New Jersey business owners are more confident about their sales and profits heading into next year than they were at this time last year, and that could prove to be very good news for employees.
The latest survey from the New Jersey Business & Industry Association’s members shows nearly 70 percent are planning to give their employees raises in 2017. That’s coming off a year when employers beat their own forecasts, with 67 percent providing their workers with raises.
But in the face of that show of confidence, the results of the NJBIA’s 2017 business-outlook survey also indicate organization members are entering the new year with some lingering concerns about the overall state economy. They include rising healthcare costs and property tax bills and the possibility that New Jersey could take new steps toward adopting a $15 minimum wage in 2017.
“Members are still concerned about the state’s economic future,” said Michele Siekerka, NJBIA’s president and chief executive officer, during a news conference in Trenton yesterday.
The new survey results come out as New Jersey’s economy has been struggling through an extended period of ups and downs in 2016, including slow overall job growth and a marginal increase in state tax collections. The latest forecast released by economists at Rutgers University also projected a rise in New Jersey’s unemployment rate is due to occur in 2017.
Yet Siekerka said most NJBIA members are heading into the new year brimming with confidence in their own prospects. More than 80 percent expect to see the same or better sales in 2017, and 83 percent are expecting profits to rise or at least stay the same. Nearly 30 percent are planning to add employees in 2017, compared with just 9 percent who say they will be cutting back.
“They’re more optimistic than they’ve been in many years,” Siekerka said.
The organization’s members are also preparing to share at least some of their profits with employees in 2017, with 69 percent saying they are planning to provide raises next year. In last year’s survey, 65 percent of NJBIA’s members said they were planning to give their employees raises, but this year’s poll showed that a total of 67 percent did so.
But the pay scale is also one of the key areas of concern for NJBIA members. Lawmakers in Trenton have talked about putting before voters a ballot question that would seek to increase the state’s hourly minimum wage to $15 within the next few years. Thanks to a constitutional amendment that was approved by voters in 2013, state minimum-wage increases are now linked to inflation. The minimum wage will rise slightly to $8.44 in 2017.
The proposal favored by Democratic legislative leaders in both the Assembly and Senate would initially push the hourly rate to $10.10, getting to $15 after several increases phased in on an annual basis. After Gov. Chris Christie vetoed legislation seeking those increases earlier this year, the legislative leaders have vowed to put the proposal before voters in November 2017.
A report released last year by New Jersey Policy Perspective, a liberal think tank based in Trenton, found that increasing New Jersey’s minimum wage to $15 an hour would boost the pay of roughly one in four workers, or 975,000 men and women.
Siekerka’s organization opposes the $15 minimum-wage effort, and she said this year’s survey results indicate a full 70 percent of members said increasing the minimum wage would have an impact on their businesses. Consequences of a higher minimum wage would include staff reductions and price increases, members said, as well as cutting working hours and more automating of services.
“Who doesn’t want to put more money into the pockets of wage earners? But it’s an economic discussion, not an emotional discussion,” Siekerka said.
But even as NJBIA is getting ready to fight against efforts to increase the minimum wage in 2017, she said she’s glad to see the uncertainty that her organization had about tax reform and transportation funding heading into 2016 is now settled on the eve of 2017.
In October, the Republican Christie worked with legislative leaders to adopt an eight-year $16 billion finance plan for the state’s Transportation Trust Fund, ending a political impasse that led to a shutdown of state-funded road, bridge, and rail projects that lasted for much of the summer. The deal that the governor and lawmakers struck increased New Jersey’s gas tax by 23 cents but also resulted in a phase out of New Jersey’s estate tax that will begin on January 1, 2017. Other changes include a slight reduction of the state sales tax and the adoption of new tax breaks for retirees, veterans, and low-wage workers.
Getting rid of the estate tax was a top priority for NJBIA, and in last year’s survey nearly 70 percent of the organization’s members said the estate tax and the inheritance tax — New Jersey is one of only two states to levy both so-called death taxes — were impacting their business decisions. In this year’s survey, 55 percent said the two taxes are affecting the future of their businesses.
Under the changes approved by Christie and lawmakers, New Jersey’s estate-tax threshold will rise from $675,000 to $2 million on January 1, 2017, and then the tax will be phased out altogether at the start of 2018. Siekerka called the tax-policy changes a “gamechanger.”
“We are very, very hopeful that comprehensive tax reform in the bills that were just signed by the governor will have an impact,” she said.
Lobbying for changes that keep more millennials in the state will also be a priority for NJBIA, she said.
But the biggest concerns among NJBIA members heading into 2017 are rising healthcare costs and property tax bills, with 81 percent expecting employee health plans to go up and 69 percent planning to pay more in property taxes next year.
And one big change that wasn’t a factor for this year’s survey was Republican Donald Trump’s surprise victory. That’s because the survey of NJBIA members was completed before the presidential election was decided.