The results of NJBIA’s 59th Annual Business Outlook show our members are forecasting a positive 2018, including rising sales, profits, hiring and wages. Yet, their optimism remains tempered by ongoing concerns about our state’s challenges and the reforms needed to make New Jersey more affordable and competitive.
The 2018 survey results convey a compelling story of how businesses view the state’s current economic climate, how recent changes to state laws have affected their outlook, and what reforms are still needed to make companies more bullish on New Jersey. As our newly elected governor and the 218th Legislature prepare to take office next month and set New Jersey’s future economic course, the data mined from this survey becomes more valuable than ever.
The good news is that our companies are feeling positive about their own businesses and are planning for a great 2018. A total 58 percent of all respondents predicted higher sales while only 9 percent thought their sales would decline – a significant improvement from last year. Our companies are also predicting higher profits and more hiring than last year.
Although New Jersey businesses struggle with an incredibly high tax burden, our member companies also recognize that strides have begun to be made to make New Jersey more competitive. For example, the survey suggests the adjustment of New Jersey’s retirement income tax exclusion and the repeal of the estate tax, which had hurt family-owned businesses and their succession planning, are beginning to have an impact.
Last fall, before the gradual elimination of the estate tax began, only 32 percent of our members said they would make New Jersey their domicile in retirement. In the latest survey, however, the number of business owners saying they’d stay in New Jersey increased by 8 percentage points. This is an encouraging trend that we expect to continue after the estate tax is completely abolished by law on Jan. 1, 2018, and as we make progress on other tax reforms aimed at making New Jersey more competitive with our neighboring states.
The survey also identified what our businesses view as their biggest challenges. A total of 72 percent of all respondents said rising health insurance costs was one of their top four concerns, and 30 percent called it their No. 1 concern, up from 25 percent last year. New Jersey’s highest-in-the-nation property taxes also made the list of top four concerns for 65 percent of businesses, with 25 percent saying it was their No. 1 concern.
Most of our respondents (68 percent) were small business owners with fewer than 25 employees, so it comes as no surprise that a proposal for a $15 minimum wage was also identified as a significant concern by 64 percent of businesses. Thirty percent said a $15 minimum wage would necessitate higher prices and 29 percent said it would cause a reduction in staff. Others said it would lead to reduced work hours and the use of greater automation.
Most tellingly, our members overwhelmingly told us New Jersey is not competitive with other states in most categories. Taxes and fees are regarded as worse by 83 percent, while 55 percent cited regulatory compliance as being more costly in New Jersey than in other states.
The upshot is a strong case for continued tax and regulatory reform to make New Jersey a more affordable place to live and do business. The business community’s concerns, reflected in both the survey data and NJBIA’s 2018-2019 blueprint for competitive business climate, can serve as a valuable reference for the new administration and legislators as we all work together to chart a course for building a more competitive New Jersey and a better economic future for our state.