The outlook for New Jersey Businesses is optimistic. The New Jersey Business & Industry Association‘s 57 Annual Business Outlook Survey shows it’s members are positive about their prospects for the third year in a row. President and CEO Michelle Siekerka spoke with NJTV News Anchor Mary Alice Williams about the outlook for next year.
Williams: What defines a positive sales outlook for 2016?
Siekerka: It’s when our businesses tell us that they’re anticipating increased profits, revenues, sales and that they’re looking to increase wages next year as well.
Williams: I want to get to wages in a minute, but are hiring trends up from last year?
Siekerka: They are consistent from last year, so year over year they’re pretty consistent.
Williams: How many businesses plan to give pay raises?
Siekerka: Well, 65 percent of the businesses surveyed said they would be giving pay raises in 2016. The average rate of wage increase is about 3 percent.
Williams: What accounts for employers looking to increase wages? Why would they want to do that?
Siekerka: They’re seeing an increase in profit and sales and as a result they’re reinvesting in their companies. When they do that they reinvest in their employees as well.
Williams: The rising cost of health benefits are consistently the biggest challenge for businesses statewide. How many businesses expect their health benefit costs to increase, and why?
Siekerka: Over 60 percent of businesses say they anticipate that the cost of health care will increase. Of that, they think it will be about six percent next year.
Williams: 62 percent of businesses said if they were to expand their businesses it would be outside of New Jersey. How significant is that as an indicator for the state’s economy?
Siekerka: We asked those particular questions this year mostly to get a gauge on long term planning for our businesses. That was one of those questions. Unfortunately, while in the short term businesses are optimistic, they’re very cautious as they look longer term. That’s one of those indications Mary Alice, is about if you’re going to expand your business in the future, our businesses are saying they’re going to do it outside the state of New Jersey. We need to pay attention to that message and do something about it.
Williams: What’s chasing them out of the state?
Siekerka: Cost of doing business, number one. Overall what we mean by that is taxes, mandates, regulatory burdens, businesses are feeling it. They feel that they can control it in the short term, but when they look out for longer term prospects for their business they’re not feeling that optimistic.
Williams: One thing we hear a lot is the double death tax — the state and inheritance taxes that affect their businesses. How does that affect businesses bottom line?
Siekerka: It does. 67 percent of our businesses say that they take a state inheritance tax into consideration when they’re doing their long term business planning. So think about it, in the state of New Jersey we are a foundation of small business. Of that we have many generational business, that’s family owned business, so when you do your succession planning you’re doing your business planning.
Williams: Is there any movement in Trenton to abolish these so called double death taxes? Governor Christie said back in September he was open to increasing the gas tax in exchange for addressing the estate and inheritance taxes. Do you think that’s going to happen?
Siekerka: There’s a lot of talk about both the gas tax, as well as the state and inheritance taxes. We are an advocate for relief on the state and inheritance tax. It’s time that we start bringing relief to those dual death taxes. As you note, we are an extreme outlier. The only state in the country with both and this is driving business decision making, so we need to pay attention to that.
Williams: The business outlook is overall positive for a third year in a row. Does this mean we’re past the effects of the great recession. The state had lagged behind the rest of the country in recovering from that.
Siekerka: Yes. New Jersey businesses are reporting that the recession is in our review mirror, and we look optimistic for the future.
Williams: What do you see ahead in terms of this Christmas shopping season? I know that small businesses don’t have that same critical need to have to make in it in December the way other businesses do, but what are they forecasting?
Siekerka: We were forecasting that it would be a strong holiday season. We were out there promoting small business Saturday, and we hope that folks went out and supported their community businesses. We made sure that we got out there to remind folks of the importance of supporting their community, and we hope that that continues throughout the holiday season.