Released today, the study analyzes data from 12 indicators across three major areas that are critical to a robust innovation ecosystem – capital, talents and business — and makes a series of recommendations to improve New Jersey’s competitiveness in building a more robust innovation economy.
“While New Jersey’s position in the region has declined somewhat, some of the recommendations made in our 2020 Innovation Indicators report have only recently been put in place,” said the director of economic policy at the NJBIA, Kyle Sullender. “As a result, we hope to see improvements in some areas of the innovation economy in the future.
“At the same time, there are still several indicators where New Jersey remains highly outlier regionally and nationally – including the corporate tax climate and net migration of undergraduates seeking a job. diploma. These are areas where New Jersey continues to need big improvements.
In the seven-state comparison, NJBIA scored each of the 12 indicators from 1 (least competitive) to 7 (most competitive), with a potentially high score of 84 points.
Massachusetts (scoring 69 points) and New York (65) remain the regional innovation leaders, as seen in the 2020 Innovation Indicator report, followed by Pennsylvania (51) and Maryland (45).
New Jersey currently finds itself tied with Connecticut for fifth place with 41 points apiece. New Jersey’s position 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.
“As in previous reports, we encourage several recommendations in all three areas that can help put New Jersey on the path to becoming an innovation leader in the region,” Sullender said. Addressing persistent barriers, particularly with respect to our fiscal climate, can help strengthen the innovation ecosystem for the state.
The full NJBIA Innovation Indicators report and charts are available here.
Key takeaways from the latest report include:
- Despite rapid 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). billion) in assets under management (AUM), which measures the value of all assets managed in a state by venture capital (VC) funds.
- According to an analysis of data from the National Venture Capital Association, New Jersey is the only state to have experienced a decline in assets under management (-2%) from 2010 to 2021.
- New Jersey still receives significantly less than regional states from two of the nation’s largest sources of early-stage/high-risk funding for startups and small businesses: the federal Small Business Innovation Research (SBIR) and Small Business Technology programs. Transfer (STTR). Massachusetts ($406.8 million) and Maryland ($191.1 million) led the region in total SBIR/STTR awards in 2020. New Jersey ranked fifth in the region, receiving 63 .3 million.
- New York’s R&D investment still far exceeds spending by the other six states combined. In 2020, the Empire State spent $453.8 million on R&D, according to the National Center for Science and Engineering Statistics.
- New York is followed in terms of R&D investment by Pennsylvania ($103.1 million), Connecticut ($58.8 million), Maryland ($33.4 million), Massachusetts (31. $7 million) and New Jersey ($23.8 million). New Jersey is the only state in the region to see its R&D investments decrease from 2010 to 2020 (-38.5%).
- New Jersey saw an increase in National Science Foundation (NSF) funding to $183.5 million in 2021 from $138.8 million in 2019. Massachusetts remains the regional leader with $565.6 million of NSF funds in 2021.
Outstanding recommendations to increase innovation capital in New Jersey include passage of Bill A-2487/S-2707, which increases credits for R&D in strategic sectors to 15% of eligible expenditures exceeding the base amount and at least 15% for basic research payments; continue to maintain/increase CSIT funding; and monitor/analyze startup creation and job creation through the new New Jersey Innovation Evergreen Fund.
- New Jersey continues to lead the region and the country in net loss of degree-seeking undergraduates leaving to attend schools in other states. According to the National Center for Education Statistics (NCES), New Jersey had a net loss of -27,556 students in fall 2020.
- Pennsylvania (+12,513), New York (+6,560), Massachusetts (+5,734) and Delaware (+1,011) all saw gains in net migration of first-time college students in fall 2020 .
- Trained employees are key to a successful innovation ecosystem and Massachusetts leads the region with 21.3% of its population with a graduate or professional degree in 2020. Maryland ranks second (20.6%), followed by Connecticut (18.9%), New York (17.6%) and New Jersey (17.1%).
- In New Jersey, 0.37% of the population in 2021 met the criteria for a “new entrepreneur”, according to the Ewing Marion Kaufmann Foundation which uses US Census data to estimate the percentage of a state’s population who start a business. This is the second highest rate of any state in the region, just behind New York (0.38%).
Talent Recommendations: A 2020 recommendation to increase public-private (P3) partnerships to pool financial resources and build relationships between industry professionals, academic researchers and government officials was launched earlier this year by the NJBIA and the New Jersey Council of Community Colleges in the form of NJ. Pathways to Career Opportunities program.
Another previous recommendation was to increase and annualize funding for the Innovation and Research Grants Program. However, notices of grant opportunities declined in FY21 and FY22.
The NJBIA continues to recommend the awarding and administration of funds to New Jersey higher education research institutions to establish partnerships that would help entrepreneurs obtain visas and enable them to create businesses and jobs. in the USA.
- New Jersey leads 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 takes into account personal income tax, sale of state, corporate tax, property tax and unemployment insurance. taxes. New Jersey has ranked last in the foundation’s annual index for seven consecutive years.
- According to the index, neighboring Delaware and Pennsylvania continue to have the most business-friendly tax climate in the seven-state area.
- Patent activity is an indicator of a healthy innovation ecosystem, and New Jersey ranks #4 in the region with 9,056 patents granted to investors and assignees in 2021. Massachusetts was #1 with 17 795 patents, followed by New York (17,119), and Pennsylvania (9,334).
- New Jersey is tied with Connecticut for fourth in the region with a new employer discount rate of 8.1% in 2021, a metric used by the Kaufmann Foundation to calculate the percentage of companies making their first pays within two years of a commercial application. Massachusetts was No. 1 in the region with a new employer discount rate of 12.1%, followed by New York (10%), Pennsylvania (9.6%).
Commercial recommendations: In 2020, the NJBIA recommended the creation of the Government Efficiency Regulatory Review Commission (GEARR) to determine where rules and regulations create disproportionate burdens on New Jersey businesses.
In 2021, the bill is adopted unanimously in the Senate and by an overwhelming majority in the Assembly (72-1-0). Governor Phil Murphy, however, vetoed the bill. NJBIA stands by its recommendation to establish the GEARR Commission to help improve New Jersey’s business climate.
A 2020 NJBIA recommendation to reinstate a business tax incentive program was completed with the creation of the New Jersey Emerge program.
Other current recommendations include modifying the current angel investor tax credit to provide additional incentives to invest in small, high-growth businesses; and implementing Path to Progress reforms for New Jersey’s public employee retirement and benefits system, state and local tax structures, county and municipal shared services, and education reform.