The cost of providing health benefits surged for New Jersey employers last year, rising by an average of 8.8%, the highest rate of inflation in at least eight years, the New Jersey Business & Industry Association said in releasing the findings of its 2000 Health Benefits Survey April 4.

Half of the companies responding to the survey said their health plan costs rose by 10% or more last year, making double-digit inflation a painful reality for many employers. Looking ahead, 44% of employers participating in the 2000 survey said they expect their health plan costs to rise at a double-digit pace again in 2001.

"The low inflation we enjoyed for a brief period in the mid-1990s is dead," said NJBIA President Joe Gonzalez, who presented the findings in a Trenton news conference. "Insidious, double-digit inflation is back and will undermine the ability of small businesses to provide healthcare coverage to their employees."

Survey participants paid an average of $5,447 per employee for healthcare coverage in 2000, up 8.8% from an average cost of $5,006 in 1999. This is significantly higher than the 6.6% rate of inflation found in the 1999 survey. It is also the highest rate of inflation recorded by the survey since its inception in 1993.

With over 16,500 member companies throughout New Jersey, NJBIA is the nation's largest statewide employer association. The Health Benefits Survey was mailed on January 5 to 14,278 employers with two or more employees. More than 1,500 companies responded, giving the survey a good response rate of better than 10%.

The continued escalation of health plan inflation follows a brief period of moderate inflation and even falling costs spurred earlier in the decade by the rapid growth of managed care in New Jersey. Employers responding to the NJBIA survey between 1995 and 1998 reported inflation rates averaging in the low single digits. The 1999 and 2000 surveys together yield disconcerting evidence that the spread of managed care in New Jersey and the accompanying cost savings for employers have run their course.

The Association's annual Health Benefits Survey, first conducted in 1993, remains the largest statewide survey of the experiences and opinions of New Jersey employers in providing health benefits coverage to their employees. Among the survey's other findings:

Managed care plans, once the cost-cutting masters of the health plan universe, were no refuge for inflation-weary employers last year. The average cost of a managed care plan rose 8.9% to $5,563 per employee in 2000, up from an increase of 5.9% in 1999.

The smallest companies, those with 2-19 employees, paid the most for healthcare coverage. Their average cost of $5,719 per employee in 2000 was $600 more (12% higher) than the average cost reported by larger companies.

The proportion of companies anticipating rising inflation has grown rapidly over the last three years. Forty-four percent of respondents to the 2000 survey said they expect their cost of providing health benefits to rise by 10% or more in 2001. This compares with 36% of employers in 1999 and 24% in 1998 who anticipated double-digit inflation in the year ahead.

Despite rapidly escalating costs, the proportion of employers offering health benefits to their employees did not decline over the last year, at least not among the universe of employers responding to the NJBIA survey. Ninety-three percent of respondents provided health coverage to full-time employees, and 75% to full-time employees and their dependents, a finding essentially unchanged from the previous year's survey.

A majority of the cost-control actions taken by employers in 2000 involved asking their employees to pay more through higher premiums, copayments and/or deductibles. In fact, 60% of the actions taken by employers involved this kind of cost shifting. Only 40% of cost-control actions involved changing plans or joining a managed care network. Not since 1993, the first year in which this survey was conducted, have employers given more weight to cost shifting to employees than to switching plans as a cost-control strategy. The ability of New Jersey employers to save money by changing plans is now limited since most have already made the move into managed care.

For more information about the survey, contact Bryan Markowitz at 609-393-7707, ext. 225, or bmarkowitz@njbia.org.
 

NJBIA's Biennial Legislative Day Set for June 14

Get an insider's view of a session day in the New Jersey Legislature and learn how laws are "really" made and how you can have an impact on the process. Sign up for NJBIA's biennial Legislative Day at the State House on Thursday, June 14.

Everyone remembers the "How a Bill Becomes Law" lecture from their high school civics class. But anyone involved in the legislative process will tell you there's a lot more to it. Every two years, NJBIA organizes a legislative day to help take the mystery out of the legislative workings in Trenton. Learn where legislators get their ideas and how they are translated into bills. Get valuable tips on what employers can do to help push legislative proposals through committee, onto the floor, and, ultimately, to the Governor's desk. Learn what you can do to have a real impact on legislation.

Participants will have the opportunity to chat with legislators at an exclusive NJBIA buffet luncheon, meet directly with influential representatives from the Governor's Office and key legislators and staff, and talk with policy experts from the nonpartisan Office of Legislative Services.

Only 50 NJBIA members can participate, so make your reservations today. The event begins at 8:30 a.m. with breakfast and networking at NJBIA's State Street headquarters and runs through the luncheon, which ends at 2:30 p.m. The cost is $60 per NJBIA member. For more information, contact Stacy Wichner at 609-393-7707, ext. 213.
 

It's no surprise that Accurate Box Company's mascot is the chameleon. The colorful reptile's ability to quickly adapt to its environment mirrors the Paterson company's philosophy of colorful innovation.

This philosophy has helped transform Accurate Box from a local folding-carton manufacturer to an international leader in carton manufacturing with brand name accounts and cutting-edge technology.

Accurate President and CEO Lisa Hirsh, the third generation of the Hirsh family to run the company, gave area legislators an up-close look at her facility as well as a little advice on making New Jersey more business friendly.

Assembly members Marion Crecco of Bloomfield, Nellie Pou of Paterson, and Jerry Zecker of Clifton, as well as Jill Pallokat of Senator John Girgenti's office participated in the plant tour as part of NJBIA's Site Visit Program. The program is designed to give legislators a better understanding of the businesses in their districts and the issues that affect them.

Hirsh told the legislators she is upset with proposed legislation that would mandate 12 weeks of paid family leave for parents of newborns or adopted children. As Hirsh explained, Accurate's 200 employees are highly trained, skilled professionals. Training a replacement would take at least 12 weeks, which would cost Accurate in productivity and sales.

More importantly, legislation like paid family leave sends a message that business is not welcome in New Jersey, she said.

"Once a week, I get a call from someone representing another state, telling me what a good deal they could offer me if I moved my operation," Hirsh said.

It's no wonder their operation is coveted by other states. Accurate employs about 200 people, many of whom are second-generation Accurate Box workers. It routinely replaces and upgrades its equipment, investing millions of dollars in its physical plant.

The new equipment, which produces cartons using a litho-lamination process, has helped Accurate carve out a market niche. The process combines sturdy corrugated cardboard-ideal for shipping and storage-with colorful laminated packaging that makes a product stand out in the store. Litho-lamination allows stores to display the product in the same package in which it is shipped, thus saving them the time and expense of unpacking their wares.

Today, litho-laminated boxes account for 90 percent of Accurate Box's business. Accurate also has some of the biggest national accounts available, including the US Postal Service, for which it manufacturers a shipping carton.

There are few businesses like Accurate-an independent company dedicated solely to box manufacturing. As Charlie Hirsh, Accurate's chairman and past president, explained: "In a specialty manufacturing industry like this, most of our competition comes from large, integrated companies. Independents like ourselves are few and far between."

Based on the display Hirsh put on for the site visit, the competition has plenty to worry about. For information about NJBIA's Site Visit Program, contact Libby Vinson at 609-393-7707, ext. 201, or lvinson@njbia.org.
 

Paid Family Leave, Healthcare Costs Dominate Discussions
at NJBA's Legislative Briefing Breakfast Series

NJBIA kicked off its annual briefing breakfast series by presenting its 2001 Legislative Agenda to hundreds of employers and legislators throughout the state during events in March and April. NJBIA staff also presented the outlook for the state economy and an overview of activities involving businesses. But key legislative issues of paid family leave and healthcare costs dominated the sessions.

Philip Kirschner, senior vice president for government affairs, said it's been a good year on the legislative front so far. "We're fortunate in that many of our priorities for this session have already been signed into law," Kirschner told the crowd at the first Briefing Breakfast in Mount Laurel on March 30.

Key legislative victories in 2001 will help businesses cope with two of employers' biggest concerns-taxes and regulations, Kirschner said.

Shortly after he was sworn in as Acting Governor, Donald T. DiFrancesco signed legislation phasing out the double taxation of S corporations. "This is like a middle class tax cut for businesses," Kirschner said. A few weeks earlier, former Governor Christine Todd Whitman had signed regulatory reform legislation, ensuring that businesses will have ample opportunity to review and comment on new state agency rules before they are adopted.

Not all the news was good, however. Vice President Jeff Stoller warned employers that labor groups are pushing hard for the enactment of legislation making New Jersey the first and only state in the nation to provide paid family leave. As written, the bill would give 12 weeks of unemployment benefits to both male and female employees with newborns or newly adopted children. Unlike unpaid leave laws that exempt small employers, paid family leave would apply to all businesses with two or more employees.

"For years, I have warned about the tremendous damage a paid family leave bill could do to New Jersey," Stoller said. "Now that a serious effort is underway to enact legislation, you know why we are so concerned."

Healthcare costs are another issue on everybody's mind, said Assistant Vice President Bryan Markowitz. After several years of relatively benign inflation, many employers have been hit with double-digit increases in the cost of their health plans, Markowitz said, pointing to the recently released findings of NJBIA's 2000 Health Benefits Survey.

Markowitz pointed to two bills he termed "cost-raisers" and three bills that would help lower insurance costs. One of the "cost raisers" would give individuals the right to sue their health plan without first going through an independent appeals process. The other would allow doctors to group together to negotiate higher fees for their services.

"We know that they're not grouping together to negotiate lower fees," Markowitz said, noting that the legislation would translate into higher insurance premiums for employers.

Of the three bills that would lower healthcare costs, one would allow small businesses to band together to self-insure, the second would offer the self-employed more insurance plan options, and the third would create an Independent Health Data Commission to help employers shop around for the best prices.

On the tax front, Vice President Art Maurice told Briefing Breakfast attendees that New Jersey's Corporate Business Tax (CBT) system needs to be reformed.

Since current law applies the CBT rate not only to sales, but also to New Jersey-based employees and physical plants, it actually punishes companies with multi-state sales that expand their New Jersey operations or hire more New Jersey employees. NJBIA is backing single-sales factor legislation that would apply the CBT only to a company's New Jersey sales.

First Vice President Jim Sinclair had three things to say to the state Legislature and Governor for enacting regulatory reform-Thank you! Thank you! Thank you! Culminating 14 years of working to streamline New Jersey's bureaucratic rule-making process, enactment of A-1484 (Heck, O'Toole)/S-1306 (Bark, Adler) represents a beginning, not an end, he said.

Sinclair said that in order for the new law to be effective, businesses must participate in its implementation. Businesses should contact Sinclair at ext. 236 or jsinclair@njbia.org to inform him of proposed regulations to which the new law should apply.

For more information on NJBIA's legislative agenda, contact Phil Kirschner at 609-393-7707, ext. 210, or pkirschner@njbia.org.
 

NJBIA Unveils "Safety Net" at Seminar, Workplace Safety
Remains a Hot Topic Among New Jersey Employers

Even though employers will not have to comply with onerous new ergonomic regulations, businesses are still very interested in providing a safe workplace. On March 23, NJBIA's workplace safety briefing breakfast attracted 125 business professionals who learned new techniques for preventing on-the-job injuries.

Originally, compliance with the Occupational Safety and Health Agency's (OSHA) new ergonomics regulations was to be the focus of the briefing. But in March, President Bush signed legislation repealing the regulations and spared employers from wrestling with the vague standards. Nevertheless, the NJBIA briefing provided employers with a wealth of information.

For all types of workplace safety issues, working with OSHA up front to prevent injuries can yield tremendous benefits. Ken Kraly, director of engineering for L'Oreal USA, said L'Oreal's participation in OSHA's Voluntary Protection Program not only improved safety, but also cut down on bureaucratic paperwork and inspections associated with compliance.

Insurance carriers are another excellent workplace safety resource. According to Robert H. de Flesco Jr., assistant vice president for New Jersey Manufacturers (NJM) Insurance Group, most insurance carriers will work with their clients to reduce workplace hazards at their businesses. NJM provides consultation resources, workplace evaluations, safety awareness training programs, booklets and videos, and industrial hygiene surveys.

Businesses were also encouraged to use the resources of the New Jersey Safety Council. The council offers a variety of instructional courses, computer software, and publications to help employers improve safety. NJBIA has negotiated a discount on safety council products for NJBIA members. Members can also join NJBIA's "Safety Net," an online workplace safety information exchange. For more information on these money-saving member benefits, contact Sara Bluhm at 609-393-7707, ext. 204, or sbluhmr@njbia.org.or at ext. 209.
 

Proposal Would Reform Corporate Business Tax to Favor NJ-Based Firms

Legislation was introduced March 29 that would reform New Jersey's Corporate Business Tax (CBT) to favor multi-state companies that expand in New Jersey and hire more state residents. The legislation, S-2314 (Kyrillos, Kenny)/A-3420 (DeCroce), would not change the tax rate, but would levy the CBT only on a company's New Jersey sales.

"While New Jersey has made tremendous progress in reforming its tax laws to promote economic growth, the current Corporate Business Tax remains so antiquated it actually penalizes businesses with headquarters, plants and employment in New Jersey," NJBIA Vice President Art Maurice said recently. "Our current Corporate Business Tax discourages businesses from hiring New Jersey workers and expanding their New Jersey operations. The time has come for our lawmakers to reform this backward tax law."

Currently, the CBT is based on businesses' property, payroll and sales in New Jersey. As a result, the more New Jersey-based property or employment a company has, the greater its New Jersey tax liability. This formula benefits corporations with no New Jersey investment, but lots of New Jersey sales.

The legislation would eliminate the property and employment factors when determining a corporation's share of New Jersey business taxes. By replacing the current tax structure with a "single-sales factor" allocation formula, New Jersey would base its share of a company's taxes only on the percentage of sales occurring in New Jersey. Property and employment factors would be eliminated. New Jersey businesses would no longer be penalized for contributing to New Jersey's economy by creating jobs and private investment and paying local property taxes.

Additionally, the existing CBT law actually forces multi-state businesses that call New Jersey home to make substantial out-of-state investments. Businesses that maintain operations solely in New Jersey can be forced to pay taxes on all of their business income-including out-of-state sales. The "regular place of business" rule, as it is called, assumes that a New Jersey-based business has no out-of-state sales unless it has a regularly occupied out-of-state office, factory or other space with at least one employee. The legislation would eliminate the "regular place of business rule."

Seven states already utilize a single-sales factor formula to determine state business taxes-Connecticut, Massachusetts, Illinois, Texas, Iowa, Nebraska, and Missouri. Competitor states New York and Maryland are seriously considering single-sales-factor legislative proposals.

Adopting a single-sales factor formula would save New Jersey corporations an estimated $100 million a year, approximately 5 percent of CBT collections. Eliminating the onerous "regular place of business" rule would allow New Jersey's 225,000 corporations with no out-of-state presence the same opportunity large multi-state businesses have to reduce the amount they pay in New Jersey taxes on out-of-state income.

For more information, contact Arthur Maurice at 609-393-7707, ext. 247, or amaurice@njbia.org.
 

Bill Would Punish Employers for Temp Agencies' Failings

Employers should not be held liable when the temporary employment agencies they use fail to withhold payroll taxes, NJBIA Vice President Jeff Stoller told the Assembly Labor Committee on March 22. Stoller testified on A-2889 (Geist), which would not only extend liability for wage and hour violations to employment agencies' clients, but also prohibit companies from hiring temporary employees during a strike.

The bill would unfairly punish employers for the actions of others. By law, temporary employment agencies must withhold employee contributions to the Unemployment Insurance (UI) fund, Temporary Disability Insurance (TDI) fund and other payroll taxes. Under A-2889, however, businesses that employ the services of a temp agency could be held liable for violations committed by the agency, even though the employer had no knowledge or control over their actions.

The bill also would prevent employers hit by a strike from using temporary replacement workers. This provision has nothing to do with enforcement of wage and hour laws and should not be included.

The ability to stay open is vital to preserving a balance between labor and management in negotiations. Otherwise, unions would have no reason to bargain in good faith. For more information, contact Jeff Stoller at 609-393-7707, ext. 209 or jeffstoller@njbia.org.
 

Congressional Scorecard

How New Jersey's Congressional Representatives Voted on Key Business Issues in 2001
	S.J. Res. 6 Repeal of Ergo Recs	HR 3 Bush Income Tax Cut	HR 333 Bankruptcy Reform
NJBIA Position	Support	Support	Support
Robert E. Andrews, D-1	No	No	Yes
Frank A. LoBiondo, R-2	No	Yes	Yes
H. James Saxton, R-3	No	Yes	Yes
Christopher H. Smith, R-4	No	Yes	Yes
Marge S. Roukema, R-5	Yes	Yes	Yes
Frank Pallone, Jr., D-6	No	No	Yes
Michael Ferguson, R-7	No	Yes	Yes
William J. Pascrell, Jr., D-8	No	No	Yes
Steven R. Rothman, D-9	No	No	Did Not Vote
Donald M. Payne, D-10	No	No	No
Rodney P. Frehlinghuysen, R-11	Yes	Yes	Yes
Rush Holt, D-12	No	No	Yes
Robert Menendez, D-13	No	No	yes

Vote descriptions:

S.J. Res. 6-Repeals regulations requiring most employers to abide by onerous regulations aimed at reducing ergonomic injuries in the workplace.

HR 3-Cuts income taxes across the board, helping the economy and saving taxpayers approximately $1 trillion over ten years.

HR 333-Requires those who can afford to pay off at least some of their debts to reorganize under Chapter 7 instead of Chapter 11. The change means businesses will be able to recover at least some payments from filers who still have an adequate income level.

For more information on federal issues, contact Libby Vinson at 609-393-7707, ext. 201, or lvinson@njbia.org.

President Bush on March 20 signed legislation repealing sweeping ergonomics regulations adopted by the federal Occupational Safety & Health Administration (OSHA) in the final weeks of the Clinton Administration. The President's action spares employers the difficulty and expense of complying with vague, ill-defined and onerous workplace regulations that would have taken effect in October.

Had the rules taken effect, companies with 11 or more employees would have had to establish an entire ergonomics-training program if a job caused even one repetitive-motion injury and could not be restructured through a "quick fix."

Companies also would have had to undertake a hazard analysis of jobs that trigger worker complaints, provide-at their cost-access to a healthcare professional for employees with complaints, and, if necessary, arrange for a second or even third opinion from other professionals. The regulations would have required businesses to give employees with ergonomic injuries light work duties at full pay or to let them stay at home for up to 90 days at 90 percent of their regular salary.

Businesses across the country objected to the fact that this onerous and costly ergonomics rule was rushed through in the final weeks of the Clinton Administration without adequate public input and scrutiny.
 

US House Approves Estate-Tax Repeal

In a 274 to 154 vote, the US House of Representatives approved repeal of the estate tax, sending the third and final installment of President Bush's $1.6 trillion tax cut to the Senate on April 4. The bill, HR 8, would phase out the estate tax over the next 10 years, repealing it entirely by January 1, 2011.

Repealing the estate tax would provide tremendous tax relief to the heirs of business owners who face staggering tax bills when inheriting the family business. Because the assets of a business have already been taxed prior to their transfer, it is unfair to force the heirs of a deceased owner to pay taxes on the same assets again.

The bill represents the third and final component of the Bush tax cut to pass the House. Legislation cutting marginal rates by $958 million over ten years and a bill eliminating the marriage penalty and increasing child tax credits were approved by the House in March.

NJBIA will host its final Legislative Briefing Breakfasts in May. Meet legislators in your district and learn about pending and proposed legislation affecting your business. Each breakfast will begin at 7:30 a.m. with registration and end promptly at 9:30 a.m. so you can get back to work. The cost is $35 per person per breakfast for NJBIA members and $45 for nonmembers. Register early by calling Stacy Wichner at 609-393-7707, ext. 213.

Following are the dates and locations for the two remaining Briefing Breakfasts:

• Tuesday, May 1
  Holiday Inn, Tinton Falls
• Friday, May 4
  Newark Airport Marriott

Register online

TUESDAY, MAY 15
NEW JOBS South Jersey
Legislative Reception

Sponsored by the Chamber of Commerce Southern New Jersey and NEW JOBS, the state's largest political action committee for the business community, this event is South Jersey's regional fund-raiser for probusiness candidates for the state Legislature. This reception will be held at The Mansion on Main Street in Voorhees from 6:00 p.m. until 8:00 p.m. The cost is $175 per person. To register, contact Sherry Esteves at 609-393-7707, ext. 219, or sesteves@njbia.org. For details on NEW JOBS, contact Executive Director Jim Sinclair at ext. 236 or jsinclair@njbia.org.

Register online

TUESDAY, MAY 15
NJEDA Capital Opportunities Conference

The New Jersey Economic Development Authority (NJEDA) will host business owners, bankers, attorneys and financial officers at its fourth annual "Capital Opportunities to Grow Your Business Conference" at the Sheraton at Woodbridge Place, Iselin, between 8 a.m. and noon. Learn more about the NJEDA's low-interest financing programs, the economic outlook, and proven methods used to recruit and retain qualified workers. Registration fee is $25 per person. For more information or to register, call the NJEDA at 609-341-2065 or visit NJEDA's Web site at www.www.njeda.com.

Register online

FRIDAY, JUNE 1
Hot Legal Topics Seminar

Some of the state's foremost attorneys will address a host of current legal issues at NJBIA's Hot Legal Topics seminar on June 1 at the Holiday Inn in Monroe Township. Learn about hiring issues, sexual harassment, employee privacy issues, employee handbooks, and family and medical leave. The program begins at 9:00 a.m. and ends at 12:15 p.m. The cost per person is $99 for NJBIA members and $129 for nonmembers. To register, call Lisa Figatner at 609-393-7707, ext. 239.

Register online

TUESDAY, JUNE 5
New Good Neighbor Awards Luncheon

NJBIA's 41st Annual New Good Neighbor Awards Luncheon will be held at the Sheraton at Woodbridge Place in Iselin. Awards will be presented to New Jersey businesses that have made an outstanding contribution to their communities through job creation, the quality of their architecture, and community involvement. The luncheon will be held from 11:30 a.m. - 2:00 p.m. Cost to attend is $55 per person. For more information, contact Stacy Wichner at 609-393-7707, ext. 213. For sponsorship information, call Sherry Esteves at ext. 219.

Register online

WEDNESDAY, JUNE 20
NEW JOBS
Morris County Fund-Raiser

Sponsored by the New Jersey Organization for a Better State (NEW JOBS), this great networking event will honor outstanding legislators of Morris County and raise funds for probusiness candidates for the state Legislature. The reception will be held from 6:00 p.m.- 8:00 p.m. at American Home Products Corporation in Madison. Admission is $100 per person. All funds raised from this event will be used in this year's general election to support candidates who are concerned about the retention of private-sector jobs and promoting economic growth. To register, contact Stacy Wichner at 609-393-7707, ext. 213.

Register online