After being sworn in January 17, Governor Jon Corzine pledged to fight for new high-paying jobs by embracing pro-growth and probusiness initiatives, stopping the fiscal gimmicks that cause recurring State budget deficits and creating an elected State comptroller position.

During his inaugural address, Corzine referred to the “deteriorating fundamentals of our economy,” saying New Jersey is “growing too few jobs, losing high paying, value-added jobs and replacing them with lower paying service work.” He called for a new public-private partnership dubbed the Edison Innovation Fund to help develop businesses that focus on “inventions, medicines and high-tech industries.” These types of businesses, he said, will provide not just new jobs, but the high-paying jobs New Jersey needs.

“I am a capitalist, I believe in business. I really do want to work with you,” he said at NJBIA’s Public Policy Forum in December, affirming his commitment to embracing business as a partner.

On State spending, Corzine said he is preparing for the difficult choices ahead. Despite a large budget deficit, he said he plans to work towards fully funding public pensions, restoring the Transportation Trust Fund, and moving forward with construction of new schools. In the meantime, he pledged that his administration would examine every program, “measure performance, demand more for less, and root out spending that merely serves political, not public purposes.” Furthermore, he said he wants to create an elected State comptroller, accountable to the public, to ensure that public funds are spent properly.

Soon after his inauguration, Corzine appointed New Jersey’s first Chief of the Office of Economic Growth, Gary Rose. Corzine hopes that Rose’s background as a former chairman of the Goldman Sachs investment banking division will help in his mission to bring more high-paying jobs to New Jersey, attract investment and stimulate the economy.

“To solve New Jersey’s financial troubles we must not only cut spending but also attract private sector investment,” Corzine said in his speech. “Rose understands the economic factors that are important to businesses looking to invest or relocate; he will be a tremendous leader—mobilizing State government to grow our economy.”

Businesses operating in New Jersey are now required to destroy customer information records when they are no longer needed and notify customers if their personal information has been accessed by unauthorized persons. Businesses are also prohibited from displaying customers’ Social Security numbers. The new requirements are part of the Identity Theft Prevention Act signed into law last year and apply to all businesses regardless of size or type.

Any business that maintains computerized records with personal information must notify the NJ State Police and any person whose personal information may have been accessed by an unauthorized person. Furthermore, businesses are prohibited from publicly displaying an individual’s Social Security number; printing an individual's Social Security number on materials that are mailed; printing an individual’s Social Security number on any card required for the individual to access products or services; requiring an individual to transmit his or her Social Security number over the Internet, unless the connection is secure or the Social Security number is encrypted; and requiring an individual to use a Social Security number to access an Internet Web site, unless a password or other authentication device is also required to access that Web site. For more information, contact Christine Stearns at ext. 260.

Legislation eliminating the 6 percent sales tax on natural gas and electricity used by manufacturers with 250 or more employees located in Urban Enterprise Zones (UEZ) was recently signed into law. The bill, S-2358 (Asselta, Sweeney)/A-3484 (Greenwald, Fisher), is a key goal of NJBIA’s Agenda for Manufacturing Renewal.

While this law is a good first step in reducing energy costs in the manufacturing sector, NJBIA believes that taxes on energy should be eliminated for all manufacturers. Lowering energy costs would free up capital that manufacturers could use to preserve jobs, modernize their operations and become more competitive. For more information, contact Sara Bluhm at ext. 204.

NJBIA recently has created a comprehensive online guide to State-agency resources available to New Jersey manufacturers. This guide makes it easy for manufacturers to find out how to access low-interest loans, grants, tax exemptions, worker training programs and much more. This online guide provides direct links to the relevant Web pages maintained by the NJ Manufacturing Extension Program, NJ Economic Development Authority, NJ Department of Labor and Workforce Development and other State agencies.

Visit “Resources for NJ Manufacturers” at www.njbia.org/manufacturing.

State and federal laws require your company to post specific labor law notices. For instance, you are required by law to dis-play a current State minimum wage poster reflecting the $6.15 per hour rate. Order new employment law posters today! NJBIA Member Price: $30 per set. Nonmember Price: $50 per set. Bulk Discount available for members only. Contact Chris Lopez or call 609-393-7707, ext. 224.

The Senate Environment Committee on January 30 voted to impose a $3-per-ton tax on all solid waste to generate $34 million per year for recycling programs. The bill, SCS-557 (B. Smith), would mandate that 60 percent of the funding go to regional recycling programs in municipalities and counties, 25 percent to county household hazardous waste collection, 10 percent to the State recycling program, and 5 percent to county public information and education programs.

NJBIA opposes this bill. SCS-557 is simply another tax on business that will do little to improve New Jersey’s recycling efforts. In 1995 and 1996, New Jersey recycled more than 60 percent of its entire waste stream, more than ever before. Spending on recycling programs at that time was about $7 million per year. SCS-557 would increase that spending by 500 percent, an unjustified hike. Clearly, more money is not the answer. Instead of throwing money at the problem, NJBIA believes the DEP should study why recycling rates have declined and propose specific solutions for improving the process.

A number of counties have successful recycling programs. Their best practices should be studied and shared with all counties before enacting another tax on a business community that is already dealing with one of the most difficult tax environments in the nation. Additionally, NJBIA strongly believes that any increase in government spending must include strict measures of accountability among the municipalities and counties that receive it. Simply throwing more money at local governments will not solve the problem. For more information, contact David Brogan at ext. 236.

Governor Jon Corzine recently nominated five top cabinet officials including two who will lead his economic growth programs.

In addition to asking State Commerce Commission Secretary Virginia Bauer to continue to serve as Secretary of the Commerce Commission, Corzine nominated Gary Rose as New Jersey’s first chief of the Office of Economic Growth. Lisa Jackson was nominated as Commissioner of the NJ Department of Environmental Protection (DEP), Bradley Abelow as State Treasurer, and Nina Mitchell Wells as Secretary of State.

Rose was a partner at Goldman Sachs and is the retired chairman of the investment banking division.

Bauer was the director of the New Jersey Lottery Commission until she was nominated as secretary of Commerce in 2004.

Jackson has been with New Jersey’s Department of Environmental Protection since 2002, serving most recently as assistant commissioner of land use management.

Abelow is the former head of the operations division at the investment firm Goldman Sachs, where Corzine served as CEO.

Wells served as vice president of public affairs for Schering-Plough until February 2004. Previously she was assistant dean at Rutgers University School of Law.

The Senate Environment Committee on January 30 voted to revamp a proposal to recycle electronic waste by replacing a proposed job-killing mandate on manufacturers with a more workable State government collection system. Under the program approved by the committee, the bill, SCS-554 (B. Smith), would provide for a Statewide system for collecting and safely disposing of computer monitors, television sets and other electronic equipment that contain large quantities of heavy metals like lead and mercury.

Originally, the bill would have required the manufacturers to develop their own plans for recycling electronic waste and made them responsible for collecting products from their customers. That plan was opposed by NJBIA. Under the new plan, the State would develop a plan for collecting any product with a television-like screen wider than 4 inches and disposing of it in a proper manner. The collection program would be funded through a small surcharge ($7 for screens 21 inches wide or less, $10 for screens wider than 21 inches) on the sale of such products.

Employee Health Insurance: How To Be a Savvy Purchaser
Getting the best health plan at the lowest possible cost is one of the most important challenges facing employers, especially small to mid-size companies. Be a savvy employee health insurance consumer. Learn what your options are. Hear from industry professionals about the numerous health insurance choices available to business. Learn how to quickly compare health plans so you can choose the one that’s right for your company. Get expert advice on purchasing high quality coverage at the most competitive prices. Find out how to benefit from setting up the new Health Savings Accounts (HSAs) for you and your employees. This is the one seminar you can’t afford to miss.

It will be held at the Doubletree Hotel Newark Airport in Elizabeth, from 8:30 a.m. to 12:30 p.m. The cost is $109 per person for NJBIA members and $139 for nonmembers. To register or for more information, call Katie Wittkamp at 609 393-7707, ext. 239. Register online by clicking on Events and Programs at www.njbia.org. For details on exhibit opportunities, contact Sherry Esteves at 609-393-7707, ext. 219.

At these briefing breakfasts, you will hear from the legislative leaders who pass the laws that impact your business. Health insurance costs. State and local taxes. Environmental fees and permits. Transportation funding. Whatever the issue, these are the people who will decide how to resolve them.

Each event will begin promptly at 7:45 a.m. with breakfast and a brief overview of NJBIA’s legislative agenda, presented by NJBIA Senior Vice President Melanie Willoughby. A panel of four legislative leaders from the area will offer their thoughts and answer your questions. Legislators from throughout the region will also be invited to attend, making this a tremendous networking event. The program will end promptly at 10:00 a.m. The dates are as follows:

Central Jersey
Wednesday, March 15
Forsgate Country Club, Monroe Township
Assembly Majority Leader - Bonnie Watson Coleman • Senate Health Committee Chairman - Joseph Vitale
Senate Republican Leader - Leonard Lance • Assembly Education Committee - Bill Baroni

South Jersey
Friday, March 31
Clarion Hotel, Cherry Hill
Assm. Budget Committee Chairman - Louis Greenwald • Senate Labor Committee Chairman - Stephen Sweeney
Senate Deputy Republican Leader - Diane Allen • Assembly Republican Budget Leader - Joseph Malone

North Jersey
Friday, April 7
Doubletree Hotel Newark Airport, Elizabeth
Senate Majority Leader - Bernard Kenny • Assembly Speaker Pro Tem - Wilfredo Caraballo
Senate Republican Whip - Tom Kean, Jr. • Assembly Republican Leader - Alex DeCroce

The cost is $69 per person, per event for NJBIA members, $105 for nonmembers. For more information or to
register, contact Stacy Wichner at 609-393-7707, ext. 213. Register online by clicking on Events and Programs at www.njbia.org. For information on sponsoring these high visibility events, contact Sherry Esteves at ext. 219.

In recent years, the New Jersey State Legislature has considered passing legislation that would require employers to provide paid family leave. The adoption of such a measure would have disastrous effects on the State economy. New Jersey would become only the second state in the nation (after California) to adopt such a mandate.

Paid leave would substantially increase employers’ cost of doing business throughout the State. It would hit the small business community especially hard and make it harder for New Jersey businesses to remain competitive with companies in neighboring states.

However, proponents of paid leave continue to push for such a law. According to recent reports, the latest incarnation would require all employers to provide 12 weeks of paid leave to employees to care for a child or seriously ill spouse or parent. While specific legislation had not been introduced as of this writing, paid-leave funding would come from an increase in the taxes employees pay into the State’s Temporary Disability Insurance Fund (TDI).

While some proponents have said there will be no cost to employers and the increase to employees might only amount to a few extra dollars a week, employers should be concerned. The proposal will increase costs for small employers, who would be forced to hire temporary employees to replace workers out on paid leave. Larger employers would face similar increased costs and could also see their TDI rates increase if they purchase disability insurance through a private provider.

An additional problem is that the Temporary Disability Insurance Fund does not have adequate reserves to cover the costs that would follow from Paid Family Leave thousands of new paid-leave claims.

Like the NJ Unemployment Insurance Trust Fund, the TDI fund has been raided repeatedly over the last decade. Since 1993 over $473 million has been diverted from the fund to help pay for the State’s general operating expenses. Again, TDI exists for the benefit of those who are suffering from a disability that prevents them from returning to work. The proposal being discussed opens this fund up to nearly every employee in the State.
A paid family leave policy in New Jersey would only cement its reputation as a State that fails to reconcile its laws with the common practices in other states. NJ would become one of only two states in the country that require employers to provide paid family leave.

For years, NJBIA has warned the Legislature of the consequences of diverting employer payroll taxes from the Unemployment Insurance Fund (UI). This unfortunate bipartisan practice began over a decade ago and both parties share responsibility for it.

Since 1993, more than $4.7 billion has been diverted from the UI fund for a variety of purposes, including uncompensated medical care or what is commonly known as hospital charity care. In 2005, New Jersey diverted $350 million from the fund for this purpose. Unfortunately, this latest diversion has left the fund dangerously close to insolvency. The UI fund balance has fallen to a 20-year low of approximately $1 billion.

Even as $4.7 billion in UI funds have been diverted, UI benefits in New Jersey have actually increased every year. In New Jersey, weekly UI benefits are 60 percent of a worker’s weekly wages. The maximum benefit rate currently is $521 per week, which is greater than the benefits provided by the neighboring states of New York, Connecticut, Pennsylvania and Delaware. These benefits are even higher than in California or Michigan.

Due to the low fund balance, payroll taxes might need to be increased this year to keep the fund solvent. Such an increase could come as early as this
spring and would largely depend on two factors: the state’s unemployment rate and whether the Legislature will entertain yet another diversion as part of the fiscal 2007 budget.

The Administration of Governor Jon Corzine fortunately recognizes that the State should not continue to divert UI funds for expenses unrelated to jobless benefits or worker training. It recently issued a transition report that speaks frankly about the consequences. The report presents a grim outlook for employers:

“The UI trust fund cannot support any additional diversions for charity care. Even without a further diversion being included in the FY 2007 budget, current projections indicate that an automatic increase in the UI tax rates paid by employers will occur on July 1, 2007. It is important that the fund be allowed to replenish itself and that no further diversions be allowed for charity care.”
Other states have tried to avoid these large increases by issuing state revenue bonds to limit or avoid the costs of federal loans. Arkansas, California, Illinois, Massachusetts, Minnesota, Missouri, New York, North Carolina and Texas have issued bonds to cover the cost of insolvent UI funds.

NJBIA believes that the Legislature must end the diversions now. As indicated in the Governor’s Transition Report, even if the diversions are stopped this year, there is a high likelihood that taxes will increase in 2007. This could lead to a $400 million payroll tax increase. Next, the State must review its options to avoid an increase or soften the impact of such an increase on employers. New Jersey employers did not support these diversions. On the contrary, the business community has long recognized that this day of reckoning would come and has consistently opposed them. Finally, New Jersey must develop a plan to assist the businesses impacted by the looming tax increase.

Whistleblower Notifications (P.L. 2004, c. 148)
Employers are required to display the official State poster in both English and Spanish regarding the Conscientious Employee Protection Act (Whistleblower Law). In addition, this law requires employers with 10 or more employees to annually distribute written or electronic notice of the whistleblower law to employees. The law gives employers the option of posting and distributing this information in other languages, in addition to the required English and Spanish.

Minimum Wage Increase (P.L. 2005, c. 70)
Increased New Jersey’s minimum wage to $6.15 on October 1, 2005, with another increase to $7.15 to take effect on October 1, 2006. In addition, a Commission will make a periodic review of the minimum wage to determine if future increases are warranted.

Deterring Unemployment Tax Avoidance (P.L. 2005, c.239)
Designed to deter the practice of shifting employees to “dummy” corporations, this law protects law-abiding employers from those who try to hide their risk experience from New Jersey’s unemployment insurance regulators.

— 2006-2007 Legislative Session —
NJ Lawmakers Consider Mandatory Health Coverage, Work Breaks and Other Bills Costly to Employers

The 2006-2007 session of the NJ State Legislature is underway, and already a host of bills have been introduced that would increase costs for employers. NJBIA opposes these bills. Below are some of the more egregious examples.

S-1021 (Coniglio)
Requires employers to provide rest and meal breaks. This bill would require every employer to provide rest and meal breaks for both exempt and non-exempt employees. The bill provides that “no individual will be permitted to work” more than four continuous hours without a paid 15-minute break or more than 6 continuous hours without an unpaid 30-minute break. As amended, the bill removes unionized employees who are covered by a collective bargaining agreement with a break/work clause. This bill would be extremely disruptive for all workplaces and would give employers and employees less flexibility in managing their work hours. Status: pending Senate floor vote.

S-1005 (Sweeney)
Increases certain workers’ compensation supplemental benefits. This bill would cost employers approximately $200 million in increased workers’ compensation premiums in the first year alone! It is intended to provide a cost of living adjustment (COLA) for death and permanent disability. The bill attempts to cure an inequity in the system, namely that those who were injured before 1980 receive a COLA and those injured after 1980 are paid the maximum benefit for that particular year. However, this bill would cause disruptions and vastly increased costs to the system. Status: second referenced to Senate Budget Committee.

S-477 (Sweeney, Vitale)
Requires large employers with 1,000 or more employees to pay a specified level of medical coverage for full and part-time employees. Specifically, a draft committee substitute of this bill requires employers with more than 1,000 employees to provide health benefits with a value equal to at least $4.17 per hour to any employee who works 15 hours or more. If an amount equal or greater to this amount is not spent, then the employer will be required to pay a tax. The amount of the new tax will be the number of hours worked multiplied by $4.17 with the amount spent by the employer on that employee’s health benefits subtracted. The resulting sum would be paid to the Expanding Access to Health Care Fund and would be used to fund the State’s FamilyCare program. The effect of the measure is that an employer would be required to spend $3,253 for health benefits for an employee working 15 hours per week or $7,589 for those working 35 hours per week.

Finally, the bill authorizes other political subdivisions (i.e. state, county, municipality) to adopt minimum wage and benefit rates that exceed the State minimum wage rates. New Jersey’s minimum wage was increased to $6.15 on October 1, 2005, with another increase to $7.15 planned for October 1, 2006. Additionally, a commission is expected to review whether future increases are necessary beginning in 2007. The language in the substitute ignores the State plan adopted last year and simply permits local political subdivisions to increase hourly wages whenever they see fit. Status: Senate Labor Committee.

S-472 (Sweeney)
Requires employers to provide as much as six months notice before any plant layoffs or terminations. The bill applies to terminations for cause (e.g. due to theft, misconduct, etc.) or due to business closings or mass layoffs. It would be nearly impossible for businesses to comply with the lengthy notice requirements or the burdensome “look back” provisions. NJBIA has suggested making this bill more like the federal law which requires employers contemplating mass layoffs or plant closings to provide 60 days notice. Status: pending Senate vote.

New Jersey’s private-sector employers added a modest 35,400 jobs in 2005, a 1 percent increase, the NJ Department of Labor and Workforce Development (DOL) reported recently. This performance left New Jersey trailing the nation in job growth once again, evidence that the state remains mired in a sluggish recovery.

The DOL’s year-end report on NJ employment growth came even as the national economy was cooling. US gross domestic product, after ten quarters of solid growth, grew by just 1.1 percent in the fourth quarter of 2005. The slowdown—brought on by a sputtering housing market, a spike in energy costs, subdued consumer spending and a big trade deficit—has set economists to squabbling. Is the slowdown temporary or is it the start of a prolonged event that will take a big bite out of economic growth in 2006?

In the meantime, New Jersey continues to behave like an economic caboose, trailing the nation rather than leading it. For two years in a row, New Jersey has done poorly compared with the rest of the nation in its rate of private-sector employment growth.

In 2004, New Jersey added 31,300 private-sector jobs, making it 41st in the nation in its rate of job creation. The addition of 35,400 private-sector jobs in 2005 is marginally better, but it still leaves New Jersey lagging the rest of the country. Private-sector employers nationally added 1.8 million jobs in 2005, an increase of 1.7 percent, compared to 1 percent for New Jersey.

New Jersey did end the year on a moderately up note. Private-sector employment rose by 5,800 jobs in November and 2,600 jobs in December. Nonetheless, there is little evidence to suggest that the State has emerged from a see-saw pattern of weak and inconsistent job growth that has plagued it in recent years.

In fact, New Jersey still hadn’t recouped all of the jobs it lost in the last recession. Total private-sector employment at the end of 2005 remained 3,200 jobs below the previous peak of 3.43 million set in December 2000.
The pronounced weakness in the State’s current employment expansion has led Rutgers University economists Jim Hughes and Joe Seneca to declare it to be the weakest expansion in half a century.

Certainly, the current rate of job growth is well below the rates of growth seen in the 1980s and 1990s expansions, when 60,000 to 100,000 new jobs were added annually. Since hitting a cyclical low in March 2003, private-sector employment in New Jersey has grown by 83,200 new jobs. This works out to an average annual gain of only 30,255 jobs.

Employment growth in the current expansion has come mostly from construction and lower wage service industries. Over the last five years (December 2000-December 2005), the biggest percentage gains have come in leisure and hospitality (up 14.6 percent), education and health services (up 12.1 percent), and construction (up 11.3 percent). (See table for details)

But overall service sector employment growth, which was the workhorse of a robust period of job expansion in the 1990s, is flagging. It has grown by a mere 2.8 percent over the last five years, and there has been unusual weakness in high-paying sectors like professional and business services (down 2.1 percent) and trade, transportation and utilities (down 2 percent).
Most of the losses over the last five years have come in manufacturing (down 23.5 percent) and information services (down 31.9 percent), which includes computer technology and telecommunications.

This report was prepared by Christopher Biddle, NJBIA Vice President of Communications, he can be reached at 609-393-7707, ext 227.