McKinsey’s Smart Economic Vision for New Jersey

July 20th, 2017 by Elaine Clisham

It was heartening to see the McKinsey & Company report on what it will take to “re-seed” New Jersey’s economy, because it shared many of the same priorities highlighted in New Jersey Future’s gubernatorial platform, Smart Growth Is Economic Growth.

Specifically, the McKinsey report notes that New Jersey has been under-investing in what it sees as the key drivers of economic growth: people, infrastructure, and what it calls “young, mid-sized businesses.” In doing so, the report concludes, the state has been ignoring the potential for as much as $60 billion in gross domestic product and 250,000 jobs.

The report’s recommendations line up nicely with New Jersey Future’s recommendations for the state’s incoming governor, including:

Over-investing in retaining educated Millennials. According to the report, highly educated Millennials account for the largest net migration of people out of New Jersey. If the state wants to keep them as a talent pool for young, fast-growth companies, it will need to find ways to provide more affordable housing types, particularly in places well served by transit and with a rich diversity of things to do.
Relieving traffic congestion by rebalancing traffic flows. The report, which surveyed chief executive officers, cited commuting difficulty as a significant barrier to talent attraction in New Jersey. To alleviate this, the report recommends directing investments to alternative means of transportation besides the car (including through congestion pricing), and bringing jobs, housing and transit closer together to reduce commute times.
Investing in younger businesses. According to the report, these are the largest net job creators in the U.S. economy, but they make up a smaller percentage of the New Jersey business landscape than nationwide, and the state is under-invested in the kinds of work spaces that accommodate them. The report recommends prioritizing the development of incubators, co-working spaces and innovation hubs — again, in vibrant, urban places that draw the talent pool these businesses are seeking.
Improving logistics infrastructure. The report highlights New Jersey’s ideal location as a logistics and distribution hub, with access to 40 percent of the U.S. population within one day’s drive. However, logistics preferences are moving toward shorter delivery times, making it even more important to invest in bringing transportation infrastructure up to standard and reducing road congestion by shifting some transportation to other modes.

The McKinsey report recognizes that a number of the smart-growth policies it outlines can have a significant positive impact on New Jersey’s economic vibrancy. We hope the next governor and the state’s legislative leaders will consider making the strategic investments the report recommends, to spark the next generation of economic growth in the Garden State.