In Support of NJ’s Permit Extension Act
New Jersey’s strongest asset is its much-vaunted prosperity. We are one of the richest states in the nation, with a median household income, based on a three-year average from 2009 to 2011, that ranks fourth in the nation at $65,072, according to the US Census. This prosperity is due largely to the accident of our geography, including our proximity to the East Coast’s largest port and our location between two major cities at the heart of one of the world’s largest consumer markets.
But our continued prosperity is threatened by an anemic level of job growth that puts us at a competitive disadvantage with other states. New Jersey’s private-sector job growth has lagged behind the national average in the aftermath of the recession, according to a recently released report by a high profile budget task force. New Jersey added only 44,300 private sector jobs, or a 1.4% increase, during the period analyzed, from June 2009 to May 2012, with the report comparing the performance of New Jersey’s economy to that of five other states. By contrast, New York saw private sector jobs grow by 4.4% in the same period, and the United States experienced a 2.9% jump in its private workforce.
What can be done to boost New Jersey’s economy? While I’ll leave the big-picture solutions up to the politicians and economists, I can comment on the construction sector. Although construction makes up a relatively small proportion of New Jersey private-sector employment, a healthy construction sector is very effective at driving economic activity, and creating jobs, in other industries.
The construction sector is known for its strong “multiplier effect,” meaning that each construction job generates spin-off jobs in other industry sectors, which is why construction-industry job metrics are so often cited as an economic indicator. While most construction industry spin-off jobs are created in sectors such as transportation, logistics, distribution and manufacturing, the impact of an increase in construction jobs also extends to businesses including furniture, landscaping, office fixtures, lighting and other products or services purchased when homeowners or businesses move into new or renovated quarters, according to a report by the state’s Division of Labor and Workforce Development.
This multiplier effect is why the Permit Extension Act recently signed by Gov. Chris Christie is so important to the state’s economy. The act, which became law on Sept. 21, allows permits for previously approved projects delayed by the recession that would have expired at the end of this year to be extended for up to an additional two years, through Dec. 31, 2014 (although no approval would be extended beyond six months after the conclusion of the extension period, or June 30, 2015). The bipartisan bill is an amendment of the Permit Extension Act of 2008, originally developed by the NJ Smart Growth Economic Development Coalition, to address the decline in building activity resulting from the economic downturn.
Then, as now, the bill received widespread support from business and industry leaders, as well as municipal officials and community groups. The reason is simple: the projects affected by the bill have already met all necessary and appropriate regulatory standards, but have been stalled as a result of the recession, primarily due to the inability to get financing. Without the extension, many projects that have already been extensively reviewed and approved by governing bodies at every level would have to start the costly, multi-year permitting process all over again with the likely result that many beneficial projects (including those on urban redevelopment, transit hub and brownfield sites) would fail to move forward, raising the prospect of the “wholesale abandonment of approved projects”--to use the language of the bill--that could significantly hamper economic recovery in the construction sector.
As the bill states, without an extension it is possible that “thousands of government actions will be undone by the passage of time,” creating a massive waste of public and private resources. Moreover, the projects that would ultimately move forward after having repeated the costly and time-consuming permitting process would do so at the cost of delayed construction jobs and delayed tax municipal tax revenues.
As the multiplier effect demonstrates, not all new jobs are created equal. Jobs in some industry sectors, such as construction, create a greater economic benefit and therefore have a greater potential to drive economic recovery. With the number of construction jobs in New Jersey continuing to decline, the amendment to the Permit Extension Act will serve as a stimulus to New Jersey’s economy by creating new construction jobs as well as spin-off jobs in other industries, thus positioning New Jersey for continued long-term prosperity.
Joseph Langan is president of River Drive Construction in Elmwood Park, NJ. He may be reached at email@example.com. Views expressed here are the author’s own.