News Release: December 6, 2000
New Jersey employers as a group remain confident in theiroutlook for their own industries and the state economy in 2001, but themost severe labor shortage in 30 years should cool the pace of businessexpansion, the New Jersey Business & Industry Association said todayin releasing the results of its annual Business Outlook Survey.New Jersey's economic expansion, now moving through its ninth year,appears to have enough momentum to carry it well into record territoryin 2001, the Association said.
If statewide employment continues to grow through August of next year,as indicated by the survey results, the current expansion will beat theold marker of 110 months of continuous growth set in the 1960s.
"The durability of this expansion is remarkable. We are riding a waveof prosperity the likes of which we haven't seen since the 1960s. But weare also facing the most severe labor shortage in a generation," said NewJersey Business & Industry Association President Joe Gonzalez, whopresented the survey findings in a Trenton news conference.
Looking at the most fundamental economic variables measured in the survey-namelythe expectations of individual companies for their own sales, profits andemployment in the year ahead-the optimism expressed virtually mirrors theimpressive findings of the Association's 2000 Business Outlook Survey.
"More than eight years into this expansion, employers' optimism fortheir own business prospects remains at some of the highest levels we haveseen," Gonzalez said.
In the year ahead, more than nine in ten survey participants expectto hire additional workers (30%) or keep employment at current levels (63%).About eight in ten expect to increase their sales (56%) or keep sales steady(29%). The percentage of respondents anticipating lower employment andsales remains at very low levels (7% and 15%, respectively).
The outlook for profits also remains bright. Half (49%) of survey respondentsexpect their profits to grow and 30 percent expect them to stay about thesame. Only 22 percent expect profits to fall from current levels.
However, the exceptionally strong pace of economic growth is also theunderlying cause of a labor shortage that is putting an increasing strainon business operations.
Eight in ten survey participants said they had difficulty finding skilledlabor in 2000, with another 72 percent reporting difficulty in locatingprofessional and technical workers, and 59 percent, managerial talent.As illustrated in Chart 2 of the survey report, these collectively arethe highest labor-shortage readings recorded by this survey since before1984, the earliest year for which comparable data is available.
"Because the entire 1970s and the early 1980s were a period of slowereconomic growth and higher unemployment than the mid- to late 1980s, itis reasonable to conclude that the present labor shortage is the most severein 30 years," Gonzalez said. "Not surprisingly, we also see evidence inour survey that the shortage is causing the pace of economic growth toslow."
Half (48%) of survey participants said the labor shortage hampered theirability to expand their businesses last year. This is up from 38 percentwho reported this problem in the previous year's survey.
The shortage of skilled workers is also putting upward pressure on wages.Seventy-five percent of respondents said labor shortages have driven uptheir labor costs either significantly (17%) or somewhat (58%). Almosteight out of ten respondents (78%) expect to increase wages for their employeesin 2001, virtually unchanged from the previous year.
However, the proportion expecting to give raises of 4 percent or more,above the rate of general inflation of 2-3 percent, has risen significantlyto nearly half (46%) of survey respondents, up from 36 percent of respondentsthe year before.
The results of NJBIA's 2001 Business Outlook Survey, which was conductedin mid-September, are based on responses from the first 1,300 member companiesor 8 percent of the Association's membership of 16,500 New Jersey employers.The respondents represent every industry and county in the state. The vastmajority of respondents are small companies employing fewer than 50 people.
NJBIA, with 16,500 member companies, is the nation's largest state-levelemployer association. For more information, contact Chris Biddle at 609-393-7707,ext. 227.
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