The New Jersey Business & Industry Association recently released its 2022 Indicators of Innovation report, a look at how the Garden State’s innovation economy compares to other regional states.
This year’s report shows New Jersey slipping slightly in overall score and position from the 2020 report, but also taking key steps which could improve its future standing — notably in business tax climate and net migration of first-time, degree-seeking undergraduates.
The study analyzes data for 12 indicators in three major areas that are key to a robust innovation ecosystem — capital, talent and business — and makes a series of recommendations to improve New Jersey’s competitiveness in building a more robust innovation economy.
In the seven-state comparison, NJBIA scored each of the 12 indicators from 1 (least competitive) to 7 (most competitive), with a potential high score of 84 points.
According to NJBIA’s data, Massachusetts (totaling 69 points) and New York (65) remain the regional leaders in innovation, as in the 2020 Indicator of Innovation report, followed by Pennsylvania (51) and Maryland (45).
New Jersey currently finds itself tied with Connecticut for fifth place, with 41 points each. New Jersey’s standing in the 2020 report was fourth overall, with 44 points.
Delaware is currently ranked last out of the seven states, with an innovation score of 26.
“While New Jersey’s standing in the region has decreased somewhat, some of the recommendations made in our 2020 Indicators of Innovation report have only been recently put into place,” NJBIA Director of Economic Policy Kyle Sullender said. “As a result, we hope to see some improvement in certain areas of the innovation economy going forward.
Key takeaways from the latest report include:
Capital Indicators
Despite experiencing fast growth in venture capital deal flow during the pandemic, New Jersey ($4.8 billion) continues to trail states like New York ($149.4 billion) and Massachusetts ($120.2 billion) in assets under management, which measures the value of all assets being managed in a state by venture capital funds.
Talent Indicators
New Jersey continues to lead the region, and the nation, in net loss of first-time, degree-seeking undergraduate students leaving to attend schools in other states. According to the National Center for Education Statistics, New Jersey had a net loss of –27,556 students in the fall of 2020.
Pennsylvania (+12,513), New York (+6,560), Massachusetts (+5,734) and Delaware (+1,011) all experienced gains in net migration of first-time college students in the fall of 2020.
Business Indicators
New Jersey takes the top spot in the region in Net Business Growth, with an increase of 4,516 new private establishments in 2019 — well ahead of second-place Massachusetts (641).
New Jersey, however, continues to have the worst business tax climate in the nation, according to the Tax Foundation’s Business Tax Climate Index, which considers the individual income tax, the state sales tax, the corporate business tax, property taxes and unemployment insurance taxes. New Jersey has ranked last in the foundation’s annual index for seven consecutive years.
Neighboring Delaware and Pennsylvania continue to have the most business-friendly tax climate in the seven-state region, according to the index.
