Regional Report: Northeast
After keeping below the national unemployment rate since the start of the Great Recession, Pennsylvania rose above it in September 2012 and is still struggling to restore jobs lost since late 2007. Hydraulic fracking of the Marcellus Shale formation has created new jobs and generated enormous wealth, as well as produced turbulence and unexpected downsides. Natural gas prices have dropped. The state’s key industries, including Energy, Advanced Manufacturing, Technology and Agri-business comprise a $570 billion economy, sixth in the nation. Education and healthcare continue to expand, and tourism is on the rise. In terms of tax burden, the Tax Foundation ranks Pennsylvania 10th highest in the country and 24th on its Business Tax Climate Index. The Keystone State spends around $5 billion a year in order to attract or retain companies, according to The New York Times. Sales tax refunds and corporate tax credits are most popular, targeting manufacturers in particular.
Connecticut’s economy is shrinking. The Nutmeg State ranks 50th in the Department of Commerce’s Bureau of Economic Analysis. High taxes, budget gimmicks, regulations and unfunded government pension liabilities exasperate business owners and entrepreneurs across the state. Employment growth post-recession continues at about two-thirds the national rate, set back by ongoing job loss in the finance and insurance sectors, traditionally Connecticut’s wheelhouse. The Tax Foundation ranks Connecticut’s tax burden 3rd highest in the country, and ranks the state 42nd on its Business Tax Climate Index. Connecticut spends over $850 million per year on incentive programs, according to The New York Times. Most popular programs are sales tax refunds and exemptions, and corporate income tax credits.
New Jersey trailed the nation in most economic indicators in 2013. Housing was a sore point; the Garden State has the second-highest percentage of homes in foreclosure than any other state after Florida. Real GDP rose at barely half the national rate. Job growth lags the U.S. pace; employment remains submerged below its pre-recession peak. Even the IT sector has retreated, disgorging 3,600 jobs. Hurricane Sandy destroyed enormous swaths of the state’s housing and infrastructure, providing construction jobs—albeit temporary—in its aftermath.
On the bright side, manufacturing exports are growing again. Healthcare, logistics and life sciences companies are posting Help Wanted signs. Geographically, the state’s position between New York City and Philadelphia benefits companies that need access to both markets; it’s also a strong location for national distribution, says incentives advisor Jim Damicis, a senior vice president with Camoin Associates. New Jersey executives gripe about taxes, and the Tax Foundation bears them out; the state is ranked second highest of the 50 states, and its business tax climate ranks second to last. Gov. Chris Christie has proposed 10 percent corporate tax cuts and a 10 percent property tax credit in—he has said little on the subject. New Jersey spends nearly $700 million per year on its Grow NJ incentives program. Grow NJ “is gaining a lot of momentum in the business community,” says Adam Tkaczuk, Northeast practice head for business incentives at Duff & Phelps. “They’re tough but fair, and projects are well-funded once you qualify.” Corporate income tax credits and sales tax refunds were the most popular incentives; top beneficiaries were print media companies and biotech firms, according to The New York Times database.
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