Attracting and Retaining Talent in New Jersey
- Oct 23, 2018
Business owners in New Jersey have expressed concerns about the difficulties of attracting and retaining talent in what is, when compared with many other states where the cost of living is much lower, a very expensive environment. There are concerns that talented workers, both entry-level and experienced, may not find New Jersey to be inviting enough when compared to opportunities elsewhere in the U.S.
Data from recent years shows that this concern is justified. Outmigration appears to be a serious problem for several states in the tri-state area, with New Jersey ranking in the top three states in the country according to a 2015 National Movers Study by United Van Lines.
Employers’ concerns about losing potential talented workers are further supported in the 2007-2014 American Community Survey, which shows that of all the residents leaving for other states, the largest percentage of outmigration is seen in millennials. In those eight years, there was a net loss – that is, the total amount leaving the state exceeded the total amount entering the state – of approximately 58,000 people aged 18 to 34. Perhaps more troublesome still, the outmigration trend appears strongest in the youngest of the generation, as 58% of all residents who left the state were aged 15-24. And finally, according to a report by the New Jersey Business & Industry Association (NJBIA), the state lost approximately 75,000 jobs, or $4.2 billion in labor income, due to outmigration from the years 2005-2014.
If we are to develop a solution to this problem, we must next take a look at the causes of outmigration. New Jersey is a state full of opportunity, with access to all that the tri-state area has to offer. New Jersey workers also earn wages higher than the national average in many professions, and residents in some areas also have access to excellent school systems and acclaimed health care providers.
With all of these benefits to living here, what are the causes resulting in a net outmigration? There are a number of factors at play including traffic congestion, high housing costs, numerous and higher taxes, and generally a higher cost of living. According to the NJBIA,
“With an average monthly housing cost of $1,530, a per capita state and local tax burden of $6,675, average energy expenditure per person of $4,404 and an average car insurance premium cost of $1,595, one can see why our young residents who are entering the workforce at the entry level of the wage scale will find it challenging to afford living in New Jersey”
New Jersey is also bordered by areas with lower cost of living – namely Pennsylvania and upstate New York. These locales represent attractive opportunities to cut down on expenses while still having access to many of the benefits of the area.
Action from state government may be needed in order to help curb this trend of outmigration. In fact, lawmakers have already begun making changes to New Jersey’s tax structure in order to make the state more attractive. As of January 1 2018, New Jersey has repealed the estate tax. Only two years prior, the state was taxing any amounts in excess of $675,000 in a decedent’s estate. The inheritance tax, however, remains in place. Beyond the estate tax repeal, the state has also increased the property tax exemption limit from $10,000 to $15,000 beginning with the 2018 tax year.
Beyond these measures, which impact individuals directly, the state is also taking measures to increase the work opportunities available to them. Aid for employers comes from the New Jersey Economic Development Authority (NJEDA), which has launched the Grow NJ Assistance Program. By incentivizing job creation in certain areas of the state, new opportunities for individuals are created where none existed before. The program is described on their official website as:
“…a powerful job creation and retention incentive program that strengthens New Jersey's competitive edge in the increasingly global marketplace. Businesses that are creating or retaining jobs in New Jersey may be eligible for tax credits ranging from $500 to $5,000 per job, per year; with bonus credits ranging from $250 to $3,000 per job, per year.”
As you can see, the state has been making efforts to retain both individuals and businesses. Some, however, have suggested that the state has not gone far enough and needs to offer greater incentives. What else can New Jersey offer that could directly impact migration trends?
Looking to other states for examples, Vermont has recently signed into law a bill which provides new inbound residents with an expense reimbursement of up to $10,000 for moving and other expenses. Although this particular program’s budget is capped at only $500,000, it still represents an option that New Jersey may want to emulate. Perhaps the promise of credits or reimbursements for skilled workers in certain industries could alleviate some of the fears that employers have about losing prospects to competition in other states.
Not all of the burden of attracting talent can fall on the state. There are many ways that companies themselves can work to attract and keep talent, even in a relatively high-cost area. Knowing what is important to the workforce will allow companies to make informed decisions about how to best position their benefits.
Student loan repayment
One proven way to attract and retain younger talent is to offer student loan repayment assistance programs. This benefit targets two valuable groups: recent graduates, and other more established professionals seeking higher education in the form of Master’s degrees. According to a 2017 survey published by American Student Assistance, 86% of respondents said that they would commit to work for an employer for five years as long as the company agreed to assist in repaying student loans.
Increase flexibility and work-from-home opportunities
The 9-to-5 model, while still the core of American business hours, does not allow for much in the way of flexibility. In an age where an increasing number of households are seeing the need for two salaries from full-time wage earners, particularly in more expensive states like New Jersey, flexibility in work hours goes a long way in keeping people happy and productive. According to a 2017 American University study, the option to regularly telecommute to work was rated #4 out of 19 possible benefits in order of desirability.
Health care benefits and maternity leave
In that same American University study, employer-subsidized health insurance ranked at #2 of 19. Although younger individuals have less immediate health care requirements on average than older individuals, the benefit is still seen as very important. And beyond basic health coverage, many millennials value a more comprehensive solution which includes things like mental health programs, gym memberships, and maternity/paternity leave offerings.
The issue of attracting and retaining talent in an expensive state like New Jersey is a complex and multi-faceted one, affected by a wide range of factors.
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Michael A. Aversa
Michael Aversa CPA formerly served as Partner-in-Charge of EisnerAmper’s Private Client Services Group, with over 35 years experience in private and public sectors. His expertise encompasses all aspects of accounting, auditing, reviews, tax and business consulting.
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