|NJBIA 63rd Annual Business Outlook Survey Details Staffing Challenges, Increased Wages, Employer Morale Concerns|
|Nearly three in four business owners said they were challenged to find appropriate staffing in 2021, and nearly the same amount raised wages – some considerably – to help offset their workforce shortage, according to NJBIA’s 2022 Business Outlook Survey, released today.
But the continued post-pandemic challenges of staffing, mandates, restrictions and lower revenue have caused some to re-evaluate how long they want to keep their businesses.
While 37% said there is no change in their future plans due to the challenges of the past 20 months, 28% said they will look to sell or cease their business sooner than previously anticipated due to continued obstacles, while 31% said they are still determining if their plans will change.
“We have seen some incredible resolve from small business owners since March of 2020 and a willingness to do whatever it takes to maintain or get ahead – especially as it relates to raising wages,” NJBIA President and CEO Michele Siekerka said. “However, there is no question that the continued challenges are wearing down some business owners.
“When nearly 60% of employers are either looking to end their businesses sooner, or considering it, due to these continued obstacles, it should be a red flag for our policymakers who might consider more mandates or policies that make it more costly to do business in New Jersey. Fewer businesses mean fewer jobs and less revenue for the state as it looks to make an economic recovery.”
Some responses in NJBIA’s 63rd annual Business Outlook Survey include:
That net negative of -21% was similar to the -23% net negative in hiring in 2020 – although 2020’s low hiring numbers likely had more to do with pandemic-related closures and restrictions than the lack of available workforce that was well-documented this year.
Prior to 2020, there hadn’t been a negative net in hiring activity in this survey since 2012.
Looking to 2022, 33% predicted they will hire more, compared to 9% which predicted less hiring – a +24% net positive hiring outlook and 9% higher than the outlook for 2021.
Businesses expect that upward trend to continue in 2022 with 22% saying they’ll increase wages more than 5%. A year ago, only 9% said they would increase pay more than 5%.
Another 29% said they’ll raise wages between 3%-4.9% in 2022. All totaled, 73% said they’ll increase wages in 2022 – compared to 56% who said they’d raise pay in 2021.
Remarkably, the exact percentage of businesses projected the same sales next year as they forecasted in 2020. A total of 46% anticipate increased sales in 2022, compared to 23% who foresee less sales. Prior to last year, the +23% net positive outlook was the lowest since 2015.
In 2021, however, businesses rebounded at least somewhat – with 37% reporting profits and 42% taking a loss.
What hasn’t improved is businesses’ outlook for profits. Last year, there was a net positive of only 14% believing they would report a profit in 2021. In 2022, however, 38% believe they will make a profit, compared to 26% who think they will lose money. That net positive of 12% is the lowest outlook for profits in this survey since 2012.
Of that 38% hoping to be on the plus-side for 2022, 15% are forecasting profits of 1%-3% next year.
Purchases and Prices
That 55% is compared to 31% who said they raised prices in 2020. Another 40% said their prices were kept the same this year, while only 5% said they decreased prices.
Regarding future purchasing plans, 44% are expecting to increase the dollar value of their purchases in 2022 and 18% anticipating a decline. That’s a net positive of +26%, nine percentage points higher than the outlook for 2021.
In 2021, 54% of businesses said they made investments to productivity. That’s a slight increase from 50% in 2020, but still off the mark from the pre-pandemic years of 2019 (62%), 2018 (61%) and 2017 (60%).
New Jersey’s Challenges
Availability of skilled labor (16%) rocketed to the No. 2 spot, while property taxes (14%) and health insurance costs (14%) rounded out the top four.
Seventy-seven percent expect their health benefits costs to go up in 2022 – an increase of 6% from last year. Twenty percent anticipated those health benefit costs to rise 11% or more in 2022.
As for local property taxes, 69% expected an increase, 28% expected them to remain the same and only 2% expected a decrease.
New Jersey’s Economic Climate
As a location for new or expanded facilities, only 22% listed New Jersey as very good or good, while 30% described it as fair and 48% ranked it as poor.
Only 11% said they believe New Jersey has made progress over the last year in easing regulatory obstacles. That number has declined steadily from 24% in 2017.
Only 13%, however, said they needed to postpone installation of equipment or expansion of their business due to permitting delays or the state’s regulatory process.
Only 36% said they are planning to keep New Jersey as their domicile in retirement – a 4% bump from last year, but still a consistent indication of the state’s low appeal for people in their golden years.
New Jersey’s Competitive Levels
Specifically, only 21% of respondents said that the quality of New Jersey’s workforce was better than other states – an 8% drop from last year and the year before. That decline could be indicative of employers forced to take less qualified workers to fill positions, or perhaps a commentary on those who chose to receive unemployment benefits rather than re-entering the workforce.
The leading competitive positive: For the second straight year, 43% rate the quality of New Jersey public schools better than other states. At protecting the environment, 21% said New Jersey does better than other states – a 2% bump from last year’s survey.
But New Jersey continues to struggle in many areas more tied directly to business. It was listed as worse that other states in taxes and fees (88%), controlling government spending (76%), controlling health care costs (72%), controlling labor costs (67%) and the costs of regulatory compliance (63%).
NJ and US Economic Outlooks
But when asked how New Jersey’s economy will fare in the first six months of 2022, only 22% reported it would be better, while 44% said it would be worse.
There were bigger changes, however, in the outlook for the U.S. economy. Only 26% said the first six months of 2022 would be better, compared to 41% who said it will be worse. That’s a -15% net outlook for the national economy, likely impacted by inflation, supply chain issues and concern of increased taxes.
That’s also the lowest net outlook for the U.S. economy in this survey since 2012 (-29%).
Respondents were asked for their level of confidence that they could enforce a drug-free workplace, given the legalization of recreational cannabis in New Jersey. Twenty-nine percent said they were very confident, 26% said they were somewhat confident, while 37% said they were not confident at all.
When it came to workplace safety, however, 29% said they were greatly concerned about maintaining it, while 32% said they were moderately concerned. Thirty-four percent said they were not concerned at all.
About the Survey
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