NJ Employers More Upbeat about Economy But Feel NJ's Political Climate Is Less Friendly
Although New Jersey employers are feeling more upbeat in their economic outlook, they are feeling more negative in their assessment of the state's business climate and its political leadership, NJBIA's top executives told reporters at a November 20 news conference. "This year's survey reveals hopeful evidence that the worst is behind us. After two very tough years, we are encouraged that our members are feeling more upbeat in their outlook," President Joe Gonzalez said at the well-attended news conference, which was held to release the findings of NJBIA's 2003 Business Outlook Survey. Gonzalez noted that business confidence had improved in the outlook for employers' own industries as well as for the sales, profits and employment of their individual companies. More employers expect conditions to improve than to get worse. However, he was careful to point out that business confidence had not been restored to pre-recession levels and was still at the second lowest level of the last nine years. Executive Vice President Philip Kirschner told reporters that employers' more optimistic assessment of economic conditions was not matched by their assessment of the state's business and political climate. He noted that only 35% of companies said New Jersey is a good place for business expansion, down from 50% just two years ago. He said Association members identified healthcare costs, property taxes and state taxes as their three worst problems. "When we asked our members what the Governor should do to make New Jersey more attractive for business investment and expansion, they said the top priorities should be to lower healthcare costs and cut business taxes," Kirschner said. In written comments, survey participants said they were angered by the $1 billion increase in corporate business taxes enacted earlier this year to balance the state budget. This is the 44th consecutive year NJBIA has conducted its Business Outlook Survey. The 2003 survey was distributed to all 18,500 NJBIA member companies in September 2002. The findings were based on the first 1,600 responses from diverse industries in every region of the state. Seven in ten of the survey participants were small companies with 2-24 employees. Following are details of the survey findings. - Industry Outlook-Thirty-six percent of survey respondents said they expect conditions in their industries to improve in the first six months of 2003, versus only 23% who expect conditions to worsen and 41% who expect conditions to stay essentially the same. This represents a reversal of sentiment from the 2002 survey, when more were pessimistic than optimistic. Among specific industries, expectations were more positive than negative in all major sectors except retail trade and construction, where they were essentially neutral.
- Recession Indicator-Forty-three percent of companies believed their industries were in a recession in September 2002, when the survey was conducted. This was up from 39% a year earlier and represents the highest percentage "in recession" since this business-cycle question was first asked in the 1996 survey. More importantly, however, only 9% of employers said their industries were heading into recession, the lowest percentage since this question was first asked eight years ago, a strong indication that a majority of companies have already hit their recession bottom.
- Employment Outlook-The employment outlook for 2003 does not provide a ringing endorsement for vigorous job growth. Twenty-four percent of respondents expect to expand employment in the year ahead, while 10% anticipate cutbacks. Sixty-six percent expect no change in employment. This is the second weakest employment outlook in nine years.
- Sales & Profits Outlook-Following last year's precipitous decline, the outlook for sales and profits has improved, although it remains at the second lowest level of the last nine years. Fifty percent of all respondents expect to register increased sales in 2003, up from 42% with similar expectations last year. Forty-two percent anticipate higher profits in 2003, up from 36% last year.
- Worst Problems-Employers continued to identify healthcare costs and local property taxes as their two most troublesome problems, but they added a new concern to their top-three list-state taxes. They also said the two most important things Governor James E. McGreevey can do to make New Jersey more business friendly are to lower healthcare costs and cut business taxes.
- NJ As Expansion Site-Asked how they viewed New Jersey as a site for business expansion, only 35% said the Garden State was good (27%) or very good (8%). This is down sharply from a 12-year high of 50% found in the 2001 survey, and it is the lowest rating in six years. Twenty-two percent said New Jersey was average as a site for business expansion, and another 42% said it was fair (22%) or poor (20%), up sharply from 28% giving it fair-to-poor ratings the year before.
- NJ Compared to Other States-A majority of respondents said New Jersey is worse than other states on a variety of government performance measures: 70% said New Jersey is worse than other states in its attitude toward business; 68%, worse in attracting new business; and 59%, worse in promoting economic development. However, on quality of life measures, New Jersey fared much better. Seventy-one percent said New Jersey's public schools are better, an all-time high, and 67% said it has a better workforce.
- Government Leaders-State government leaders received low approval ratings with only 11% saying the Governor and Legislature are doing a good job. Sixty-five percent said President Bush is doing a good job, and 27% said Congress is doing a good job.
- Wage Inflation-A little over half of all respondents (53%) expect to spend more on wages and salaries in 2003 and only 11% see such expenditures falling. The percentage expecting an increase was the same as last year, but down sharply from 78% the year before that. Three in ten employers (29%) anticipate wage and salary cost increases of 1-3%, while another two in ten (19%) anticipate increases of 4-5%.
- Fringe Benefit Inflation-Seventy-two percent expect to spend more on fringe benefits, up from 67% last year, but down from a recent high of 80% in the 2000 survey. Approximately one-third of employers (34%) expect fringe-benefit costs to rise 1-5% over the coming year, while another four in ten anticipate increases of 6% or more. One in five (18%) of employers are bracing for increases of 11% or more.
- Labor Availability-A softer economy has eased labor markets, making it easier for employers to find qualified workers. Sixty-seven percent of employers reported difficulty finding skilled workers in 2002, down from a high of 80% two years earlier.
- Labor Costs-The softening labor market has eased other pressures that had built to critical levels during the prosperous 1990s. Only 23% said a shortage of labor had hampered business expansion plans over the past year, down from an expansion high of 48% two years ago. And only 42% said a shortage of labor had driven up labor costs in 2002, down from a high of 75% two years ago.
- Pricing Power-The weak economy and abundant competition have made it more difficult for employers to raise prices. Only 30% increased prices for their products in 2002. This compares with 36% last year and 42% the year before that. Sixteen percent said they lowered their prices in 2002, more than the 12% who reported lowering prices in 2001.
- Capital Spending Plans-Thirty-two percent said they planned capital spending increases in 2003 and 19% said they anticipated cuts. Half of all respondents (49%) anticipated no change. This question was asked for the first time this year and therefore no historical comparisons are possible.
NJBIA Condemns Outrageous Labor Bills that Would Promote Union-Organizing Activities at NJ Taxpayers' Expense
NJBIA broadly criticized four bills during the Assembly Labor Com-mittee's November 25 meeting as outrageous legislation that would use taxpayers' money to assist private union-organizing activities and make it almost impossible for qualified nonunion companies to obtain state contracts.The four bills would let unions organize a company's workforce without first allowing employees to vote in an election, would use taxpayer dollars to collect confidential information that can be used for union organizing, would require employers to forfeit their legal rights to oppose unionization if they receive state assistance, and would limit the ability of nonunion contractors to bid on state apparel contracts. After NJBIA testified against the measures, the committee only released A-2958 (Friscia, Sarlo), which, as a practical matter, denies many state contractors and grantees the right to resist union-organizing drives. While the other three measures were not released from committees, they could come up for consideration at another time. A-2958 says that any nonunion company receiving a state contract or reimbursement cannot use those funds to respond to union-organizing activities. The language of the bill is so vague and broad as to make it almost impossible to prove that some of those funds are not being used to oppose union-organizing activities. Therefore, the only way to comply would be to give up the legal right to oppose unionization. For instance, it would be impossible for many companies to prove that the time of supervisors and managers who have many duties is never spent on opposing union organizing activities. The bill would unfairly impact contractors with many state contracts and institutions such as hospitals and nursing homes, for which government funds account for a large percentage of their revenues. These entities would find it impossible to prove that state funds were not used to oppose union organization since those monies are used to support all the operations of the facilities. Employees deserve to hear both sides of a unionization argument before deciding whether or not to join a union. State funding should not be used to silence management's opinions. The three bills held by the committee were: A-1320 (Egan, Friscia)-Authorizes instant unionization. This bill provides that unions can organize private workforces in New Jersey whenever a majority of employees sign a card indicating an "interest" in having union representation. No election would be held! A basic tenet of the National Labor Relations Act is that the final decision on unionization be made by employees in a secret ballot election, free from coercion by either the union or employer. A-2938 (Friscia, Greenstein)-Requires state contractors to disclose employment information that unions can use for organizing drives. In order to secure state contracts, employees would be forced by this measure to disclose detailed confidential information on the amount of payroll, the cost of health insurance and other benefits, workers' compensation records, union representation, gender and ethnic background of employees, and the identity of subcontractors. This private information would be made public and posted on the Internet! A-2946 (Friscia, Quigley)-Disqualifies state apparel vendors. Any vendor providing apparel to state agencies would have to accept an unprecedented list of new requirements for bidding, including a ban on employee layoffs for poor business conditions. Bidders would also be forced to accept many of the provisions in the above-mentioned bills, including instant unionization and forfeiture of their right to oppose union-organizing activities. This policy would reduce the number of experienced vendors bidding on state contracts and drive up costs for all New Jersey taxpayers. For more information, contact Jeff Stoller at jeffstoller@njbia.org or ext. 209.
Employers Face Tax Withholding Changes for 2003
Employers face changes in tax withholding rates and taxable wage bases for 2003. Higher personal exemptions and standard deductions and revised tax brackets are reflected in new federal income tax withholding tables. The social security (FICA) tax will apply to an increased taxable earnings base. On the state level, the maximum taxable wage base will rise for contributions to the State Plan Temporary Disability Insurance, Health Care Subsidy Fund, Unemployment Insurance Fund, and Workforce Development Partnership Fund. The following rates and wage bases are applicable in 2003.
SOCIAL SECURITY (FICA) - Maximum taxable earnings $87,000 (up from $84,900).
- Employee and employer tax rate - 6.2% (.062).
- Self-employed tax rate - 12.4% (.124).
MEDICARE (HI)- Taxable earnings - unlimited.
- Employee and employer tax rate - 1.45% (.0145).
- Self-employed tax rate - 2.9% (.029).
FEDERAL INCOME TAX- Modified federal income tax withholding tables will be mailed to employers in federal Circular E, reflecting tax bracket, standard deduction, and personal exemption annual cost-of-living adjustments.
FEDERAL UNEMPLOYMENT (FUTA)- The employer FUTA tax will remain 0.8% (.008), after credits, of the first $7,000 of each employee's earnings. No Federal Unemployment Insurance Tax is imposed on employees.
NEW JERSEY WORKFORCE DEVELOPMENT, UNEMPLOYMENT INSURANCE AND HEALTH CARE SUBSIDY FUND TAXES- Employee and employer State Unemployment Insurance, Health Care Subsidy Fund, and Workforce Development tax rates will apply to the first $23,900 of an employee's earnings.
- For 2003, employees are subject to a 0.0425% (.000425) Workforce Development Partnership Fund tax rate. The combined employee Unemployment Insurance (UI) and Health Care Subsidy Fund (HC) tax rate remains at 0.3825% (.003825) of taxable payroll as the state continues the diversion of UI taxes to the Health Care Subsidy Fund. Of the combined 0.3825% employee UI/HC tax rate, the allocation will be 0.1825% (.001825) to UI and 0.20% (.0020) to HC for 2003.
NEW JERSEY TEMPORARY DISABILITY INSURANCE (TDI)- Maximum taxable wages $23,900 (up from $23,500).
- Tax rate for employees covered by the State Plan TDI - 0.5% (.005) of taxable wages.
- Employer tax rate for the State Plan is based on each employer's claims experience.
NEW JERSEY GROSS INCOME TAX- Tax withholding rates are unchanged for 2003.
NJBIA is again offering the Rapid Finder payroll tax deduction tables, combining New Jersey and federal tax deduction tables for employers with weekly payrolls. For details, call NJBIA's Christine Lopez at 609-393-7707, ext. 224.Employee Benefits Rise in 2003
Employee maximum weekly benefits for Workers' Compensation, Unemployment Compensation, and Temporary Disability are adjusted annually to reflect increases in average taxable wages of covered employees. Amounts applicable in 2003 are set forth below. NEW JERSEY UNEMPLOYMENT INSURANCE - Maximum benefit for benefit years commencing on or after January 1, 2003: $482 weekly (up from $475).
TEMPORARY DISABILITY INSURANCE- Maximum benefit (State Plan) for periods of disability commencing in 2003: $450 weekly (up from $444).
WORKERS' COMPENSATION- Maximum benefit applicable to temporary disability, permanent disability, permanent partial disability, permanent total disability, and dependency benefits awarded for injuries suffered in 2003: $638 weekly (up from $629).
Quote of the Month
"The biggest fault of this administration is they are not taking care of their customer base."
Thomas A. Bracken, president and CEO of Sun National Bank in Vineland, saying McGreevey is ignoring the immediate concerns of business. McGreevey, Menendez Push Economic Agendas at NJBIA Public Policy Forum
Governor James E. McGreevey and newly elected House Democratic Caucus Chairman Robert Menendez called for restraint in government spending and pushed their economic agendas before 230 business leaders at NJBIA's Public Policy Forum on December 5. With the theme "Charting a New Course, a Pro-Growth Agenda for 2003," the Forum focused on stimulating economic growth and bolstering business confidence. Governor McGreevey said his education and high technology initiatives would create economic growth over the long term. He stated that while the economy is weak now, New Jersey was well positioned to take advantage of new industries in the future. McGreevey promoted his plan to consolidate Rutgers University, the New Jersey Institute of Technology, and the University of Medicine and Dentistry into one higher education entity. His long-term economic development plan would invest more in university research to develop a world-class higher education system. McGreevey said improved education will address an important economic development issue, which he described as "the need to add value to our products." The Governor said the state should focus on new, high technology companies that will drive future economic growth. With the state facing another multi-billion dollar budget shortfall, many employers attending the Forum were worried about their immediate future and the prospects of another round of higher taxes. McGreevey pledged to reign in state spending by freezing operating expenses. "Government operations costs will be held flat in this fiscal year," McGreevey said. "Trenton needs to do what we ask of others. And we will control those costs." The governor did not address taxes in his speech but told reporters afterwards that it was "exceptionally unlikely" that business taxes would be increased again next year. The state's billion-dollar business tax increase enacted earlier this year has been a source of anger and frustration for New Jersey employers. In his keynote address, US Representative Menendez called for policies to create an environment where business can grow. Menendez recently was elected chairman of the Democratic Caucus, his party's third most powerful leadership position in the House. As such, he will play a leadership role in crafting a new national message for House Democrats-a message that is expected to focus heavily on economic policy. Among the specific proposals Menendez endorsed were a tax cut for middle class taxpayers and passage of bankruptcy reform requiring those who can afford it to repay at least part of their debt. He also called for initiatives to help small businesses pay for employee health benefits. Most importantly, he said, the nation needs to pay for what it spends and stop increasing the budget deficit. During the legislative leadership panel, Senate Co-President John Bennett and Assembly Republican Leader Paul DiGaetano criticized the corporate tax hike and spending policies of McGreevey and Democratic legislators. The Democratic leaders-Senator Bernard Kenny and Assembly Majority Leader Joe Roberts-said they were forced to make tough decisions because their Republican predecessors left a huge budget deficit. NJBIA Executive Vice President Philip Kirschner presented the Association's progrowth agenda. He called for balanced labor laws, no paid family leave, common sense environmental policies, no new tax increases, reduced government spending, and initiatives to lower the cost of health benefits. NJBIA also presented two awards. NJBIA President Joe Gonzalez honored state Senator Robert Littell, co-chairman of the Senate Budget and Appropriations Committee, with the NJBIA Paul L. Troast Award. Littell was recognized for his work to soften the impact of the Corporation Business Tax increase. NJBIA Chairman Bart Luedeke presented the Leonard C. Johnson Award to Maurice Coffee, vice president of government relations with Virtua Health of Mount Holly, for helping to shape healthcare policy in New Jersey as a member of NJBIA's Health Affairs Committee.
WEDNESDAY, FEBRUARY 26
HR 101 Seminar
This program is a "crash course" in the key human resource issues facing New Jersey employers. Small business owners and first-time HR managers will have a special interest in hearing experienced labor attorneys and veteran personnel executives discuss the basics of managing employees. Learn how companies with limited resources can successfully avoid costly mistakes in the complex world of employment law. This event will be held at the Sheraton at Woodbridge Place in Iselin. Cost is $99 per person for NJBIA members and $139 for nonmembers. To register, contact Lisa Figatner at 609-393-7707, ext. 239.
WEDNESDAY, MARCH 26
Health Benefits Seminar
This half-day seminar will tackle some of the critical issues facing employers in providing health benefits. It will be held at Forsgate Country Club in Monroe Twp. from 8:00 a.m. to 1:00 p.m. Cost is $99 per person for NJBIA members and $139 for nonmembers. For more information, call Stacy Wichner at 609-393-7707, ext. 213.
SPRING 2003 BRIEFING BREAKFASTS
Continuing its annual tradition, NJBIA will travel across the state this spring to host a series of six Legislative Briefing Breakfasts. These breakfasts give you the chance to meet with 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. Don't miss this excellent opportunity to network with colleagues and legislators in an informal atmosphere. The cost is $39 per person per breakfast for NJBIA members and $49 for nonmembers. Call Stacy Wichner at 609-393-7707, ext. 213, for dates and locations.
NJBIA Compensation Report (2002-2003)
Knowing how much to pay existing and prospective employees is an important task! This is precisely why you need NJBIA's 2002-2003 Compensation Report. Compiled from 314 companies reporting data on 28,000 employees, our Report is the state's most complete guide to the salaries and wages employers in your industry and your region are paying their employees. Find out what the competition is paying, what they are budgeting for salary increases, and what lump-sum bonuses they are offering. The Report contains information on over 200 job classifications within 12 job families. It also categorizes breakdowns by five geographic regions within the state for most jobs listings, along with statewide totals. Prices: NJBIA members $95 (plus 6% NJ sales tax); nonmembers, $200 (plus 6% NJ sales tax).
Rapid Finder Payroll Tax Deduction Tables (January 2003)
NJBIA is pleased to offer the January 2003 edition of the NJBIA Rapid Finder Payroll Tax Deduction Tables. This is a valuable publication for companies that maintain their own payroll and a handy reference for all payroll managers. The Rapid Finder lists and combines New Jersey and federal tax deductions for employers with weekly pay periods. Federal income tax withholding will be changed for 2003 reflecting reduced federal tax rates. In addition, federal personal exemptions, standard deductions and taxable wage brackets will be adjusted for inflation. This all-in-one guide calculates tax deductions for five separate tax tables: Federal Social Security Tax, Federal Medicare Tax, New Jersey Gross Income Tax, Unemployment Insurance, Workforce Development Partnership Fund and Temporary Disability Insurance Taxes, and Federal Personal Income Tax. Prices: NJBIA members $25, nonmembers $35 (6% NJ sales tax must be included, unless your organization is tax exempt.)To order these and other NJBIA publications, call Christine Lopez at 609-393-7707, ext. 224.
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