Economic Optimism Dims, Yet Hope Springs Eternal

By Michele N. Siekerka, Esq., NJBIA President and CEO On Dec 5, 2019

“Horrible” and “hostile” were two adjectives used frequently by business owners assessing New Jersey’s business climate in our 61st Annual Business Outlook Survey. “Difficult,” “unfriendly” and “unfavorable” were also common responses, along with a few words unsuitable for print – but you get the picture.

The possibility of an economic downturn is worrying business owners (55% say they expect a recession in 2020 or 2021), and that’s amplifying their existing concerns about the high cost of doing business in New Jersey. Our survey found more business owners are giving the state poor marks on taxes, government spending, fees and economic development efforts than last year, while optimism about the six-month economic outlook is at its lowest point since the 2009 recession.

It wasn’t all bad news, however. When we asked our members to assess the quality of New Jersey’s public schools, workforce and quality of life, the number who said the Garden State was better than other states in these areas actually increased over last year. Those ranking public schools as “better” than other states increased 5%, while positive reviews on workforce and quality of life each rose 2%.

Also on the positive front, more employers (43%) said they were taking advantage of employee training and professional development opportunities to meet workforce challenges. The number of employers who relied on community colleges for these programs increased 5% from last year’s survey to 29%. The use of public colleges/universities and one-stop career centers/workforce development boards for training and professional development needs also increased by 4% and 2%, respectively.

Although our survey found only a slight uptick in employers participating in apprenticeship programs (now 15%), we expect that number to grow with the recent launch of the state’s new Apprenticeship Network program. Applying the successful apprenticeship model that’s been used in the building trades to nontraditional high-growth industries, such as advanced manufacturing, clean energy, information technology and healthcare, will ensure that New Jersey employers have the highly skilled workforce they need for jobs in the innovation economy.

Bright spots in the survey data notwithstanding, the overriding message is a compelling story about New Jersey’s challenging business climate. New Jersey’s high property taxes are the No. 1 concern of business owners for the second year in a row, followed by the high cost of doing business. When we asked member companies how New Jersey compares to other states, 89% rated New Jersey worse in taxes and fees, and 79% said New Jersey was worse in controlling government spending.

This sobering assessment about the realities of doing business in New Jersey is mirrored in recent studies as well, including NJBIA’s own regional business analysis and the Tax Foundation’s 2020 State Business Index Tax Climate, both of which ranked New Jersey dead last.

Our members want New Jersey’s business climate to be more competitive, especially now, as concerns about a national recession are growing. In the meantime, they are doing their best to prepare with pro-active plans for 2020, such as reducing operational expenses (62%), growing their operational base (50%), expanding sales (29%), and launching new products or services (22%).

New Jersey’s business owners are tough and they work hard to successfully overcome challenges in their paths. However, their concerns about the need for tax and regulatory reform are real and should serve as a valuable reference point for state policymakers. New Jersey needs to be more competitive and affordable for all taxpayers, including the business community.

To access more business news, visit NJB News Now.

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