This year may have been a relatively good one for New Jersey businesses and their employees, but many employers appear to be concerned about a possible recession, which is casting a cloud over hiring plans and wage increases.
Companies voiced growing fears of a recession and possible slowdown of sales and profits in the latest annual member survey conducted by the New Jersey Business & Industry Association, a leading business-lobbying group based in Trenton.
Some of the responses to the NJBIA survey suggest reason for optimism about the state of the economy, according to results the association made public yesterday. They include 54% of the businesses reporting that sales have increased this year and nearly 50% indicating their profits have also gone up.
But other responses show that many employers fear choppy economic waters ahead, with 56% of businesses saying they expect a recession to occur in either 2020 or 2021. Of those businesses, 32% said they would respond to a recession by postponing employee raises, and another 35% said they would hold off on the hiring of new workers.
Brenda Flanagan of NJTV News reports from NJBIA’s annual conference
Respondents to the survey also echoed concerns about taxes and over-regulation that have been featured prominently in previous polls conducted by NJBIA, a group that frequently lobbies in the State House for lower taxes.
‘We can ascertain from these responses that New Jersey’s challenging business climate, coupled with the many forecasts of an economic slowdown, are giving our business owners pause for what’s ahead,” said Michele Siekerka, NJBIA’s president and chief executive.
But data suggests state is on solid economic ground
By many measures, the New Jersey economy is on solid ground heading into 2020. For example, the latest data from the federal Bureau of Labor Statistics indicated the unemployment rate was 3.2%, just above the state’s historic low. And the total number of those employed in New Jersey had grown by nearly 30,000 between January and the end of October this year.
State tax collections have also been growing steadily in 2019, with the income, sales and realty-transfer taxes all generating increased revenues since the current fiscal year began on July 1, according to the latest official revenue report from the Department of Treasury.
Yet the New Jersey businesses that responded to this year’s NJBIA member survey don’t appear to feel as good about the state economy as the latest employment and revenue statistics may suggest.
For example, only 40% rated the state’s economic performance this year as either “good” or “excellent.” By contrast, 60% rated the performance of the state’s economy in 2019 as either “poor” or “fair.”
Moreover, only 12% reported higher expectations for the state economy in 2020, compared with 40% who are expecting things to take a turn for the worse. That gap in expectations was the widest since 2009, when the state was in the throes of the Great Recession, according to NJBIA.
The survey also examined how businesses are adapting to the state’s ongoing ramp-up to a $15 minimum wage. (Under the current schedule, the minimum wage for most New Jersey workers will rise to $11 on Jan. 1, and it will eventually reach $15 by 2024.)
Thirty-two percent of survey respondents said they would be raising prices in response to the minimum-wage hikes, and 21% said they would be cutting staff at some point during the minimum-wage ramp-up. Another 15% said they would slash worker benefits, and 13% said they would automate services amid the ramp-up, which would likely impact staffing.
Legalization of marijuana is an issue
Association members also weighed in on the topic of marijuana legalization, an issue that lawmakers appear ready to put before voters to decide as early as next year. Just 44% of the NJBIA members who participated in the survey said they expect the legalization of marijuana to be good for the state economy. They also expressed concerns about how marijuana legalization could impact things like workplace safety, productivity and attendance.
But this year’s survey wasn’t all bad news about the economy. For example, more companies reported increased hiring in 2019 than those reporting cutbacks. Nearly 80% reported giving their employees pay raises this year, including some topping 5%. And heading into 2020, just 25% said they would not be giving any raises or are planning to cut wages.
Moreover, survey respondents seem to feel better about the state of the national economy than about the state economy. More than 80% rated the national economic performance as either “good” or “excellent,” and only 25% predicted national economic conditions would get worse next year.
Nearly 50% also said the quality of public schools in New Jersey was better than in other states; nearly 30% said the quality of the state’s workforce was better than in other states.
But nearly 90% said taxes and fees are worse in New Jersey than other states and more than 60% said the cost of complying with state regulations was worse in New Jersey than other states. And only 21% rated New Jersey as a “good’ or “excellent” place to expand their business facilities.
“While our greatest assets like our schools and workforce continue to rank high, the factors driving our ability to afford those assets continue to be even more expensive and of greater concern year over year,” said Siekerka, the NJBIA leader.
“This is why NJBIA continues to call for a reform agenda in order to get these outlier costs under control, especially right now with concerns of a recession on the horizon,” she said.