By ERIC AVEDISSIAN/Sentinel staff
OCEAN CITY — New Jersey is “the least affordable, most expensive, non-best business climate” in the region, according to Michele Siekerka, president and CEO of the New Jersey Business & Industry Association (NJBIA).
Siekerka outlined issues facing the state, including the increase in the minimum wage, in an address March 12 to the Ocean City Regional Chamber of Commerce.
Information from the NJBIA ranked New Jersey last in the region in terms of regional rates — minimum wage rate, top income tax rate, top corporate tax rate, state sales tax rate, property tax rate paid as a percent of personal income and top unemployment tax rate. That gave New Jersey a 16 in its business climate score. Delaware scored first with a 31 overall regional business climate score, followed by Maryland, with 30. Pennsylvania and New York ranked third and fourth respectively, followed by Connecticut, Massachusetts and New Jersey.
“We see that New Jersey ranks dead last,” Siekerka said, adding New Jersey is getting less affordable and competitive than in recent years. “That means that there’s either a new cost that’s been imposed on business or a new tax that’s been imposed to drive those numbers in the wrong direction. … We tend to be an extreme outlier and our policies take us in the wrong direction.”
She said New Jersey has many “fiscally challenged and broken” programs that make businesses here unsustainable and are driving companies to Pennsylvania and New York. According to Siekerka, the NJBIA is lobbying for change to retain companies in the Garden State.
Siekerka said the state increased expenses 45 percent and revenue only 23 percent.
“Don’t get the message wrong. I’m not suggesting that we have a revenue problem with the State of New Jersey. What this calls out is we have a spending problem in the state of New Jersey. We have structurally broken systems that are not sustainable,” Siekerka said.
She said property taxes — how the state funds K-12 education — uses a “wholly broken” funding formula.
While Siekerka noted that New Jersey might be first in “quality delivery of K-12 education,” taxpayers pay on average $22,000 per pupil per year for 13 years to support education.
She said Massachusetts has equal quality education compared to New Jersey but delivers its education at 23 percent lower cost than New Jersey.
Shifts in the state’s school funding formula created underfunding in some districts, which resulted in higher property taxes to make up for the shortfalls.
“Clearly, this is not sustainable. This should scare the heck out of all of us,” Siekerka said.
In 2019, Gov. Phil Murphy signed legislation raising the state’s minimum wage to rise incrementally to $15.
The current minimum wage in New Jersey is $8.85 per hour. Under the new law, the base minimum wage for New Jersey workers increased to $10 per hour July 1, 2019. By Jan. 1, 2020, the statewide minimum wage increased to $11 per hour, and then will increase by $1 per hour every January until it reaches $15 per hour Jan. 1, 2024.
For seasonal workers and employees at small businesses with five or fewer workers, the base minimum wage will reach $15 per hour by Jan. 1, 2026. By Jan. 1, 2028, workers in these group will receive the minim wage inclusive of inflation adjustments that take place from 2024 to 2028, equalizing the minimum wage with the main cohort of New Jersey workers.
Siekerka said the NJBIA lobbied for exemptions for seasonal workers and an “off ramp” to halt the increases in the event of statewide catastrophes.
“Look at coronavirus. Do you really think that you’re going to increase your wages when you’re laying people off because you might not have work for them?” Siekerka said.
Siekerka said workers under age 18 will be exempted from the pay increase on the schedule.
“No one’s going to be hiring youth for their first job opportunities and wouldn’t that be a shame? What people will do is they’ll hire someone with some minimal skills before they’re going to take a young kid who knows nothing and train them if they’re going to have to pay them $15 an hour,” Siekerka said.
A bill is pending in the state Legislature to offer a payroll tax credit for businesses hiring youth, she said.
Siekerka urged business owners to reach out to their state representatives and advocate for the passage of this bill before the summer tourist season.
