Flight of the Yankees: New Jerseyans go South
Tune in live tonight on www.APP.com at 7 p.m. for a town hall with citizens, tax experts and reporters, who will discuss ways to fix New Jersey’s property tax crisis. You will be able to send in questions during the Q&A period.
Fifth in a weeklong series
CARY, NORTH CAROLINA The nickname for Thomas Nangle’s new hometown here says it all: “The Concentrated Area of Relocated Yankees.”
The town’s real name is Cary, population 150,000 and growing. But with the high number of New Jerseyans and other northerners migrating to this municipality just west of Raleigh, a Southern accent is getting harder to come by.
SEE ALSO: The Trenton way: Save $1, spend $2,800 more http://dailyre.co/1LtNzVO
The Jersey Comeback, once touted by Gov. Chris Christie as the start of New Jersey’s rebirth, has become more of a reality in North Carolina than the Garden State. Feeling squeezed by the high cost of living, a stagnant job market and rising taxes, fed up New Jerseyans have discovered an attractive alternative in the Old North State.
Taxes are lower, housing is cheaper and jobs are more abundant, North Carolina transplants say.
“When you talk about the cost of living, people are facing high taxes everywhere in Jersey,” said Nangle, who grew up in Morris County. “That’s why you see the exodus out of New Jersey.”
New Jersey looked similar to North Carolina 40 years ago. There was no income tax, low property taxes and affordable housing. People were clamoring to move in.
SEE ALSO: Tax Crisis: Meet the $200,000 officer http://dailyre.co/1LsdKfv
Now, those who once found prosperity in New Jersey are taking their education, skills and income elsewhere.
From 2009 through 2013, at least 21,000 New Jerseyans took more than $1.2 billion in income with them to North Carolina, according to IRS migration data, which is based on tax returns.
During that same period, New Jersey saw a net loss of about $8.2 billion in income and 88,000 residents. The majority fled to Florida, Texas, California, North Carolina, New York and Pennsylvania.
Before the 2008 economic crash, New Jersey had the highest population losses (because of migration to other states) since the 1980s, peaking in 2006 with a net loss of more than 27,000 taxpayers. The recession slowed the exodus, which bottomed out at 13,000 taxpayers in 2009, but was back up to 20,000 by 2013, according to migration data from the IRS.
And it doesn’t look like that’s changing anytime soon.
SEE ALSO: Exclusive: Fighting New Jersey’s property tax crisis http://dailyre.co/1LphJcE
People are fleeing the climate and congestion, but they’re also leaving because of high property taxes, inheritance taxes, income taxes and business taxes, said James Hughes, economics professor and dean of the Rutgers University Bloustein School of Planning and Public Policy.
“It’s a tough place to live,” Hughes said. “It’s going to be slower growth going forward. We’ll probably be lagging the nation. We’re just going to have a below-average economic growth rate.”
So what’s North Carolina doing differently from New Jersey?
Besides managing state spending and keeping the property tax burden low, cities are rebuilding their downtowns to attract millennials, the generation born between 1980 and 2000. Businesses are flocking to metro areas; Raleigh is becoming the home of one of the largest clusters of bio-tech companies in the country; and Charlotte is becoming a major energy center with nearly 1,800 energy companies.
The state has made a healthy recovery since The Great Recession. North Carolina’s job growth from 2014 to 2015 was ninth in the country at 2.66 percent. Job growth in New Jersey was less than one-half percent, putting the state in the bottom five.
Although North Carolina’s growth has been stagnant in rural areas, there’s economic prosperity in the major metro areas, as well as in the east and west, driven by mountain and beach tourism, said John Connaughton, a professor of financial economics at the University of North Carolina Charlotte.
Government jobs are shrinking in North Carolina, but all other industries are growing quickly, according to data from the U.S. Department of Labor’s Bureau of Labor Statistics. The construction, energy and tech industries are booming.
But in New Jersey, it’s a different story.
Jobs in the finance, leisure and hospitality and professional service industries are shrinking, the labor data show. The only industries growing at a rate faster than 2 percent are the construction and goods-producing industries. Government is shrinking slightly.
Insert graph on employment growth by industry in NC & NJ
‘Never going back’
Fed up with the high-cost, high-stress lifestyle that came with living in Jersey City, 28-year-old Thomas Nangle and his wife Leighann decided to take advantage of an opportunity to leave New Jersey.
The couple decided that Leighann, who works at Fidelity Investments, would take her company’s offer to move to its Raleigh offices. Nangle, an environmental engineer at CDM Smith Inc., was also able to transfer to his company’s Raleigh branch and keep his New Jersey salary.
With the money they save on rent every month since moving to Cary, the couple could rent a second two-bedroom apartment roughly twice the size and half the price of their $2,300-per-month, 600-square-foot apartment in Jersey City.
Thomas, who says he will never move back to New Jersey, is a Parsippany native and Rutgers University graduate. After spending a few years living with multiple roommates, he moved in with Leighann in Jersey City in 2013, where the couple struggled despite earning two professional salaries.
In Jersey City, the couple paid close attention to how much they spent, and how much they put in their joint account for apartment expenses.
READ MORE: Coverage of New Jersey's property tax crisis http://php.app.com/taxpain/
“Here, it’s not even a thought,” Nangle said. “It’s very comfortable. We need to start making some better investments because we have excess money from living here 18 months.”
The couple is also saving on car insurance, tolls and commuting time. Their new apartment has a lake view, a pool and new kitchen appliances.
Their apartment is also steps from hiking trails, surroundings more in line with the type of suburban lifestyle the couple wants to have. They like having access to city life and culture in nearby Raleigh.
The couple threw a big wedding in North Carolina last May, meant in part to lure the rest of their Jersey and Maryland family members to the area.
Photo of Nangle pointing to one of the patches the advice quilt their families made
Affordability and quality of life will likely keep the couple there, they say.
In fact, Nangle is convincing his large, Irish family to follow them south. And that’s no easy feat for a family that has been in New Jersey for generations.
Yet with rising property taxes and his parents nearing retirement, the Tar Heel state is looking appealing to them, he said.
“They have the pull of family being there, but I think everyone in the family is experiencing the (tax squeeze),” Nangle said. “I think everyone’s kind of making their plans, in some way, to relocate to different areas.”
The Nangles are looking to buy a starter home with three bedrooms in what they call “desirable” neighborhoods. They’re expecting to pay about $150,000 for their home and less than $2,000 a year in property taxes.
If the Nangles bought a house in Cary valued at $150,000, property taxes would cost them roughly $1,476 per year. In Middletown, New Jersey, a $150,000 house – if that even exists – would cost more than $4,000 in property taxes.
“My family talks about how I made a good move, even though it’s tough to do,” Nangle said. “But they’re envious and want to do it too. Anyone living in New Jersey knows how difficult is to save and raise a family.”
“I loved my childhood. I had a great childhood, great parents, lived in a great town with great friends, great people,” he said. “I wouldn’t change it for anything. But at the same time I’ll say, I definitely won’t go back.”
Why has North Carolina recovered faster than New Jersey?
North Carolina doesn’t have a highly aggressive economic development incentive program wooing companies to the lives of Mecklenburg, Chatham and Wake counties, home to the Charlotte and Raleigh-Cary, Durham-Chapel Hill metro areas.
In fact, in North Carolina, the amount of economic development tax credits available to a county is based on that county’s wealth — meaning there aren’t a lot of resources available for areas already thriving.
The existing economic base, low cost of living, educated workforce and the reputation for growth in these communities, developed over last two decades, are what has fueled the economic activity, Connaughton said.
“In the height of the recession, people that didn’t live in North Carolina still saw Charlotte as an area of economic opportunity. When your (state’s) economy falls apart, people say they’re moving to North Carolina,” Connaughton said. “The legacy of the booming economy outlasts its reality.”
Charlotte, starting the 1980s, began growing into one of the largest financial centers in the country, which is primarily responsible for its explosive growth, Connaughton said. After the economic collapse in 2008, the city was able to retain its work force and grow, as well as diversify its industries.
Since the recession, Charlotte has reinvented itself. The energy sector, anchored by two of the largest energy companies in the country, Duke Energy and Siemens Energy, has grown significantly in the last five or six years. There are now more than 1,800 energy companies in Charlotte, according to the city’s Chamber of Commerce.
“There is talent here, and when you’re looking to expand and you’re one of those (corporate) players, you come here,” Connaughton said. “There’s a labor force you can tap into.”
Consequences of change
That talented, educated workforce may start to dwindle if the state continues on its current trajectory, according to Andrew Broad, an economist at the University of North Carolina Greensboro Center for Business and Economic Research.
Historically, Broad said, North Carolina has been progressive by Southern standards. That’s changed since Republicans took over the General Assembly in 2010. North Carolina has become a more conservative, low-tax, low-service state, Broad said.
And it’s hurting education.
North Carolina’s test scores are among the lowest in the nation, while New Jersey ranks No. 2.
Per pupil spending in North Carolina during the 2008-09 school year was $8,867 — roughly half of what was spent in New Jersey that year, according to data from the National Education Association. In 2014-15, spending was even lower: $8,620, and that doesn’t account for inflation.
“It’s true that how much you spend on education isn’t the perfect measure of quality,” Broad said. “But it’s not a bad measure.”
New Jersey’s per pupil spending went from $16,090 in 2008-09 to $20,923 in 2014-15, according to the NEA data.
Average teacher pay in North Carolina has dropped from $48,603 in 2008-09 to $47,783 in 2014-15.
Funding for the state’s public universities hasn’t been restored to pre-recession levels, which is also concerning, Broad said.
“We know investment matters — and human capital investment are among the most productive investments we can make,” Broad said. “Now, you can’t tell North Carolina apart from Alabama, Mississippi and South Carolina.”
Education and a skilled workforce are what fuels what’s known as the Research Triangle area, which includes Raleigh, Durham, Cary and Chapel Hill. It’s anchored by the University of North Carolina at Chapel Hill, Duke University and North Carolina State University. State government, the tech industry, research and education are the economic drivers for the Triangle, Connaughton said.
The state has also simplified and lowered corporate business and income taxes, which has driven growth, Connaughton said.
Broad said these low taxes can have a positive effect, especially if businesses are looking for a cheap place to run a business. He worries, nonetheless, that the shift away from education spending will eventually hurt the state’s economy.
“You can import well-educated people (for jobs), but it’s hard to see how lowering the quality of public education that most students get is in any way a good thing.”
North Carolina’s 2013-14 high school graduation rate is the highest it’s been since the state started recording the data in 2006. In 2006, the rate was 68.3 percent, compared to 83.8 percent in 2014, according to the North Carolina Department of Public Instruction. But it’s still ranked 24th in the nation, according to the National Center of Education Statistics.
New Jersey ranks third in the country with an 88 percent graduation rate.
A better life
Two of Derrell Cooper’s four children are named Camden and Jersey.
The 46-year-old former Toms River South football player loves his home state. Last month, while visiting his father in Lakewood, running into a former high school football teammate brought him to tears.
“We love how we grew up and what we saw and how our childhood and teenage years were in Jersey,” he said. “I wouldn’t change it for the world.”
But Cooper can’t give his children the kind of life he wants to in New Jersey.
He wants to put his four children through college. He doesn’t want to be what he calls an “asphalt cowboy,” spending hours every day traveling the Parkway or the Turnpike to keep the property taxes paid.
He wants his kids to have access to a pool, playgrounds and other amenities that are difficult to come by in New Jersey because of the cost and limited space.
INSERT MIGRATION DATA: Latest data from 2013 was released last week.
“I will never be able to raise my kids and give my kids everything my parents gave me in New Jersey,” Cooper said. “It’s just not economically feasible.”
So he left. Cooper moved around the country a while before settling on Cary, where he and his wife both have tech jobs. Their decision to go to Cary was deliberate and research-driven.
“It’s hard to get someone like me to say something negative about New Jersey,” Cooper said. “However, when you’re a parent, you want to provide your children with the best and the greatest opportunities.”
Although the cost of health care, utilities, groceries and transportation in most parts of North Carolina are only slightly lower than in New Jersey, housing is on average about half the cost. And property tax rates are significantly lower.
The Coopers are building a six-bedroom, 4,600-square-foot house in a subdivision with a pool, a playground and tennis courts. The $640,000 house would probably cost him upward of $1.1 million in New Jersey, he said.
Cooper said a nice, three-bedroom home in Cary would range anywhere from $900 to $1,800 to rent. In Middletown, New Jersey, a similar house would start at about $2,000, according to Zillow.com real estate data.
“That might be in a place that’s 30 years old,” he said. “Here, we’re talking brand-new with top-notch school systems and amenities — swimming pools and things you would want if you were a child again.”
NOTE: Also, a potential sidebar or mini story or pullout bullet points on why housing prices are lower in NC. It’s easier/cheaper to build because there’s less bureaucracy.
A ‘strong core’
Hughes, the New Jersey economist at Rutgers, said the state’s chief problems — losing jobs and people — isn’t unique. It’s an issue facing most Northeastern and Midwestern “rust belt” states.
As people make their exodus from New Jersey, the state is losing income tax revenue, and the business and sales taxes it needs to thrive, Hughes said. The tax burden then falls harder on property owners.
About 48 percent of state and local taxes in New Jersey are paid by property owners, which is the second-highest percentage in the country, according to data from the Tax Foundation.
But Hughes said despite the economic woes and slow growth facing New Jersey, the state still has a “strong core” economy.
There are about 4 million jobs in New Jersey, with a high proportion of those in the financial and professional services fields. The state has a strong, educated workforce and plenty of knowledge-based jobs, he said.
Foreign companies find New Jersey attractive for corporate headquarters because of its location, and based on geography alone, New Jersey has a lot of assets for businesses, Hughes said.
Hughes said New Jersey will probably always lag the nation in growth unless some major crisis forces change.
“We’re not about to become an economically depressed area, we just might not be as affluent as we were 25 years ago,” he said.
New Jersey’s household income has dropped significantly over the past decade, according to U.S. Census data. In 2006, the state had the highest median income at $68,059. But by 2014, the state dropped to ninth in the country with a $65,243 median household income.
Part of what will determine the future of New Jersey hinges on what two groups decide to do: retirees who are fed up with high taxes and millennials who mostly have suburban fatigue.
In 2016, baby boomers will be between 52 and 70 years old, and they’re retiring at a rate of 10,000 per day, nationally. Hughes said as they get older, significant numbers of them will probably leave.
“If you’ve rode the inflation cycle, you could sell your New Jersey home for say, $400,000, and go to North Carolina and get a better house for half the price,” Hughes said. “They can leave the state and move to more affordable areas — cash out. Or they can stay because they want to be near their grandchildren. We don’t know what they’re going to do.”
‘Rent-poor’ millennials
Charlotte resident Charlie Frankel had some unexpected roommates when he lived in Ridgefield Park, New Jersey.
They didn’t pay rent, slept in his bed and lived off him. Well, at least his blood.
For about $900 per month, Frankel lived in a bed bug-ridden apartment in North Jersey. He struggled to make ends meet while working as a paid intern for the New York Jets and as a part-time writer for MLB.com.
The 2013 Wake Forest University graduate and Pennsylvania native spent as little time as possible in his Ridgfield Park apartment.
Doing his laundry in his apartment complex meant checking on it every 20 minutes to make sure the machines didn’t breakdown, as they often did. When it rained more than a few inches, Frankel had to run out and move his car off the parking lot that often flooded.
“Things like that make it so you’re constantly on edge and never able to feel settled,” Frankel said. “You wouldn’t feel like you could go out of town for a week and leave your car at your apartment complex. Things like that were definitely a struggle living in New Jersey.”
Now, Frankel is living quite comfortably on his entry level salary in Charlotte. He’s in a year-old, one-bedroom apartment with more space than he could ever use. And he doesn’t have roommates — human or parasitic.
“It’s rewarding to know that your dollar is going to go a long way down here as far as housing,” Frankel said. “You don’t feel like you’re putting all of your salary into something that’s a step above living in your car.”
Most young people can barely afford to live in New Jersey. One in three New Jersey millennials 18 to 35 still lives with a parent, compared to 1 in 4 nationally, according to U.S. Census data.
LINK TO NJ MILLENNIAL STORY
Raleigh and Charlotte have become havens for millennial activity. They’re affordable and surrounded by culture, economic growth, entrepreneurial environments and major universities.
Steve Patrella, another New Jersey native who moved to Charlotte for a job, said he didn’t lose much of the cultural experience that comes with living so close to New York. The only things he misses are the bagels and pizza.
“There are a ton of transplants from New Jersey, New York, Connecticut, Massachusetts, Pennsylvania and Maryland,” Patrella said. “It doesn’t seem like a lot of people grew up here, but they come to realize pretty quickly that it’s a fun place, and that it’s affordable.”
Tomorrow: How towns make millions off the misery of homeowners
Contact Kala Kachmar at kkachmar@gannettnj.com
“It just makes you feel like you made the right decision when you see a lot of Yankees here riding around with North Carolina plates,” Cooper said. “Growing up in the 80s, you’d be hard-pressed to find New Jersians in North or South Carolina. But it seems like a lot of people are getting frustrated with the taxes, drug problems, schools and poor quality of life.” –Derrell Cooper
At a glance: The Nangles in Jersey City vs. Cary, North Carolina
Jersey City: one bedroom, about 600 square feet for $2,300 per month, plus $125 for parking and $300 in tolls to get to and from work in a month
Cary, North Carolina: Newer apartment, lake view, 1,200 square feet, two bedrooms, free unlimited parking, no tolls for $1,100 per month.
2012 tax highlights
Total state and local taxes per capita:
New Jersey: $10,364 (15th)
North Carolina: $8,997 (32nd)
U.S. average: $9,665
Property taxes collected per capita
New Jersey: $2,918 (2nd)
North Carolina: $912 (40th)
U.S. average: $1,379
Sales taxes collected per capita
New Jersey: $1,372 (32nd)
North Carolina: $1,238 (43rd)
U.S. average: $1,518
(SOURCE: U.S. Census)
Median value of owner occupied homes (2009-13)
North Carolina: $153,600
New Jersey: $327,100
U.S. average: $176,700
Source: U.S. Census
Median home sale prices 2014 (metro areas)
New Jersey
Newark-Union: $381,500
Trenton-Ewing: $267,100
Edison: $305,100
Atlantic City: $207,600
North Carolina
Charlotte: $193,800
Durham: $199,100
Fayetteville: $125,400
Raleigh/Cary: $208,600
Source: National Association of Realtors
Charlotte is racing to attract millennials
-There are more than 10,000 apartments under construction in Charlotte with another 11,000 proposed
-An extension of Lynx Charlotte, the city’s recently built light rail system, will open in 2017
-The millennial population in Mecklenburg County grew by 32 percent from 2007 to 2013
-Millennials are 27 percent of the county’s population, up from 21.7 percent
Sources: Charlotte Apartment Report by Real Data, Charlotte Chamber of Commerce, U.S. Census
Economic snapshot
Job growth from 2014-15:
North Carolina: 2.7 percent, ninth overall in US
New Jersey: 0.5 percent, 45th overall
Gross state product growth from 2000-14:
North Carolina: 24 percent increase, 19th overall
New Jersey: 10.6 percent, 45th overall
Sources: U.S. Census, U.S. Bureau of Labor Statistics, U.S. Bureau of Economic Analysis
Unemployment rates: I need to get the latest figures, but North Carolina has added a LOT of jobs this year, and the unemployment rate is up because more people are entering the workforce, which explains why it’s almost as high as NJ’s.