First and foremost, the COVID-19 pandemic is a public health crisis, with staggering casualties and human suffering beyond words. But, it is also an economic crisis. Consider this: In the nine years after the peak of the Great Recession, New Jersey added approximately 350,000 new jobs. In the first nine weeks of this crisis, COVID-19 has impacted nearly three times that number. This is the staggering challenge facing us all.
So, as we begin to sharpen our focus on the restart and recovery effort, our goal should not be limited to ensuring that we are better prepared to handle another similar crisis. We must be equally committed to building a state — and an economy — that is more resilient, in every sense of the term: economically, socially and physically. A resilient New Jersey is an extension of the “Stronger and Fairer New Jersey” that Gov. Phil Murphy has been focused on since Day One.
And, just as we have seen the virus hit vulnerable communities harder than others, those living most precariously in good times are most acutely at risk economically in a crisis.
So, this is our task — to build a New Jersey economy that is more resilient and works for more people in the wake of the COVID-19 crisis. Gov. Murphy has been clear in his charge to us — to safely restore our economy today and plan smartly for tomorrow.
That means developing a decision-making framework based on science, data and public health expertise that allows businesses and workers to understand how decisions will be made, not just for ending this current period, but for the months and perhaps years ahead. The work of the Governor’s Restart and Recovery Commission (comprised of leading national experts) and the Restart and Recovery Advisory Council, which I’m honored to co-chair with Higher Education Secretary Zakiya Smith-Ellis and Choose New Jersey CEO Jose Lozano, will be critical to developing smart frameworks that keep New Jersey ahead of this curve.
In the short-term, it means thinking about moving from crisis management (i.e., stay at home orders, which have been critical to bending the curve) to thinking about how we learn to cope with this disease through multiple phases and cycles — through loosenings and tightenings, with good months and bad months. We have to think of the economy as having a chronic condition that has to be managed.
Building a more resilient economy in the long term has to begin with an honest and sober assessment of what lies ahead.
And as we begin the process of restart and recovery, we will have to live with alterations to our daily lives in ways large and small — and with the uncertainty that accompanies the possibility of further widespread outbreaks this fall, and beyond.
That uncertainty and disruption will have massive long-term economic consequences — which is reflected in the Congressional Budget Office’s recent projections of double-digit national unemployment through the end of 2021.
We are in this for the long haul — anyone who tells you otherwise is practicing magical thinking.
This fundamental change to the long-term economic outlook means we need to calibrate our economic policies and priorities to focus on the biggest challenges and opportunities that will present themselves during this crisis and emerging recovery — and there are both. The good news is that many of the sectors and initiatives already prioritized by Gov. Murphy’s 2018 economic master plan still represent significant opportunities for the state. The challenge is that, in an unprecedented fiscal crisis, we will have fewer resources to invest, and so we will have to be even more judicious in how those resources are allocated to build a more resilient and equitable New Jersey.
While it’s too early to say for sure exactly what prescriptions will be needed to stabilize and restore New Jersey’s economy, I wanted to share some initial thoughts on five key challenges and opportunities that will likely present themselves as we reopen the economy of the densest state in America. How we respond to these issues will determine our economic destiny for the next several years.
While some of the nearly 1 million New Jerseyans who have lost their jobs will be able to return to work once non-essential businesses can reopen, many industries — particularly those that rely on density and proximity (i.e., casinos, restaurants, entertainment, retail, sports) are likely to face significant operational and financial challenges. As we work to recover, workforce development and economic development have to be seen as two sides of the same coin, now more than ever. We must mount an unprecedented effort to provide the training and other resources needed to connect these workers with opportunities in other sectors. The jobs portal launched by Gov. Murphy during this crisis is a good example of the kind of efforts we will need — and which builds off the models outlined in the Governor’s JobsNJ plan, a plan released in January that cemented already strong partnerships between the Economic Development Authority, the Department of Labor & Workforce Development and the Office of the Secretary of Higher Education. And, when people return to work, New Jersey can and should be the national leader in ensuring that all workers have the protections and rights they need to be as safe as possible from this virus in the workplace.
2. Small business
COVID-19 has been a catastrophe for the small businesses that employ approximately half of New Jersey residents — businesses that have less cushion to absorb this kind of shock. And, even in good times, firms owned by women, minorities, veterans, immigrants and the LGBT community struggle to access capital and other critical resources. The EDA’s emergency grant and loan programs, and the Small Business Administration programs enacted by Congress, are helpful stop-gap measures. But this crisis has revealed once again the long-term vulnerability of the small business sector. We need a Marshall Plan for small business in New Jersey. That plan should also aim to empower — and fund —minority entrepreneurs with the goal of narrowing the pernicious wealth gaps that have left so many black and Latinx families particularly vulnerable in this crisis.
3. Clean energy
One of the sectors likely to be able to recover most quickly in this crisis is one of the sectors that Gov. Murphy has prioritized from Day One — the clean/renewable energy sectors that are poised to add significantly to the state’s climate, energy, environmental and economic resilience. We should push harder than ever to prioritize the development of the Offshore Wind industry, and to make the package of resiliency- and environmental-justice driven investments outlined in Gov. Murphy’s Regional Greenhouse Gas Initiative strategic plan.
Many of the biggest opportunities that will emerge from this crisis — in life sciences, education technology (“ed tech”), cybersecurity, e-commerce and other mobility technologies — will be in the innovation economy. Gov. Murphy’s proposed Innovation Evergreen Fund — which has gained widespread support in the Legislature and within the business community — is designed to be a tool that uniquely positions New Jersey to capture a disproportionate share of the activity in these industries.
Just as the fundamental economic outlook has shifted, so, too, must our economic development incentive strategies. The reality of a significant recession is that, at least for the next year or two, most firms will be fighting for survival — and likely not looking to relocate their headquarters or major operations. Coupled with New Jersey’s grim fiscal realities, this means that we have to prioritize scarce investment dollars and adjust the proposals for new incentives crafted prior to this crisis. Any new incentive program should be focused on investments that: 1) the state can afford; 2) capitalize on opportunities which exist in this climate; and 3) support the state’s long-term economic resiliency. Some examples of potential priority investments include supporting the “re-shoring” of pharmaceutical and other critical manufacturing, repositioning previously less-fashionable suburban office parks to accommodate reduced density elsewhere, and attracting U.S. operations of foreign companies seeking closer proximity to their customers and partners.
Repowering our economy in the wake of this unprecedented crisis will require a combination of doing what we have always done well, and some new, bold ways of doing business. But I share Gov. Murphy’s confidence that, with the right priorities and investments, New Jersey’s economy will get through the COVID-19 crisis and emerge both stronger and fairer than ever.
Tim Sullivan is the CEO of the New Jersey Economic Development Authority.