The New Jersey Business & Industry Association’s 59th Annual Business Outlook Survey, released today, details positive returns in 2017 and hopes for increased sales, profits and wages in 2018.
But that optimism is tempered by the potential impacts of the $15 minimum wage promised by Governor-elect Phil Murphy, with 64 percent of member businesses indicating they will raise prices, reduce staff levels or hours and/or increase automation to offset that mandate should it occur.
There were also increase concerns about the costs of health insurance, property taxes and the overall cost of doing business in New Jersey.
“New Jersey’s economy is strong. Businesses overall are continuing to see steady economic growth,” said NJBIA President and CEO Michele Siekerka. “We are seeing guarded optimism as to whether these trends will continue in 2018. That sense of caution is resulting from the uncertainty about policy changes that a new governor and administration generally tends to bring. Of continued concern this year is the more familiar challenge of the overall high cost of doing business in New Jersey versus other states.”
Among the positive trends reported by the more than 1,000 members who participated in the survey:
- 58 percent said sales in 2018 would rise and only 9 percent said sales would fall. The net positive of +49 percent is notably higher than last year’s forecast of +38 percent.
- 51 percent said actual sales were up in 2017, compared to 24 percent who said sales were down. The net positive of +27 percent is considerably higher than last year’s 12 percent net increase.
- 55 percent forecasted that profits will increase in 2018, compared to 12 percent who expect profits to fall. The net positive of +43 percent is higher than last year’s forecast of +31 percent. Actual profits of NJBIA-member businesses in 2017 showed a net positive of +18 percent.
- 31 percent of members said they would increase hiring in 2018, while 6 percent said they would decrease employment for a net positive of +25 percent. Last year, a net positive of +20 percent forecasted increased employment. Employment in 2017 actually rose by a net positive of +14 percent for members.
- 69 percent said they would provide wage increases in 2018. 60 percent will give raises ranging from 1 to 4.9 percent. In 2017, 67 percent gave wage increases – the same percentage as in 2016.
- 49 percent said they would increase the dollar value of their purchases, while 10 percent expect the dollar value of their purchases to go down for a net positive of +39 percent. This is higher than last year’s forecasted net positive of +27 percent.
- 45 percent said the quality of New Jersey’s public schools is better than other states, while 29 percent said the quality of our workforce is better than other states.
Among the concerning or negative trends in the survey:
- 64 percent said increasing the minimum wage to $15 an hour would impact their business. In response, 30 percent would raise prices, 29 percent would reduce staff, 27 percent would reduce hours, and 11 percent would increase automation.
- 78 percent expect healthcare costs to rise next year, while 56 percent believe they have been negatively impacted by the Affordable Care Act – down from 64 percent last year.
- New Jersey continues to be perceived as being non-competitive with other states in many categories.
- 83 percent said New Jersey is worse than others in in taxes and fees;
- 71 percent said New Jersey is worse in controlling the cost of regulatory compliance;
- 61 percent said New Jersey was worse in controlling healthcare costs;
- 55 percent said New Jersey was worse in timeliness of issuing permits;
- 53 percent ranked New Jersey worse in attitude toward business.
- 76 percent said New Jersey has not made progress over the last year in easing regulatory burdens for business.
Additionally, only 40 percent of members surveyed said they would make New Jersey their domicile in retirement. While this number remains high, it is trending positive over last year’s 32 percent who committed to staying in the Garden State.
“We believe this upward trend is due to the gradual elimination of the estate tax, which we long advocated for to spur small business succession planning and to slow outmigration to tax-friendlier states,” Siekerka said. “We expect this trend to continue with the complete repeal of the estate tax on Jan. 1, 2018 and as we make progress on other tax reforms that will make New Jersey more competitive.”
The survey also showed a continued need for improvement in the area of workforce development in New Jersey, with 84 percent of businesses stating they have no engagement with their county vocational school district and 77 percent having no connection to their local school district. Another 63 percent of respondents say they have not used an employee training program or provided professional development for their employees.
“We see this as an opportunity,” Siekerka said. “NJBIA’s Post-Secondary Education Task Force was launched earlier this year to match education programs to private sector jobs and build a brand for New Jersey higher education and career pathways. We are focusing on efforts to make New Jersey more attractive to our future workforce because millennial outmigration continues to impact the business community and our state.”
For a copy of NJBIA’s Business Outlook Survey, visit here.
A total of 1,010 members responded to the survey. Most were small businesses with fewer than 25 employees. The margin of error is plus or minus 2.99 percent at a 95 percent level of significance.