The Greenlining Blog | Connecting Communities, Issues, Policy & People

New Jersey’s Sluggish Recovery Hurting Working Families

Posted on September 16, 2016October 10, 2020 by Brandon McKoy

Household incomes are stagnant. Poverty, true poverty and deep poverty persist and remain far higher than prior to the Great Recession. Income inequality is on the rise. Nearly half of young adults aren’t striking out on their own, opting to live at home instead. And nearly all of these metrics are worse for people of color and women.

In other words, the kitchen-table economics of working- and middle-class New Jerseyans across the state – as brought to light in the 2015 American Community Survey data released this week – are yet more evidence that New Jersey’s near-decade experiment with trickle-down economics hasn’t worked. The prosperity has not, in fact, trickled down.

This bleak picture in New Jersey is not new, but each year it stands in starker and starker contrast to national trends. In 2015, American median household incomes grew by more than 5 percent and the share of people in poverty dropped by more than 1 percentage point.

Back home, the Garden State ranked last among every state in household income growth during 2015, seeing just a 0.3 percent rise in median household income, which inched up to $72,222. And poverty remained stubbornly high, with a slight drop in people living under 100 percent of the federal poverty level (which, at $20,160 for a family of three, is clearly an inadequate measure of true poverty in New Jersey), a slight increase in people living in deep poverty (defined as 50 percent of the federal poverty level) and a slight dip in people living below 200 percent of the federal poverty level, a more accurate measure of true poverty in this high-cost state. (All of these year-to-year changes were statistically insignificant, as they were within the Census’ margin of error.)

In other words, one in four New Jerseyans is still struggling to get by, while one in ten lives below the official and inadequate poverty line and one in twenty lives in absolutely desperate economic circumstances.

Child poverty also dropped slightly – to 15.6 percent from 15.9 percent – but the change was statistically insignificant, falling within the margin of error. Child poverty is still 34 percent higher than it was before the Great Recession, when it was 11.6 percent in 2007.

While poverty has fallen slightly across most groups, New Jerseyans of color continue to experience significantly higher levels of poverty than others. Poverty among African Americans fell from 19.7 percent to 18.6 percent; and among Hispanics and Latinos of any race poverty dropped from 21.2 percent to 20.2 percent. These rates are significantly higher than poverty among whites, which dropped from 8.5 percent to 8.2 percent. Among Asians, poverty rose from 6.8 percent to 7.1 percent. For the category of “Some Other Race” poverty dropped to 20.2 percent from 21.2 percent, and among individuals of “Two or More Races” poverty increased to 17.7 percent from 14.3 percent.

Poverty among women also remains higher than poverty among men. For women, the rate of poverty dropped from 12.2 percent to 11.7 percent. Among men, the poverty rate remained largely unchanged, dipping slightly from 10 percent to 9.8 percent. For both groups, the poverty rate is higher than it was in 2007, when it was 9.7 percent for women and 7.3 percent for men.

At the same time most families are struggling, those at the very top continue to do quite well, thank you very much. In fact, New Jersey was one of only eight states that saw income inequality increase from 2014 to 2015, and it is now at its highest level ever.

And while New Jersey ranks near the bottom on a number of economic statistics, there is one in particular where we are second to none – nearly half (46.9 percent) of young adults (18-34 year olds) live at home with their parents, more than any other state by far (Connecticut comes in second at 41.6 percent).

For those who have been paying attention, this information – while distressing – shouldn’t be surprising. New Jersey has had one of the nation’s weakest recoveries out of the Great Recession; in many cases it has not yet returned to pre-recession levels. When making the necessary adjustments for inflation, for example, median household income is still about $4,400 lower than it was in 2007, when it sat at $76,629.

Even though New Jersey has enjoyed a drop in the annual unemployment rate, which has gone from 10.9 percent at its peak in 2011 to 6.6 percent in 2015, it is still higher than it was before the recession (it was 5.9 percent in 2007). Additionally, when unemployment goes down, it is sensible to expect poverty to go down as well, but that hasn’t been the case for New Jersey. The poverty rate remains stubbornly high at 10.8 percent, up from 8.6 percent in 2007. And true poverty – incomes less than 200 percent of the federal poverty level – at 24.7 percent in 2015, also remains significantly higher than in 2007, when it was 20.9 percent.

New Jersey still has a very long way to go before we recover all that was lost during the Great Recession, as our recovery continues to lag significantly behind the rest of our region and the nation. In order to get back on the right track, policymakers must find ways to invest in the state’s assets, including our workers and families, so that our economy can grow and our state can be strong and resilient.

Census: More New Jerseyans Gain Health Insurance

Posted on September 13, 2016October 10, 2020 by Raymond Castro

Census Data: Number of New Jerseyans Without Health Insurance Continues to DropAffordable Care Act’s Impact Continues to Be Seen in Annual Census Reports

Unprecedented progress has been made in increasing the number of New Jerseyans with health insurance as a result of the Affordable Care Act, new data from the U.S. Census Bureau released today shows. The number of people with coverage increased in 2015 for two main reasons: New Jersey’s decision to expand Medicaid to reach the poorest residents who otherwise couldn’t afford health insurance, and the success of the health insurance marketplace in making insurance more affordable for low- and moderate-income New Jerseyans. This new report is particularly important because 2015 is the first year when the ACA was fully implemented, and the census data rivals all other studies in quality because of its large sample size.

The share of New Jerseyans without insurance has dropped to 8.7 percent in 2015 from 13.2 percent in 2013 – a decrease of 34 percent. This was close to the national average percent decrease, which was 35.2 percent. The number of uninsured New Jerseyans decreased by 389,000 – just 771,000 lacked insurance in 2015 compared to 1,160,000 in 2013.

Since the Medicaid expansion started, about 480,000 additional New Jerseyans have enrolled, exceeding all projections. Thanks to New Jersey’s decision to expand Medicaid to help more people who can’t afford private insurance, more people are getting the care they need to go to work, take care of their kids, and be healthy, productive members of their community.

New Jersey is also saving about a half billion dollars a year as a result of the Medicaid expansion because it was rewarded under the ACA for expanding eligibility in NJ FamilyCare and it has reduced the state’s charity payments to hospitals. New Jersey leads the nation for its savings from the Medicaid expansion.

In spite of the fact that three insurers have recently left the marketplace, it has made revolutionary changes in New Jersey’s individual market and still offers many plans to choose from. Prior to the marketplace, the number of New Jerseyans purchasing comprehensive insurance had been decreasing for nearly two decades, owing to the nation’s highest premium rates that made this coverage unaffordable for middle-class families. The ACA changed that by making premium subsidies available to over 80 percent of everyone enrolling in the marketplace, which has helped make insurance much more affordable for about 250,000 New Jerseyans.

New Jersey Should Keep Tax Deal with Pennsylvania in Place

Posted on September 7, 2016October 10, 2020 by Jon Whiten

Last week New Jersey Gov. Christie notified Pennsylvania that he will likely move to end nearly four-decades-old tax agreement between the two states in an effort to boost revenues in the Garden State (and punish legislative leaders for failing to bend to his will on changing health benefits for public-sector retirees).

While ending the agreement would presumably bring much-needed revenue to New Jersey, it comes with harmful consequences to the state’s working-class residents. In the end, that price is too high and this is a deal not worth making.

Here’s how it works: Currently, New Jersey and Pennsylvania allow residents who work in the other state to pay income taxes to the state in which they live, not the state in which they work. So Bucks County residents working in Mercer County pay Pennsylvania income taxes, while Camden County residents working in Philadelphia pay New Jersey income taxes.

Ending this agreement would subject New Jerseyans who work in Pennsylvania to the latter’s income tax, and vice versa. Since New Jersey’s income tax is highly progressive – meaning that the wealthiest pay the highest rates – and Pennsylvania has a regressive flat income tax, wealthy and upper-middle-class Keystone Staters who work in New Jersey would pay more, as would working- and middle-class Garden Staters who work in Pennsylvania.

The result:

If you’re a New Jersey worker who files taxes as a single person and you earn less than $61,000 working in Pennsylvania, you will pay more in state income taxes. If you are in a married household and you jointly file your taxes, you will pay more if your household income is less than $113,000.

The news is even worse for working-class New Jerseyans who are employed in Philadelphia. The city levies a 3.47 percent wage tax, against which New Jersey residents can currently claim a partial tax credit. That would end along with the reciprocal agreement.

Ending the agreement might bring $180 million in annual revenue, according to the state’s former treasurer – and New Jersey can certainly use every dollar of revenue it can get. But state finances must also be viewed with fairness in mind, and on that front there are plenty of fairer ways to raise revenues – particularly when New Jerseyans at the bottom and in the middle already pay the highest share of their incomes to state and local taxes.

Here are just a few quick examples that, taken together, could bring in over $2 billion in revenue each year, and in a much more equitable and sustainable way:

Close tax loopholes that allow multi-state corporations to artificially shift revenue out of New Jersey: An estimated $110 million to $290 million in revenue each year
Raise income taxes on earnings of over $350,000 by implementing two new tax brackets: An estimated $1.1 billion in revenue each year
Roll back some of 2011’s business tax cuts (single-sales factor, cut in S-corporation minimum tax and carry-forward changes): An estimated $321 million in revenue each year
Levy taxes on a regulated and legalized marijuana market: An estimated $305 million in revenue each year

Debt Sentence

Posted on September 7, 2016October 10, 2020 by Brandon McKoy

New Jersey’s Declining Investment in Higher Education Harms Students & Families

This Fast Facts is a summary of an in-depth report researched and written by four graduate students at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University in conjunction with New Jersey Policy Perspective. For the full report, visit https://www.njpp.org/wp-content/uploads/2016/08/Debt_Setenced_NJPP_Report_FINAL.pdf

State investments in public higher education have been declining for decades, forcing universities to deal with increasing numbers of students with less public funding. The result has been students and families taking on larger and larger amounts of student loan debt to pursue a college degree.

New Jersey is no exception.

In fact, the Garden State has seen one of the largest decreases in funding per pupil when compared to other states in the Northeast and the national average. Students attending New Jersey colleges are likely to incur noticeably more debt than the national average.

As a consequence, some students find it more difficult to complete their degrees, are forced to do so part time, or are prevented from attending at all. For those who attend and graduate, their delayed earnings potential and more immediate repayment requirements translate into higher rates of delinquency and default, and concurrent declines in participation in the economy — they are less likely to buy cars and homes or start families.

New Jersey’s declining investment in higher education accelerated during the recent recession, when annual state support declined by 29 percent from 2008 to 2015. These cuts, however, are worse when combined with the increase in attendance that accompanies a recession as families choose more affordable in-state tuition rates. When these two trends are combined, colleges and universities are foced to do more with less, and the amount of funding per pupil drastically decreases – in New Jersey, it declined by 30 percent from 2008 to 2014.

As state funding for public colleges and universities has declined, tuition rates have increased. In just a little over ten years, the average tuition in New Jersey has increased by nearly $4,000 when adjusting for inflation. Without adjusting for inflation, the average sticker price for a college education in the Garden State has increased by $6,000 during the same period. This shows that the price of a college degree out-paced the rise in inflation over the same period; the extra burden is made doubly worse by simultaneous and significant decreases in state funding for public universities and colleges. This is a drastic shift in the responsibility of paying for a college education from the state to students and families, and is particularly troubling at a time of stagnant or declining incomes for most New Jerseyans. Average tuition and fees at the state’s public colleges and universities are now about 12 percent of the median income for a New Jersey family of four – nearly double the 6.6 percent share in 1995.

These problems, however, are not without solutions. New Jersey has an important role in reversing – or at least slowing down – increasingly unaffordable college prices and rising student debt.

To slow it down, New Jersey could return to pre-recession levels of funding for higher education, reversing recent cuts. To do so, New Jersey would need to increase state support by 40 percent (in CPI-U adjusted dollars), from the $735 million invested in 2015 to $1.03 billion. While this would help ease the pain, it would not cure the patients by meaningfully improving the affordability of public college.

Of greater impact would be a return to public funding levels that would place tuition and fees to the more affordable 6.6 percent of family income seen in 1995. To get there, New Jersey would need to increase state support by 63 percent, from the $735 million in 2015 to $1.2 billion. This would bring today’s funding in line with the average funding in the 1990s and serve as a true reversal, supporting not only the current middle class, but also providing for its expansion.

Gov. Christie Rejects Pay Boost for Nearly 1 Million Workers

Posted on August 30, 2016October 10, 2020 by Jon Whiten

The governor has failed to take advantage of a great opportunity to give nearly 1 million New Jersey workers a raise, reduce inequality and help the state’s economy. Instead, he has decided to allow employers to continue paying 975,000 New Jerseyans so little that they can’t survive on their wages alone in this high-cost state. These workers and their families must continue to rely on the publicly funded safety net and the charity of the private nonprofit sector just to put food on the table, clothes on their backs and a roof over their heads.

The phased-in minimum wage hike, to $15 over 5 years, was a sensible, steady way to give working families across the state a better shot at success, and would have mostly helped adults working full-time despite the myths perpetuated by opponents of raising New Jersey’s pay. In fact, far more of New Jersey’s low-wage workers are raising kids of their own (28 percent) than are teenagers themselves (9 percent), and about 1 in 5 New Jersey children have at least one parent who would have received a raise under this proposal

The Value of New Jersey’s Gas Tax Has Plummeted

Posted on August 24, 2016October 10, 2020 by Sheila Reynertson

Having the second lowest gasoline tax rate in the country may be great on drivers’ pocketbooks but it’s been devastating for the fund that keeps New Jersey’s roads, bridges and mass transit in shape. In fact, the purchasing power of New Jersey’s gas tax has dropped by 47 percent since the last time it was increased in 1990, costing the state over $10 billion in lost revenue over the past 26 years, according to a new analysis by the Institute on Taxation and Economic Policy.

And the need to replenish the Transportation Trust Fund will only grow in the years ahead if New Jersey fails to raise the gas tax. By 2026, the gas tax will have lost 62 percent of its value.

Enacting an increase in the gasoline tax rate could reverse this decline. But as the governor and lawmakers remain unwilling to raise the gas tax without some sort of tax break trade-off, the gas tax as it stands now will continue to raise insufficient level of revenue over time for two reasons.

The escalating cost of maintaining and building roads, bridges and mass transit has reduced the amount of work that can be done with each dollar raised by the gas tax and the gas tax collections per mile driven has decreased due to more fuel-efficient cars on the road.

Simply reversing this decline would require increasing the state’s gasoline/diesel tax rates by 13.8/16.7 cents, respectively, in 2017. If lawmakers want to increase the purchasing power of the gas tax beyond its 1990 levels, the tax rate increases would need to be even larger.

But in the face of inevitable improvements in vehicle fuel efficiency and continued growth in the cost of construction and maintenance, further rate increases will be needed in the years ahead. A tax rate indexing law similar to the one recently enacted in Georgia would be a good way to implement such future increases.

Those who love to boast about New Jersey’s cheap gas and the fact that about a third of it is bought by out-of-state travelers may find it harder to do so as they face more treacherous road conditions and longer commuter times, and as state government agencies that serve New Jerseyans face budget raids to help bail out the broken Trust Fund. It’s beyond time to put forward a sustainable plan that adequately funds one of New Jersey’s greatest assets – its infrastructure – for decades to come.

New Jersey Loses Jobs in July; Recovery Remains Elusive

Posted on August 19, 2016October 10, 2020 by Jon Whiten

With New Jersey employers cutting 4,700 jobs in July, the Garden State’s brief one-month flirtation with a full jobs recovery from the recession has ended – at least momentarily. More than 7 years after the recession’s official end, New Jersey still has 1,900 fewer jobs it did before the recession began. Regardless of the monthly ups and downs, New Jersey’s economy remains fragile and its recovery continues to lag behind that of our neighbors and the nation as a whole.

New Jersey has now recovered 99 percent of the jobs it lost since December 2007, when the recession began. It’s one of only nine states that hasn’t yet recovered all the jobs lost since that time. The U.S. has now recovered 170 percent.

The Garden State now has the 9th slowest job growth (-0.05 percent) of all the states since December 2007. The nation as a whole has grown jobs by 4.4 percent during that same time, while the Northeast region has posted growth of 3.8 percent.

But the news gets even worse. Not only has New Jersey not gotten back to December 2007 employment levels, it has also failed to keep up with the population growth that’s happened since. In fact, New Jersey should have 263,200 more jobs in July 2016 than in December 2007 just to keep employment levels stable as the population grew during that time.

This means the state still has a current jobs deficit of 265,100, and needs to add 116,505 jobs each year for the next three years just to get back to pre-recession employment levels and keep up with continued population growth by July 2019. For contrast, the state has barely gained that many jobs in the past three years total, having added only 147,500 since July 2013 (an average of 49,167 jobs gained per year).

Many of the jobs that have been growing in New Jersey have been lower-paid jobs. The two employment sectors that have seen the largest increase since December 2007 are the ones where New Jerseyans earn the least: education and health jobs (including home health aides), which have grown by 14.8 percent, and leisure and hospitality jobs (including retail and food service), which have grown by 7.7 percent. Highly paid sectors like financial services (-5.7 percent) have been declining, as have sectors that formerly made up the strong working and middle class: construction (down 10.9 percent); manufacturing (down 19.8 percent) and public-sector state and local government jobs (down 4.5 percent).

Honoring the Legacy of Former Board Chair Kathleen Crotty

Posted on August 7, 2016October 10, 2020 by Jackie Cornell

One year ago today, the staff and Board of New Jersey Policy Perspective joined in sorrow as we learned of the passing of our great friend and Board Chair, Kathleen Crotty.

Kathy was a groundbreaking force in New Jersey public life. She served as the executive director of the state Senate Democratic Office from 1986 until she retired in 2009 – the first woman to lead one of the legislature’s partisan offices. A longtime advocate for women in public office, and a renowned mentor and advocate for people starting careers in public service, Kathy set high standards in recruiting and nurturing the Senate office’s policy staff.

Over the past year, thanks to the generous support of dozens of Kathy’s friends and family, New Jersey Policy Perspective launched the Kathleen Crotty Fellowship in Kathy’s honor.

The 10-week policy Fellowship aims to continue Kathy’s commitment to public policy and her legacy of mentorship, providing an eager graduate student or recent graduate with an intensive summer experience working in New Jersey policy and advocacy, under the guidance of experienced mentors at NJPP.

Today, as we remember Kathy’s many contributions to the world of New Jersey public policy and civic life, we are proud to introduce the first Crotty Fellow, Amy Dunford, a graduate student at the Edward J. Bloustein School of Planning and Public Policy, whose impressive work this summer included an evaluation of the success of New Jersey’s paid family leave insurance program.

For more information on the Crotty Fellowship, or on how you can help to ensure its long-term success, please email me at jackie@njpp.org

Universal Broadband is Essential Infrastructure for New Jersey

Posted on August 4, 2016October 10, 2020 by Brandon McKoy

This is an edited version of testimony delivered to the Board of Public Utilities this afternoon regarding Verizon’s service in South Jersey.

In today’s hyper-connected world and digital economy, access to affordable high-speed internet is vital to providing economic opportunity. For the child researching a topic for school, the young mother looking for a job so she can support her family, the entrepreneur trying to hold a video conference with business partners, and countless others, having fast and reliable high-speed internet is essential to achieving their daily goals.

While Verizon may state that it holds the best intentions, the fact of the matter is that its failure to maintain landlines and refusal to build sufficient high speed infrastructure significantly harms the residents of our state. And those already struggling to get by are the ones that can least afford a lack of access to affordable high speed internet.

Broadband access in New Jersey is generally quite high. Just three percent of residents lack access compared to ten percent of Americans overall. But New Jersey, as the most densely populated state in the nation, must lead and make access to this vital service universal. 21 percent of rural New Jerseyans lack access to broadband internet. Cumberland, Atlantic, Burlington and Salem counties all rank in the bottom third in the state for broadband access.

When it comes to employment and education, access is incredibly important. Today, many employers post job openings in online-only forums and use online-only applications. Among Americans who sought work within the past two years, 80 percent used online resources. And research shows that unemployed people who use the internet for job searches have been found to obtain jobs about 25 percent faster than similar candidates who don’t search online.

Schools rely on the internet more now than ever before to educate their students. In 2007, 94 percent of school districts serving low-income populations reported that their teachers assigned internet-based homework. A recent study surveying high schoolers reported that 97 percent are required to use the internet to complete homework. Unfortunately, 1 in 4 lower-income households with school-age children don’t have high-speed internet at home, placing major barriers to educational attainment for these children.

And while access is obviously important, access alone is not enough. Even though only three percent of New Jerseyans lack access to high-speed internet, about fifteen percent live in a household without broadband. Many also have no choice of carrier. Without competition among carriers, it is more difficult to incentivize affordable options. While recent data is not available for New Jersey, three-quarters of homes nationwide have no competitive choice for high-speed broadband.

Across America, 10 percent of higher-income households live without broadband. For low-income households, those with incomes under $20,000, that number is 59 percent. Among black families, 50 percent don’t have broadband. Among hispanic families, 46 percent don’t have broadband. For white families, 28 percent live without broadband. Among all families who live without broadband, a third cite cost of service as the main reason.

Considering all of this, state officials and representatives need to make the maintenance, construction and expansion of high speed internet networks a priority, and take steps to ensure that residents can access this service affordably. If Verizon is unable to either maintain its landline infrastructure or construct a high speed fiber internet network, then state representatives must step in and fix the problem. Whether that is partnering with another private company or creating a public solution, this need must be addressed in a purposeful manner. The longer these communities are subject to sub-par, unaffordable internet access, the more they will struggle to build strong economies that improve the lives of all New Jerseyans.

The Senate’s Tax Cut Plan, by the Numbers

Posted on August 4, 2016October 10, 2020 by Jon Whiten

The current transportation funding proposal championed by New Jersey’s legislative leadership, and advanced out of the Senate Budget Committee last week, includes a much-needed increase in New Jersey’s fuel taxes, which is crucial to ensuring New Jersey’s economic future. But the good news ends there, as the flip side of the coin is a big package of tax cuts that will disproportionately benefit the state’s wealthiest residents and heirs while making it all that much harder for New Jersey to pay for essential services and targeted investments to grow the economy in the future.

The tax cuts are weighted towards those who have little need for relief – and those families stand to receive much larger breaks, dollar for dollar. So while eliminating the estate tax will deliver an average tax cut of more than $100,000 to a few thousand heirs (and an average tax cut of more than $1 million to those inheriting the very largest estates), boosting the Earned Income Tax Credit will give nearly 600,000 striving and struggling working families a credit of about $250 each.

$896 million: The total amount of lost revenue from the five tax cuts and credits

62%: The share of that amount that will be split between about 4,000 heirs of New Jersey’s largest estates, via the total elimination of the estate tax ($552 million) = an average tax cut of about $138,000.

Of this:

Approximately 72% will go to a few hundred (about 22%) of the heirs who currently pay the tax; those who are inheriting the largest multi-million-dollar estates
The rest (just 28%) will go to 78% of the heirs who currently pay the tax; those who are inheriting smaller – but still sizable – estates valued between $675,000 and $2 million
The 96% of estates left by deceased New Jerseyans that are worth less than $675,000 will continue to be untaxed

18%: The share of that amount that will be split between about 200,000 New Jersey households with annual retirement income between $10,000 and $100,000, via a 400 percent expansion of an existing tax exemption on retirement income = an average tax cut of approximately $820

Of this:

About 84% will go to the top 40% of all New Jersey households (those with annual incomes over $79,000).
About 16% will go to households in the middle (with incomes between $49,000 and $79,000)
Just 1% will go to the bottom 40% of all New Jersey households (those with incomes below $49,000), because these taxpayers are already largely covered under the current exemption.

15%: The share of that amount that will be split between nearly 600,000 working families who are struggling to get by in high-cost New Jersey, via the increase in the state Earned Income Tax Credit to 40% of the federal level = an average tax cut of $250

Category: Blog