By Michael G. McGuinness
Let there be no doubt that New Jersey’s dwindling workforce is our most important economic asset in this labor-constrained world. This message is loudly and clearly delivered in Population Trends in New Jersey, authored by Rutgers University professors Drs. James Hughes and David Listokin, just published on Jan. 14 and now available. This article will highlight a number of key findings from this valuable information resource related to recent dynamics and what that bodes for New Jersey’s future.
Our population is growing very slowly and aging more rapidly, due to retiring baby boomers, low fertility rates and increased longevity rates. Fortunately for New Jersey, international migration of the foreign-born is countering the outflow of our domestic population. This trend, however, should not be taken for granted, as immigrants are now heading to other gateways. It is crucial for our economic competitiveness that New Jersey maintain its historic attractiveness for these international arrivals. The foreign-born residents are positioned to exceed 25 percent of the state population during this decade, while the percentage of Black Americans will continue to decline.
For the balance of this decade, there will be a mass exodus of baby boomers from the labor force and from once-dominant societal positions. This will be the greatest brain drain in the state’s history. The enormous challenge will be how to capture and retain the boomers’ extensive knowledge, experience, wisdom, cognitive skills and institutional memory. All public and private organizations in New Jersey will share in this task. Another challenge of this decade will be the sheer number of resources that will be consumed by the aging baby boomers.
Boomer retirement will reshape New Jersey’s housing and economic markets, and lead to a vast proliferation of retirement, life plan and continuing care communities. The scale of downsizing by this cohort from suburban single-family home ownership will result in a housing supply excess whose size may overwhelm the scale of demand exerted by the younger generations. It will be a buyers’ market statewide that will especially benefit incoming Generation X, or those born between 1965 and 1980. This smaller age group represents the peak family-raising stage of the lifecycle and the age of peak housing consumption. They are also now moving into the lower and midlevel leadership ranks of organizations.
Behind them will be the millennials or Generation Y, those born between 1981 and 1996. This will be the first generation where whites constitute a minority. Their numbers will exceed those of the baby boomers. Currently, they are dominating the lower and lower middle tiers of the labor market, transforming the structure of the workplace and workplace location, and reshaping housing demand. In the last two decades, millennial workplace and residential choices led to the state’s urban resurgence.
The millennial lifestyle preferences, however, are changing with their age and maturity, and contributing to a reverse migration back to select and less costly suburbs that afford both family raising environments and urban amenities. This is an excellent opportunity for suburban mayors to reinvent their communities to attract millennials who may prove to be their most viable economic asset. This trend will also likely lead to stiff competition from the urban mayors to retain those same millennials. Their impact on the housing market remains to be seen. It is unlikely that they will follow in the footsteps of past generations that focused on “trading up” to bigger homes on bigger lots. Rather, Drs. Hughes and Listokin have coined the term “upscaling” in place (renovations) to be the new trade-up model, with specific community characteristics assuming a much more significant role in residential decision-making. This trend could result in starter homes becoming the new “forever” homes, thereby disrupting the geographic mobility historically displayed by households moving through the life cycle.
Post-millennials or Generation Z — those born between 1997 and 2012 — now dominate enrollment in the K-12 schools and undergraduates in today’s colleges and universities. Similar to millennials, they are mostly minorities, characterized by a rich racial and ethnic diversity. This group will dominate entry-level jobs for the balance of this decade. Having grown up in the mobile era of smartphones and social media, with access and connectivity to everything everywhere simultaneously, their know-how will be essential for leading today’s advanced technology companies. Their impact on the economy is likely to be profound.
Generation Alpha, born 2013 and later, comprises the state’s youngest residents. This generation will be totally immersed in technology, including artificial intelligence and robotics, and will present enormous and complex challenges to our education system. The final size of this group cannot yet be determined, as it will depend on fertility rates, and domestic and international migration patterns. School enrollments will continue to decline for the balance of this decade, with some wide variations based on the preferences of millennials regarding family-raising environments.
Given the anticipated continued decline in the number of school-age children for the balance of this decade, I would urge our elected officials and policymakers to act responsibly and revamp our education delivery system to reflect these demographic changes more cost-effectively. A sharp reduction in the number of school districts through consolidation and elimination would be inarguable, given the sheer costs and complexities of delivering an acceptable level of education to our increasingly tech-savvy youngsters. If done thoughtfully, fewer school districts should make our state more affordable for residents due to anticipated lower property taxes, the bulk of which are allocated to school funding.
We may know who lives in New Jersey today, but any one of them may have a different address in 2030. The sustained generational succession waves are transforming our landscape, especially the workforce. As Hughes and Listokin well stated, “the world as we once confidently knew it has long since vacated today’s Garden State premises.”
(Note: Much of the information in this article is attributable to the work of Drs. Hughes and Listokin of Rutgers University and is available at Population Trends in New Jersey: 9780813588315: Amazon.com: Books).
Michael McGuinness is CEO of NAIOP New Jersey and has led the commercial real estate development association since 1997. NAIOP represents developers, owners, asset managers and investors of commercial, industrial and mixed-use properties, with 830 members in New Jersey and over 19,000 members throughout North America.
