The New Jersey Business & Industry Association (NJBIA) recently published the results of its annual Business Outlook Survey. On a positive note, New Jersey businesses are projecting increased performance on a number of fronts, including employment, sales, and profits. At the same time, worries remain about the state’s economy and the cost of doing business in New Jersey. The prospect of a $15 minimum wage topped the list of specific concerns cited by the respondents.
“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.”
In total, 1,010 NJBIA members responded to the survey. Most respondents were small businesses, with 68 percent reporting fewer than 25 employees and 11 percent with 25 to 49 employees.
Many NJ Businesses Optimistic for 2018
Most businesses expect 2018 to be better than 2017. Below are:
- Fifty-eight percent expected 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.
- Fifty-one 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.
- Fifty-five 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.
- Thirty-one 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.
- Sixty-nine 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.
- Forty-nine 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.
Concerns Raised by NJ Business Community
Many of the top challenges raised by New Jersey businesses are familiar. As in the past, NJBIA members listed health insurance costs as their most significant concern. Overall, 30 percent cited it as their top concern (up from 24 and 25 percent in the past two years), while 72 percent rated it as one of their top four concerns.
Many businesses also continue to be troubled by the state’s high property taxes. In total, 25 percent reported it as their top concern, and 65 percent listed it among their top four concerns. Meanwhile, the overall cost of doing business in New Jersey was cited by 18 percent as their top concern, and 68 percent included it among their top four concerns.
The majority of business owners believe that New Jersey is not competitive with other states in several key categories, including taxes, fees, and controlling healthcare costs. In addition, only 24 percent of members believe that New Jersey had made progress in easing regulatory burdens over the last year. In light of these perceptions, it is not entirely surprising that while 43 percent of New Jersey businesses surveyed indicated that they are planning to expand, only one-third plan to expand and would open another location in New Jersey. Meanwhile, two-thirds plan to expand in another state.
Minimum Wage Increase Worries
Minimum wage hikes also ranked high on NJBIA members’ list of concerns entering 2018. The survey revealed that more than 60 percent of the responding businesses would be impacted by an increase in the state’s hourly wage. To offset higher wages, most would make cuts in other areas. Specifically, 30 percent of businesses said they would raise prices to offset the wage increase, 29 percent would reduce staff levels, and 27 percent would reduce hours. Just 11 percent would respond with greater automation.
For more information about the survey or if you have any questions, please contact me, Michael A. Jimenez, Esq., Counsel in Scarinci Hollenbeck’s Corporate Transactions & Business Group, at 201-806-3364.