In NJBIA’s 64th annual Business Outlook Survey, launched at this time, a big majority (75%) mentioned Gov. Phil Murphy and lawmakers haven’t completed sufficient to handle enterprise affordability previously 12 months – in comparison with simply 5% who mentioned policymakers are doing sufficient.
“It was a yr which noticed historic spending and finances surplus, but no complete enterprise reduction – and our companies have taken discover,” mentioned NJBIA President and CEO Michele Siekerka.
“Thus far, there has not been any reduction from a $1 billion unemployment insurance coverage tax enhance, which was introduced on by the longest COVID restrictions and shutdowns within the nation. The ANCHOR property tax reduction program excluded companies, though they pay practically half the property taxes within the state. This sends a robust message to companies that they don’t have the assist they want in Trenton.
“Whereas state grants for focused companies are appreciated, they don’t deal with the excessive price of working a enterprise in New Jersey, which is underscored by the best enterprise tax burden within the nation. And they don’t present the excellent or focused reduction wanted as we see extra small companies continue to close.”
Companies have been additionally requested find out how to enhance enterprise affordability in New Jersey. The leading responses referred to as for a discount in company enterprise taxes (19%), revenue taxes (17%) and property taxes (17%).
There are additionally nationwide components at play on this yr’s survey:
There was uncertainty on whether or not continued inflation would have an effect on jobs.
When asked if they anticipate needing to reduce staff if inflation remains the same or worsens over the next 12 months, most (36%) mentioned they weren’t positive, whereas 35% mentioned they might not want to cut back workers and 29% mentioned they might.
The uncertainty could also be primarily based on how exhausting it’s to search out employees within the first place. Some 70% of respondents said they were challenged to find appropriate staffing in 2022 – solely a 3% enchancment from final yr, when many employees have been making the most of prolonged unemployment advantages.
As for positives, New Jersey companies have been sometimes bullish on their hopes for elevated gross sales, earnings and hiring in 2023.
Nevertheless, their outlook on each the nationwide and New Jersey financial system for the primary six months of 2023 was bleak total.
Staffing
Those that mentioned they struggled to rent have been requested to listing the highest three components that the majority affected their potential to search out acceptable staffing.
Most (79%) said there were not enough candidates or applicants to fill open positions, whereas 59% mentioned candidates lacked the required expertise or {qualifications}.
Additional down the listing, 35% mentioned they have been unable to supply the requested compensation or advantages, whereas one other 28% reported faster-than-typical worker turnover.
As for impacts that went along with hiring challenges, 61% mentioned they elevated wages, 59% mentioned their accessible workers was extra harassed or burnt out and 45% mentioned they misplaced income.
One other 38% mentioned they employed workers with decrease {qualifications} and 31% acknowledged their service to their prospects suffered.
Employment
Even with these staffing challenges, nonetheless, New Jersey companies did see a small rebound in hiring ranges in 2022 – though the numbers weren’t essentially robust. Nineteen percent increased hiring this year, while 21% said they decreased hiring.
That internet adverse of -2% is a notable enchancment from the web adverse of -21% in 2021 and -23% in hiring in 2020 – largely as a result of pandemic closures and its aftermath. Previous to 2020, nonetheless, there had not been adverse internet hiring on this survey since 2012.
Trying to 2023, 30% predicted they will hire more, compared to 9% who predicted less hiring – a +21% internet constructive hiring outlook.
Wages
Whereas filling jobs stays a problem for New Jersey employers, efforts to extend wages are persevering with.
In 2022, 33% of respondents increased pay for employees by 5% or more. Two years in the past, in the course of the peak of pandemic-related shutdowns and restrictions, that quantity was solely 12%.
All totaled, 77% elevated wages in 2022 – a 5% enhance of employers giving raises than in 2021.
Regardless of gloomy financial outlooks nationally and in New Jersey, companies anticipate that upward pattern to proceed in 2023, with 23% saying they’ll enhance wages greater than 5%. One other 32% mentioned they’ll elevate wages between 3% and 4.9% in 2023.
All totaled, 77% mentioned they’ll enhance wages in 2023, whereas 22% anticipate no change in wages.
Gross sales
Actual sales grew for New Jersey businesses in 2022, with 51% claiming an increase – an 8% leap from 2021 and 32% greater than the pandemic yr of 2020.
Forty-nine percent of businesses projected an increase in sales for 2023. That’s in comparison with 18% who foresee much less gross sales subsequent yr. Total, that’s a +31% internet constructive – an enchancment from the final two years, however nonetheless nicely beneath pre-pandemic projections for gross sales.
Earnings
From 2012 to 2019, extra New Jersey companies reported features than reported losses on this survey.
That each one modified in the course of the pandemic yr of 2020 and the climb from that gap continues.
This yr, 37% of respondents reported profits for the year, while 41% reported a loss – exemplifying NJBIA’s common mantra to Trenton that “each greenback counts” when informing lawmakers on coverage.
Companies’ outlook for earnings additionally continues to be lukewarm. In 2023, only 37% believe they will make a profit, compared to 24% who think they will lose money. That net positive of 13% continues a similar low outlook for profits over the past two years.
Purchases and Costs
Not surprisingly, there have been value will increase for major services and products of many New Jersey companies to offset the historic will increase in inflation in 2022.
A complete of 71% mentioned costs for his or her merchandise and/or companies elevated in 2022 (17% elevated considerably, 54% elevated modestly). Only one% mentioned they’d decreased costs this yr.
Concerning future buying plans, 45% predict to extend the greenback worth of their purchases in 2023 and 16% are anticipating a decline. That’s a internet constructive of +29%, or 3 share factors larger than the outlook for 2022.
In 2022, 55% of businesses said they made investments in productivity. That’s a slight enhance from 54% in 2021 and 50% in 2020, however nonetheless off the mark from the pre-pandemic years of 2019 (62%), 2018 (61%) and 2017 (60%).
NJ Challenges
For the second straight yr, the general price of doing enterprise was listed as essentially the most troublesome downside for New Jersey companies – with 25% listing that as tops among their Top 4.
Medical insurance prices, which was listed as a perennial high downside, climbed again to the No. 2 spot with 16%. Availability of expert labor (14%) was listed because the third high downside, whereas property taxes, which held the unenviable high spot from 2017 to 2020, is now fourth (11%).
Seventy-four p.c of respondents mentioned they anticipate their well being advantages prices to go up in 2023. Of these, 21% anticipated these well being profit prices to rise 11% or extra in 2023.
As for native property taxes, 61% anticipated a rise, 37% anticipated them to stay the identical, and solely 2% anticipated a lower.
NJ’s Aggressive Ranges
That is sometimes a section of the survey where the state struggles, however there have been some shiny spots to be discovered.
The standard of public training was seen because the main aggressive constructive, with 44% ranking the standard of New Jersey public faculties higher than different states. At defending the atmosphere, 28% mentioned New Jersey does higher than different states, a 9% bump from two years in the past.
One other notable constructive: 28% mentioned the standard of New Jersey’s workforce was higher than different states. That’s up 7% from final yr, when companies have been extra apt to take much less certified employees to fill open positions.
Final yr, 46% mentioned New Jersey was a worse place to dwell than in different states. Nevertheless, in 2022, that quantity went all the way down to 32% – a notable enchancment.
New Jersey, nonetheless, continues to battle in lots of areas tied extra on to enterprise. It was listed as worse than different states in taxes and costs (83%) and controlling authorities spending (74%) – the latter of which can straight be tied to a $50.6 billion state finances for FY23 that’s now 41% larger since Gov. Murphy took workplace in 2018.
New Jersey can be listed as worse than different states in attracting new enterprise (68%), controlling healthcare prices (67%), controlling labor prices (67%), and angle towards enterprise (58%).
NJ’s Financial Local weather
A continued reluctance by companies to broaden in New Jersey stays.
Fifty-five percent of respondents said they had no plans to expand, whereas 23% mentioned they might broaden in one other state, in comparison with 12% that may broaden in New Jersey. One other 10% mentioned they might open one other location in New Jersey and one other state.
As a location for new or expanded facilities, solely 23% listed New Jersey as excellent or good, whereas 40% described it as honest, and 37% ranked it as poor.
Only 14% said they believe New Jersey has made progress over the last year in easing regulatory obstacles. That quantity has declined steadily from 24% in 2017.
When requested if their enterprise had postponed set up of apparatus or any enlargement resulting from delays in allowing or a regulatory course of, a regarding 27% mentioned sure – which is 14% larger than final yr.
Only 39% said they are planning to keep New Jersey as their domicile in retirement. That quantity is up 7% during the last two years, however nonetheless a sign of the state’s low attraction for individuals to expertise their golden years.
Financial Outlooks
No two phrases have been extra regarding for the enterprise group in 2022 than “inflation” and “recession,” and the financial outlook on the state and nationwide financial system on this survey bears that out.
In 2022, most (48%) rated New Jersey’s economy as fair, while 30% described it as poor. Twenty p.c listed it nearly as good – a 5% drop from final yr – whereas solely 2% referred to as it wonderful.
When asked how New Jersey’s economy will fare in the first six months of 2023, solely 16% reported it might be higher, whereas 52% mentioned it might be worse.
That -36% internet adverse is the bottom outlook for New Jersey’s financial system since 2009, when the financial system was within the throes of the Nice Recession.
Not surprisingly, most (79%) rated the U.S. economy as fair (40%) or poor (39%) in 2022.
Trying forward, 56% said they believed the U.S. economy would perform moderately worse (40%) or substantially worse (16%) in the first six months of 2023.
Comparatively, solely 16% mentioned the U.S. financial system would carry out considerably or reasonably higher within the first half of subsequent yr.
That’s a -40% internet outlook for the nationwide financial system, the bottom on this survey class on this century.
Concerning the Survey: Questions for NJBIA’s sixty fourth Annual Enterprise Outlook Survey have been despatched to New Jersey enterprise homeowners and govt workers in September and October, 2022. The report relies on 468 legitimate responses. Most respondents have been small companies, with 61% using 24 or fewer individuals.
