McKinsey report on New Jersey’s pandemic recovery offers lessons in driving inclusive growth

Five years after McKinsey published Reseeding growth in the Garden State, seminal research on economic development in the state, we continue that conversation in a newly published report, The Garden State in bloom: Cultivating New Jersey’s workforce of tomorrow. Even as total employment in New Jersey has rebounded to pre-pandemic levels, the state—like many others across the US—faces a talent shortage in selected occupations, among other challenges.

Here, some of the report’s authors share what inspired them to take a new look at the state’s economic potential and why a comprehensive talent strategy could bring opportunities for all of its residents.

Why did you want to take a new look at economic development in New Jersey in this moment?

What New Jersey’s pandemic recovery can teach leaders about seizing opportunity
From left: Aaron De Smet, Zachary Surak, Jocelyn Grahame
What New Jersey’s pandemic recovery can teach leaders about seizing opportunity

Aaron De Smet: New Jersey is interesting in that it’s a fairly high income, urban, and suburban place, with most of our larger cities also serving as suburbs of Philadelphia and New York. The state has a lot of highly skilled, highly educated, and highly paid workers, and New Jersey has some of the best universities. We should be attracting more talent and keeping a greater portion of the talent who grow up here.

All of this made New Jersey an interesting place to look at when it comes to opportunities for employers, employees, and communities. And how do these opportunities change as we look ahead to disruptions in the workplace, from technology and automation to increased remote work? We’re at an inflection point where a lot of things are changing in how we think about what work is and what it means to be an employer or an employee. Now felt like a good time to ask: What do those changes mean for a unique place like New Jersey, and how can we take advantage of them?

Zachary Surak: There are many folks in our office who were born and raised in New Jersey—Jocelyn and I count ourselves among them—and also so many transplants who take pride in helping change and make an impact in the community. Five years ago we did some work on economic development in New Jersey called Reseeding growth in the Garden State, which examined changing the trajectory of the economic performance of the state. We think of this latest research as an extension of that dialogue—chapter two of that work.

What are some examples of the practical implications of our research?

Aaron: I’ll give you an example. There is currently a national shortage of truck drivers who have a commercial driver’s license. We know that one of the best ways to get truck drivers—as is often the case in any profession—is to get them pretty young and not require they attend a college, but instead a vocational school right out of high school. The problem is: The only way to make money as a truck driver is to be able to drive cross state lines, and you can't do that until you’re at a certain age. But now, with a shortage of long haul truck drivers, there’s a pilot program that the federal government has launched to help address this, by reaching 18, 19, and 20-year olds who in the past would not have been eligible.

New Jersey is a great place for this kind of innovation because it’s already a transportation hub. New Jersey is already doing some of these things, but if you read our report, you might ask: Why wouldn’t New Jersey double down on this with more public-private partnerships to better upskill young kids? That’s exactly the kind of thing we should be doing more of and investing in. I don’t want to overplay this—it’s just one small micro example of a creative way to make a difference. If we do enough of these things systematically—across lots of different opportunities, lots of different professions, lots of different types of partnerships—in aggregate, they can make a huge impact on the state.

New Jersey skyline

The Garden State in bloom

Cultivating New Jersey’s workforce of tomorrow

What kind of collaboration is required to realize impact?

Zachary: There’s two tracks here. One track is collective action—for example, higher education institutions partnering with the private sector to design and accredit reskilling programs in the region, and then deploy those reskilled workers to areas where employers need talent. That coordination of matching supply and demand is a massive opportunity. The second track is individual institutions. There are many actions that individual institutions can take to both get smart on their exposure to the economic and workforce challenges ahead so that they’re not blindsided by this over the coming decade.

Jocelyn Grahame: For collaboration to happen, a few things need to be true. The problem really needs to be universal—and affect the institutions who are being asked to collaborate equally, which I think is definitely true in this instance. If everyone goes out and tries to solve the talent shortage on their own, you end up with a situation where everyone is competing for a shrinking pool of talent, but the needs are not shrinking. You’ve got to have leaders who are willing to think more broadly than their individual institution. And I think it also has to be based on personal trust, which we saw during the pandemic. Because there was a greater good, because leaders were willing to trust each other and work together, we saw better answers the more they collaborated.

What’s one thing you hope readers take away from the report?

Jocelyn: The future of work is obviously a topic for everybody, and when you look at the specific factors affecting New Jersey, we saw a lot of movement, including people from urban areas into more suburban and rural areas, as well as people leaving the state. We see a lot of questions that affect not only organizational stakeholders in the state, but also individual actors in the state, such as healthcare organizations, who are doing profoundly important work.

But six of the top 10 professions for which we have the biggest talent gaps are actually all in healthcare. We also know the workforce isn’t monolithic. So how do leaders think about the talent that’s going to help them reach their goals over the longer term, not just the shorter term? The last few years, lots of companies have been competing intensely for talent, which might have higher flight risk because of the remote environment. So the question is: How do we tap into some of those hidden talent pools?

Zachary: If you look back at the pandemic recovery—and even if you look over a longer time period of the last 20 years—certain populations have been left behind. So there’s an existential question here for the region: How do we create more opportunities for more diverse populations who have tons of capacity to contribute in different ways? And how do we unlock that capacity? I think if people had the fact base, they would be surprised by the kind of economic dynamics that are present, and all the opportunity that could be unleashed to create inclusive growth in the workforce with a little collective action.

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