdon, Warren already have fewer than 1,000 babies born per year, and Sussex is just 1,154 per year.

These five counties already have fewer students than several ordinary single-municipality districts.
  • Sussex's total enrollment is 20,512.00
  • Salem's total enrollment is 10,906.50.
  • Hunterdon's total enrollment is 19,474.50.
  • Cape May's total enrollment is 12,583.00.
  • Warren's total enrollment is 16,443.50.
    And there's more contraction ahead for all of them.

    As districts shrink, many will find it difficult to sustain the classes and extracurriculars that most parents think their kids should have.

    As shrinking districts shrink further, their per student costs will become even higher.  If these districts actually lose Adjustment Aid, their taxpayers may not be able to make up the difference, since a district's fall in costs is not proportional to the fall in enrollment.

    (see "Sussex County Consolidation.")

    3.  The State's Economy will Face a Demographic Headwind

    Population growth isn't, by itself, a good thing, but it is something that an economy usually needs to grow and is, itself, a sign of economic growth.

    New Jersey already has the country's worst net outmigration rate and has 80,000 more people leave the state than it has new arrivals from other states.  From 2015-2016 New Jersey's population actually fell by 2,077, so the falling number of births compounds our separate problem with net outmigration.

    As New Jersey has smaller cohorts enter the labor force (and so many young New Jerseyans leave
    Source, http://bit.ly/2ib9Zmb.  NCES.
    anyway) employers may struggle to find enough workers.  Many employers who contemplate a New Jersey expansion or investment will decide against it, given concerns about the labor supply.

    The shrinking population will also harm the economy on the consumer-side, since there will be less aggregate demand, ie, less spending, less household formation etc.  Less aggregate demand equals less sales tax, less corporate tax etc for the Treasury.

     New Jersey's unemployment rate should stay low, which is a plus.  Housing prices will be lower than they would otherwise be, which is another plus.  Perhaps an equilibrium will be established by our net outmigration decreasing.

    But the state economy will grow very slowly and New Jersey will struggle mightily against its debts until there is a federal rescue or another round of pension cuts.

    37% of New Jersey college students already go to college out-of-state.  When the students look back home towards New Jersey in its death throes, it'll be hard to think of a reason to come back.

    After more NJ-born college students don't come back, the demographic headwind will become a hurricane.

    ----------

    State Aid Deficits and Surpluses are Dynamic


    The fact that NJ's population continues to grow in some places and shrink in others underscores how dynamic the state aid distribution is.  

    Given the continued decline of births in NJ - and outright collapse in some places - the districts in NJ that have lost enrollment over the last few years have not seen the end of it.


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    See Also: