NJ Business Matters: The Blog of the CIANJ

Money for Nothing

Gas prices are high. So high, that yesterday the owner of your blogger's favorite pizzeria had to explain to a customer - repeatedly - why gas prices forced him to charge more per slice. And when prices get that high, Congress always seems to feel it has the power to step in and alter the meeting place of supply and demand.

Once they were through passing "price gouging" legislation that made it illegal for companies to charge"unconscionably excessive" prices, "tak[e] unfair advantage of unusual market conditions," and "increase prices unreasonably" during an emergency, the next target was auto makers. Rather than letting the free market decide how efficient a car your average American wants to drive, the Senate passed legislation that would increase the minimum vehicle mileage average to 35 mpg by 2020.

The Washington Post explains that leadership in the House of Representatives is considering the same,

As the price of benchmark West Texas crude oil topped $70 a barrel for the first time in 10 months, House Speaker Nancy Pelosi (Calif.) yesterday affirmed her support for the tougher fuel-economy standards recently passed by the Senate.

And after a news conference touting energy measures recently approved by 11 House committees, Majority Leader Steny H. Hoyer (Md.) said such standards -- currently missing from the House measures -- would be introduced in time to resolve differences between House and Senate energy legislation later this year.

What they don't talk about is the cost of such a change. Fortunately, Charles Krauthammer dedicates this column on Real Clear Politics to the issue,

[T]o quote Sen. Dianne Feinstein precisely: "What the China situation, or the other countries' situation, shows is that these automakers, in all of these countries, build the automobile that the requirements for mileage state. And they don't fight it, they just do it."

Yes. That is how things work in Communist Party dictatorships. It is odd to hold up China as a model of corporate-government relations. It is also poor salesmanship. Just a week after Feinstein made that statement, the Brilliance BS6 sedan -- "a car with which [China] wanted to conquer Europe's automobile market" -- failed a German crash test so miserably that it may be banned from Europe, reported the European news agency AFX News. "It was the second time in less than two years that a Chinese-made car has failed the test, following the spectacular failure of the Landwind sport-utility vehicle made by Jiangling Motors 18 months ago."

You get what you pay for. When you build lighter cars with more fuel efficiency, you know that ultimately -- even with the best (let alone Chinese) technology -- safety is compromised. That happened three decades ago when U.S. mileage efficiency rose dramatically in response to the oil shocks of the '70s. It will probably happen again.

Now we may, as a society, decide that the trade-off is worth it. We may reason that fuel inefficiency leads to dependency on foreign oil which in turn leads us to lives lost in other ways -- such as wars to defend our interests in the oil-rich Middle East and elsewhere. But what we cannot deny is that there are trade-offs. What is fundamentally wrong with the energy bill the Senate passed last week and with the debate leading up to it is the chronic, almost pathological, refusal to recognize that there are such trade-offs.

That pathological refusal equates to a lack of full understanding by the public - especially when the mainstream media fails to point it out.

More Relief for NJ's Public Employee Unions

In the waning hours of this year's budget session, government inability allowed the state's public employee unions to win back something they negotiated away this winter - the right to free health insurance for retirees.

Today's Star-Ledger explains,

Union officials got the chance to revise the co-payment provision after the Corzine administration said the state would not be able to meet the contract's Jan. 1, 2008, deadline for setting up a new set of health insurance plans for workers and retirees.

Under the original plan, retirees would pay 1.5% of their pensions into their own health plans, something more in line with private sector practices. Now, those meeting the threshold of years served can skip the payments if they participate in a "wellness program".

Unsustainable benefits negotiated by legislatures and administrations of the past have made health insurance one of the fastest growing budget items, accounting for $1 billion this year and it is expected to double within five. During the "special" session on property tax reform, the Joint Legislative Committee on Public Benefits Reform's first health benefits recommendations were to make current employees AND future retirees pay some portion of their health benefits.

The sooner the recommendation becomes practice, the sooner taxpayers can see an easing of upward pressure on their taxes.   

Signed. Sealed. Delivered.

Earlier today, Governor Corzine signed into law the FY 2008 New Jersey budget, with promised vetoes for appropriations the administration saw as unnecessary.

The Governor also outlined eight principles for asset monetization,

1. New Jersey’s roadways will not be sold; and they will not be leased to a for-profit or foreign operator.
2. Allowable uses of proceeds (reducing State debt and capital investments) will be identified upfront and subject to public and/or legislative approval with safeguards against diversions for other uses.
3. New Jersey citizens will retain ownership and the benefits from both initial proceeds and ongoing operations.
4. Safety, maintenance and operating standards will be provided at current or improved levels.
5. Sufficient funding to meet the long-term capital needs required to improve our roadways and reduce congestion will be provided.
6. Terms and conditions of employment for current employees and contractors will remain unchanged with prevailing wage and competitive contracting procedures retained.
7. Toll schedules will be open, predictable and available to the public.
8. There will be a substantial, open and public discussion in advance of any transaction. I will hold 21 town hall meetings in 21 counties.

The Governor's complete statement from today's signing is available on PoliticsNj.com

Restaurant Owners Shockeroo: Government Interference Actually Does Impact Small Businesses

Our friends at the New Jersey Restaurant Association recently held a meeting among their members, Assemblyman Guy Gregg and Senator Ellen Karcher to discuss the ways in which Trenton policies impact their businesses. The Star-Ledger covered the event and highlighted some intuitive points that are sometimes forgotten in the Trenton scuttle.

We hate to sound like a broken record (or a short-circuited iPOD for the kids), but during major legislative debates, some in the General Assembly and Senate demonstrate the fact they do not see the connection between legislative activity and business development/job growth. During the debate on Paid Family Leave, Senators dismissed business community warnings as alarmist and tried to explain away sluggish private sector job growth on the fact NJ was one of the last states into a recession and will therefore be one of the last states out.

The truth is that what Trenton does matters to New Jersey's small businesses. The hard working restaurant owners are trying to deliver that message,

During a recent round-table discussion at the New Jersey Restaurant Association in Trenton, a group of family restaurant owners were asked if they want their children to follow them into the business. Their response: an emphatic chorus of "No!"

Independent restaurateurs blame Trenton for government policies and regulations, they say, have driven up their costs, and made New Jersey an increasingly difficult place to operate.

Let's hope the message of the restaurant owners, and the broader business community continues to spread through Trenton.

Well If You Don't Have Anything Nice To Say

Big Labor and its friends on Capitol Hill have been particularly rabid when it comes to the now-defeated Employee Free Choice Act. From the official Teamsters news release:

"Today’s vote shows us who is standing with workers and which politicians are in collusion with corporate America to destroy the middle class," said Teamsters General President Jim Hoffa....

"The legal system that is supposed to protect workers is broken, and workers are paying a terrible price,” Hoffa said. “Corporations trample on workers with reckless disregard for the law and they must be stopped"

Well we haven't met the corporations who trample on workers with reckless disregard, but we do know that a majority of union households prefer to have unionization determined via secret ballot.

And here's what Senator Kennedy had to say to opponents of the bill,

Snip Tuck

Governor Corzine is vowing to veto "quite a number" of state spending projects (or if you prefer, "Christmas tree" grants) before he signs the FY08 budget into law on Thursday.

NJ.com quotes the Governor as saying,

"I've been very clear that legislative earmarks to individual districts are not something we are in favor of," Corzine said in an interview on WNYC this morning. "You will see quite a number of line items that are cut back quite a bit. ... We will be very aggressive in looking at some of those additions."

That might make lawsuits like the one possibly being brought by the Center for Constitutionality avoidable.

Last year, the Center brought a suit against the governor over the same grants. The contention was that the distribution of funds violated a Constitutional separation of powers. After the suit was filed, the Governor impounded $25 million of the remaining $128 in pork and the suit was dropped.

Today's Record highlights the founder of the same organization and the possibility of yet another suit over the fact similar groups are being treated differently by the government through these grants. Click here for the entire article. 

Monmouth Poll Says NJ Becoming Too Expensive for the Middle Class

A survey published by Monmouth University revealed results that should surprise no one - New Jersey residents are finding that the state is becoming too expensive a place to live. 72% of New Jerseyans earning less than $50,000 per year and 64% of those earning between $50,000 and $100,000 per year say they are not earning enough to keep pace with the cost of living. Even among those earning more than $100,000 per year, only 13% say they remain ahead of cost of living increases, compared to 29% of all Americans.

The problems have been well-documented and communicated through a variety of means. With one of America's highest tax climates, residents struggle under burdensome property taxes as businesses simultaneously decide to move or expand operations elsewhere. While they were at it, Trenton policies caused the size of state government to balloon for more than a decade, setting up a public employee pension system that is unsustainable.

The Governor is right when he notes we must grow our way out of this. Unfortunately, a budget with no new school funding formula, and funding for only one year of property tax relief combined with measures such as paid family leave move us away from that goal. 

Full survey here.

Senate Rejects Card Check Bill

The US Senate just voted against "invoking cloture", effectively killing the deceptively-titled "Employee Free Choice Act". Sixty votes are required to end debate, and the cloture motion failed 51-48. Later this afternoon, we'll link to the roll call vote so you can see who cares - and who doesn't - about protecting the secret ballot in unionization drives.

The roll call vote is available here. In this case, a "NO" vote is a vote for the secret ballot and against the so-called Employee Free Choice Act.

On Leadership and Global Warming in New Jersey

Today's Philadelphia Inquirer covers the recently-passed Global Warming Response Act and gathers reaction from multiple sides of the issue. The legislation would require the Department of Environmental Protection to take an inventory of state emissions and submit a plan to bring the level of CO2 emissions to 1990 levels (a 20% reduction) by 2020. This is similar to the goals outlined in Governor Corzine's Executive Order No. 54 and goals outlined in the state's Energy Master Plan, which will be released later this year.

The paper chatted with CIANJ President John Galandak, who pointed out the benefits of incentives over mandates, along with the tremendous business opportunity available with green technology.

John Galandak, president of the New Jersey Commerce and Industry Association, which counts utilities among its members, said he was concerned that the law might wind up imposing so many restrictions that it would dull the competitiveness of state businesses.

Galandak urged state officials to provide incentives rather than mandates. He did add that a growing market for renewable energy could present powerful business opportunities.

New Jersey is on the cusp of becoming only the second state to pass legislation that would significantly curb CO2 emissions. Utilizing too many sticks in the form of higher taxes and more expensive building materials would give companies reason to choose one of the other 48 states. An incentive-based program could help NJ reach the same emissions goals, without chasing jobs outside our borders.

And if New Jersey seeks to address climate change (despite the fact reaching the outlined goals in NJ would have zero impact on global warming), it is imperative that we head down a path that protects our economic growth. That is possible, if government sets realistic goals and chooses to incentive realistic options - including nuclear energy. More than half of the electricity in New Jersey is already provided through nuclear power. Increasing capacity would significantly help NJ meet its energy needs through a technology that produces zero emissions. No so-called "alternative sources" meet both those goals.

If we really are going to be a leader in addressing global warming, then we must examine all options - and nuclear energy must be one of those options.

An Idea Whose Time Has Not Yet Come

The Star-Ledger is reporting that political considerations will put any plans to sell or lease rights to state assets on hold until after the November elections.

Gov. Jon Corzine's grand plan to solve the state's lingering financial crisis by selling the Turnpike and other toll roads to a public corporation has been put on hold until after the November election.

Corzine is concerned that introducing a controversial and complicated "asset monetization" plan in the weeks before a legislative election might foul the political waters for Democratic candidates and jeopardize passage of the plan by the Legislature, administration officials said.

Both you regular blog readers already know the CIANJ position on asset monetization: It is an avenue that is worth examining as it can benefit the state's taxpayers, including the over-taxed business community. However, if an individual were to sell an asset to help pay off a credit card, they'd better cut up the card. New Jersey's situation is different than Illinois and Virginia's were when they first signed public-private partnership legislation. Before details of a monetization plan can be discussed, the state must ensure its spending patterns are significantly altered.

Burden of Proof and Unionization

Yesterday, the Senate Labor Committee voted 3-0 (with one abstention) to advance legislation that will create an accounting nightmare for New Jersey businesses that are recipients of public funds.

S2701 prohibits non-union employers from using public funds to oppose unionization drives within their organizations. While the bill may have been drafted in response to public entities, such as Rutgers, engaging in such activities, the bill has much broader implications.

For example, hospitals in the state of New Jersey are required to provide "charity care" for the uninsured. Given this requirement, the state reimburses hospitals for part of their expense. The hospital is therefore the recipient of public funds. S-2701 requires the New Jersey hospital to prove that the money it received from the state is not the same money used in unionization drives. This could require separate bank accounts, limit intra-company transfer of funds and prevents the hospital from using its own money the way it sees fit.

CIANJ strongly opposes the legislation. A similar bill has already been passed in California and is currently being challenged in the US Supreme Court.

Cloture Vote on Employee Free Choice Act Set for Tuesday

The hopelessly-titled Employee Free Choice Act is scheduled for a cloture vote (which would end debate) on Tuesday. Senate rules require 60 votes to end debate on a bill. If not, the legislation is effectively halted. Over on the Kreitzman Mortensen & Borden Labor blog, they have a round-up of all the blog buzz surrounding the EFCA. Be sure to check it out.

As we noted yesterday, the Employee Free Choice Act eliminates an employee's right to a secret ballot and to vote on the first union-negotiated collective bargaining agreement. There is still time for workers and business owners to contact Senators Lautenberg and Menendez and ask them to protect the secret ballot.

Today in Washington: Yea or Nea on Card Check

The U.S. Senate is scheduled to take a key vote today on the haplessly-titled Employee Free Choice Act, legislation that would eliminate the guarantee of a secret ballot for workers considering unionization. Even AFL-CIO President John Sweeney acknowledges the bill does not have the necessary votes to "invoke cloture", but he is adamant about building momentum for card check in 2009. As if it'll be a better idea then.

Regular blog readers know the current system requires signatures of authorization cards before a union can represent a group of workers. Following acquisition of the signatures, the National Labor Relations Board administers an election via secret ballot. If 50% +1 of voters vote "Yes", the union represents all the workers at the bargaining table.

The trouble for unions is that they have been losing about 40% of their elections recently, and have been hemorrhaging membership overall. First they blamed the NLRB under President Regan, claiming it was slanted against unions. Ditto for George H.W. Bush's administration. Then with a favorable board under President Clinton, they blamed the bad economy. Then, amazingly, they blamed the good economy. Anything to get around the fact that people just weren't buying what the unions were selling.

The EFCA gets around that whole messy elections process. Now, if 50%+1 of workers sign authorization cards, all would be represented by a union. The trouble is workers have no guarantee of privacy when given their cards, and would be asked to sign them in the presence of their co-workers and union organizers. In some cases at the home of the worker (unions have the right to ask for the home address of each worker as part of an organizing drive). As you can imagine, the process wouldn't be without coercion.

What's worse, workers wouldn't even be guaranteed the right to vote on their first union-negotiated contract. The EFCA contains provisions that would send the first contract negotiations to arbitration if no deal can be worked out in two years.

The legislation won't pass today, and if it does, the President has vowed to veto it. Nevertheless we'll get a good chance to see who cares, and who doesn't, about a secret ballot this afternoon.

Also, ever timely, the General Assembly will vote on a resolution urging Congress to pass the EFCA and for the state to communicate that message to members of Congress. Great timing. Good thing for e-mail. 

Update: With the near-collapse of the energy bill, it is now unlikely the Senate will be able to consider the Employee Free Choice Act today.

Today in Trenton: Unionization and Public Funds

This morning, the Senate Labor Committee will consider S2701, which would prohibit any nonunion employer from using public funds to engage in unionization activities. CIANJ strongly objects to the measure on several grounds. First, the legislation requires companies that are the recipients of grants or other public monies to keep the public money separate from their unionization activities. This would create an accounting nightmare for employers who wish to communicate likely outcomes if their organizations become unionized.

While the National Labor Relations Act guarantees employers the right to provide information regarding the benefits and pitfalls of unionization, S2701 would have the net effect of limiting employer speech for industry sectors whose businesses depend on public funds. The Senate Labor Committee meets at 10:00 a.m.

We're #11

Dr. Joseph Seneca, Rutgers economist and chairman of the New Jersey Council of Economic Advisors, warned yesterday that the New Jersey economy may be on the precipice of a decline, partly fueled by the shrinking of our population.

While the state has added new jobs, the rate of growth has been "tepid," Joseph Seneca said during a seminar at the Marriott at Glenpointe in Teaneck. Many of the new jobs were created by state and local governments....

Perhaps most significant is the rate of migration out of New Jersey, the economist said. This year for the first time, New Jersey is no longer among the 10 most-populated states, edged out by North Carolina. More than 72,000 people left the Garden State last year.

Click here to read the fantastic article about what is helping and hindering our economy.

Regular blog readers know that at public hearings regarding paid family leave, proponents of the bill disagreed with the notions that our state is losing population and that our economy is vulnerable because of Trenton's policies. Be it anecdotal evidence, the rationale that New Jersey was one of the last states into a recession (and therefore it is proper that we are one of the last states out) supporters of this and similar legislation do not always see the correlation between their actions and long-term economic results.

New Jersey has become an expensive place to live - too expensive for some people and not worth it for others. The legislature has excaserbated that trend, and unless it reduces spending, reworks the school funding formula and ceases to pass legislation that give businesses an incentive to leave it will not change - whether legislators choose to acknowledge that or not.   

Gone 'Till November

Governor Corzine has acknowledged that the much-discussed paid family leave legislation will not pass before the legislature breaks for the summer. As the lede in today's Record indicates,

Governor Corzine won't get his wish on paid family leave – at least for now.

A spokeswoman for Corzine said he has accepted that the Legislature won't pass a bill by the end of this month to give employees the right to paid family leave.

The governor told the AFL-CIO convention in Atlantic City last week that he would like to see the controversial legislation pass by June 30.

This is clearly welcome news to the business community. Thursday is expected to be the last legislative session until after the November elections. As amended, the bill would require virtually all businesses to allow up to ten weeks of paid leave time (funded by the state's Temporary Disability Insurance Fund) for an employee to care for a sick family member, newborn or newly-adopted child. New Jersey is one of about six states that already offers paid maternity leave - 10 weeks being the standard. The 10 weeks of paid family leave time would be in addition to the 10 weeks already offered.

S-2249 would make New Jersey only the second state in the country with paid family leave, and would give businesses yet another reason to choose to expand elsewhere. Part time employees would be eligible for the benefit, unlike FMLA. And because eligibility is based on wages ($143 per week as a minimum), there is no minimum number of hours that must be worked to take advantage of the program.

As legislators return to their districts to campaign for re-election, be sure to ask them where they stand on paid family leave. 

Limiting Access to Our Own Resources: Natural Gas Edition

Senators Menendez and Lautenberg were instrumental in securing a  narrow majority (44-43) vote to halt legislation that would allow Virginia to explore its Outer-Continental Shelf (OCS) for natural gas.

In 1981, America paid the lowest natural gas prices in the industrialized world. Then we implemented a moratorium on drilling the OCS. Unlike oil, natural gas prices are set on a local rather than global scale. The law of supply and demand took hold, and as demand increased with a relatively flat supply prices spiked. Now, we pay the highest natural gas prices in the industrialized world. All while sitting above a few trillion cubic feet of the stuff. Remember that even during Hurricane Katrina, with platforms in the path of the storm perched in the Gulf of Mexico, there were no major spills.

Last year, Congress struck a deal that would allow states to determine whether or not drilling could occur 50 + miles off their respective coastlines. Virginia wants to take advantage of that while growing economic opportunity and helping reduce our natural gas costs at the same time. Yesterday's vote would stop them from doing so.   

The Feds on Monetization

Today's Star-Ledger features more coverage on the possible "monetization" of the Turnpike as a method to alleviate taxpayers of the overwhelming debt our state faces. House Transportation and Infrastructure Committee Chairman Jim Oberstar (D-MN) has warned all 50 state governors against using certain privatization practices that could jeopardize the public good. Doing so could result in a forfeiture of federal funds. The Governor insists that his yet-to-be-announced plan does not include anything Chairman Oberstar warned against.

It's worth restating the CIANJ position on the sale/lease of state assets: It is an avenue that is worth examining as it can benefit the state's taxpayers, including the over-taxed business community. However, if an individual were to sell an asset to help pay off a credit card, they'd better cut up the card. New Jersey's situation is different than Illinois and Virginia's were when they first signed public-private partnership legislation. Before details of a monetization plan can be discussed, the state must ensure its spending patterns are significantly altered.

Changes to Public Retirees Health Care Plans

Earlier today, approval of the state budget was delayed in the Senate Budget and Appropriations (SBA) Committee until changes could be made to the state public employee benefit package. Under the deal negotiated earlier this year, public employees' pension plans were to be brought more in line with the private sector. A major component of that was the requirement that public retirees pay a small portion of their pension benefits (1.5%) to pay for their health insurance. That requirement will now be waived for retirees who choose to participate in a "wellness" program.

NJ.com is reporting,

State officials said they had to renegotiate portions of the contract this month because it became clear they could not meet a requirement that they set up new health insurance plans for state and local government workers by Jan. 1, 2008.

State Sen. Stephen Sweeney (D-Gloucester), one of the committee members who voted in favor of the changes, said he was troubled that Gov. Jon Corzine's administration had proven incapable of meeting the terms of their February agreement.

"I have real concerns why it took them so long, so they had to basically renegotiate," said Sweeney, a vocal critic of public employee benefits in the past."I'm very surprised the administration was not prepared."

Following passage of these changes, the SBA Committee voted to approve the $33.5 billion state budget for FY08. 

Today in Trenton: Budget Public Hearings and Committee Votes

This morning, the Assembly Budget Committee will hold hearings on changes to the FY08 New Jersey Budget. A summary of those changes is available here.

CIANJ's position on the budget remains largely unchanged from the message delivered earlier this year. We continue to praise the legislature for passage of a budget that includes no new taxes or broad-based tax increases. New Jersey will come in line with tax policies in almost all other states when the double-taxation of S-Corporations expires. This change will assist more than 100,000 small businesses throughout the state.

However, the budget still does not fully correct the legislature's spending habits. It relies on one-time surplus money, takes funds from the Temporary Disability Insurance fund and subsidizes unnecessary spending at the local level - and there is still no new school funding formula in place. That message will be communicated to the legislature later today.

Today in Trenton: Financial Literacy for High School Seniors

The Senate Budget and Appropriations Committee will meet later this morning and will consider two bills of importance to New Jersey's business community. First up, A3024/S2101 which would establish a pilot program to teach financial literacy to New Jersey's high school seniors.

The need for basic knowledge of personal finance is as pressing as ever in the United States. Consider some of these facts,

• The average college student graduates with a credit card balance of over $2,300. Add to that an average of $20,402 in education loan debt, and you have quite a financial load to manage even before you get your first job.
• In 2001, more young people filed for bankruptcy than graduated from college.

The legislation, introduced by members of both parties, won't solve those problems immediately, but it can lead to more of New Jersey's young people prepared to adequately manage their finances. CIANJ supports the legislation and urges its passage.

What the Healthcare Industry Means to New Jersey

As we have noted here at NJBusinessMatters time and again, state government must do all it can to help us protect and grow New Jersey's private sector job base - especially its highly-skilled job base. If we ever needed a reminder of that, today's report issued by the HealthCare Institute of New Jersey (HINJ)offers a compelling look at what the state's healthcare sector provides our economy. The entire report is available by clicking here with some highlighted statistics offered below.

• Average compensation (salary + benefits) for Pharmaceutical/Med Tech firms has increased 5.9% from last year's levels to more than $122,000
• Nearly 87,000 "spin-off" jobs are created by Pharma/Med Tech activities
• HINJ member companies generated $15.4 billion in NJ business sales last year
• HINJ members generated $671 million in tax revenue for the NJ state government and localities

A press conference will begin later this morning. Look for these stats and more to be splashed across Friday morning's mainstream media. When you read them, remember the importance of keeping all of that revenue within the Garden State's borders by creating a pro-growth tax code and producing a world-class workforce.

See for Yourself

As part of this year's budget process, the legislature is now posting all budget requests on-line as well as a more detailed look at the legislature's proposed changes to the Governor's budget. We will be testifying (eloquently I'm sure) on the changes next week. In the interim, click here to view the requested changes of all legislators and here to review the changes made from the Governor's original budget.

Star-Ledger coverage here.

Energy Policy, Price Controls and...Of Course...Anti-Gouging

The Heritage Foundation has published a hard-hitting white paper on the Senate's proposed energy plan (S.1419) which is chock full of higher energy prices, price controls and pandering.

Some members of Congress are convinced fuel prices are too high and are attempting to legislate them down. The trouble with that is you cannot legislate against the law of supply and demand. Fuel prices currently sit at the intersection of the two. By forcing prices artificially low, Congress would have the perverse effect of outstripping supply. That leads to dry pumps and long lines. You may remember the last time we tried this.

Despite the economic logic, and the fact the Federal Trade Commission (FTC) found there was no "price gouging" during the aftermath of Hurricane Katrina, the Senate feels the need to do something. As the Heritage Foundation points out,

Ironically, the Federal Trade Commission (FTC), the very agency charged with implementing the price-gouging measure, is on record stating that such legislation is a bad idea. The FTC has stated that "our examination of the federal price gouging legislation that has been introduced … indicates that the offense of price gouging is difficult to define."[8] The FTC adds that "the lack of consensus on which conduct should be prohibited could yield a federal statute that would leave businesses with little guidance on how to comply and would run counter to consumer' best interest."[9]

The FTC concludes that a price-gouging law that does not account for market forces would be counterproductive. "Holding prices too low for too long in the face of temporary supply problems risks distorting the price signal that ultimately will ameliorate the problem," and that such laws create a risk that "wholesalers and retailers will run out of gasoline and consumers will be worse off."[10] Congress should not ignore FTC's concerns about price-gouging legislation.

It's almost as if Congress wants you to forget two things they have done to increase gas prices: a tax structure that means the government earns more per gallon than oil companies and an ethanol mandate that has failed to reduce emissions but succeeded in driving up gas and grocery prices.

Governor Corzine Weighs in on Paid Family Leave

While Governor Corzine has expressed support for the concept of paid family leave, he has never publicly stated an opinion on the specific legislation before the state legislature. That began to change today, according to a report to be released in tomorrow's Star-Ledger.

Gov. Jon Corzine told the labor leaders in Atlantic City today that the Legislature should send him a bill by then end of the month that requires employers to provide paid "family leave" to all employees who need to deal with a crisis at home, such as the illness of a spouse or elderly parent.

Speaking to the AFL-CIO's convention on endorsing legislative candidates, Corzine told the crowd of about 300 labor activists at the Borgata casino that his administration is 100 percent behind unions.

"It is the right of every worker to join a union if they so choose," Corzine said, referring to recent efforts at Rutgers and by Atlantic City casino workers to organize. "We are seeing an undermining of the middle class in this country and there are not too many institutions sticking up for them."

It remains critical that CIANJ members contact their representatives in Trenton to ensure they understand the impact proposed paid leave legislation will have on New Jersey's employers. While federal law does not require unpaid leave to be provided by small employers, a paid leave mandate would now be placed on small businesses in New Jersey. Large employers would now be forced to offer the benefit to even their part time workers. As currently written, New Jersey's version of paid family leave would offer the most generous benefits in the US at a time when our economy lost 1,000 private sector jobs over the first four months of this year.

Remember that as of July 1st, the entire legislature will stand in recess until after the November elections. Over the next 17 days legislation will move quickly. We will post continuous updates here at NJ Business Matters.

End Game

Over on the fantastic EFCAUpdates blog (where there are whispers the Employee Free Choice Act could be acted upon this week), is a post focused on the mandatory arbitration aspect of the ill-titled legislation. Here at NJBusinessMatters we have been focusing on the fact the bill removes the secret ballot requirement of unionization. Also of great importance is the section of the EFCA that would increase the likelihood negotiations would turn into arbitration.

The EFCA sets a mandatory time frame for a newly-formed union to negotiate its first contract. If negotiations do not produce a contract, an arbiter would automatically be brought in. As evidenced in the post, this gives union representatives incentive to allow the negotiating process to be dragged out. From the perspective of the worker, not only would they no longer be given a secret ballot to form a union, they are also not guaranteed a vote on their first union-negotiated contract. Heck of a free choice.

As the EFCAUpdate authors explain in the case of DirecTV provider DirecTECH,

The fact is, unions don’t set wages. Neither do employers for that matter. In today’s system, wages are set by the labor market. DirecTECH’s pre-unionization wages were likely set at the level it deemed was necessary to attract and retain enough qualified workers to perform its customer’s installations. Sure, it might be able to attract or retain better qualified workers if it paid higher wages, but it is obviously satisfied with the applicant pool and turnover rate created by its current wage scale. Why should an arbitrator be empowered to order DirecTECH to pay more?

The employees, of course, can try to affect the labor market by withholding their labor and by encouraging others to do the same. If the employer feels that it has to pay more to service the customer, then it will either do so or go out of business. But the DirecTECH union apparently hasn’t gone on strike. It just wants the DirecTECH to “give” employees more money and dreams of the day when an arbitrator might order the company to pay above-market wages.

The issue then is where those above-market wages will come from. DirecTECH could raise its prices, but an arbitrator would not be able to order DirecTECH’s one and only customer to pay those higher prices. The customer would be free to find another company willing to perform the work at market rates. One might argue that the higher rates could simply be taken from the company’s profits, and that is true. But an arbitrator would not be able to order an investor to keep his or her capital in an enterprise that is not providing a desired rate of return. DirecTECH’s owners could simply decide to invest their money elsewhere.

Somewhere, somehow, the free market is going to exert its will on the process.

Budget Deal Struck - Details to Follow

Governor Corzine, Senate President Codey and Speaker Roberts agreed to a budget deal yesterday, weeks in advance of the July 1 Constitutional deadline. We expect more details to be released today, but there are a few points already worth highlighting.

• Total spending will increase be $200 million over the Governor's proposed budget. That represents an increase of more than 7% above last year's spending.
• $776 million will be spent on charity care, which are funds given to hospitals to cover a portion of the cost of caring for New Jersey's uninsured.
• $15 million in special legislative grants.

Watch the blog and the CIANJ website later today and tomorrow for a reaction to the budget's finer points. Daily Record coverage here.

Plant Closing Notification Bill Passes

Earlier today, the General Assembly voted to pass legislation requiring certain companies to give at least 90 days notice before they can close a New Jersey facility. Federal law requires 60 days notification.

CIANJ objects to the bill for three primary reasons.

1. Once again, the New Jersey legislature is putting a requirement on companies not applicable in other states and beyond the requirements of the federal government. It provides yet another reason for corporations to expand or locate outside New Jersey's borders.


2. The modern economy requires mobility and flexibility. This legislation limits both for companies in New Jersey.


3. Companies in New Jersey would now be forced to announce their business plans thirty days sooner than their competitors. This puts NJ companies at a competitive disadvantage to their peers in other states.

The final tally was 57-20 in favor of passage. We will post the actual votes when they become available on the official Legislative website.

Congressman Garrett Meets with the CIANJ

A special thanks to Congressman Scott Garrett who met with about 30 members of the Commerce and Industry Association of New Jersey early this morning to discuss issues important to New Jersey's businesses. Some of the more interesting facts that were brought up by the Congressman and our membership were:

The ever-expanding federal budget. For most of our history, the federal government has spent 20% of our Gross Domestic Product (GDP). This year, that number is up slightly. However, if entitlement programs are not altered the federal government will spend 33% of our GDP within a generation.

The need for a comprehensive approach to energy policy. Alternative fuels are going to be a necessary part of our future, but they do not yet represent a significant source of energy. The government can help change that by providing incentives and lifting regulations, but ultimately the free market will provide the greatest incentive. In the interim, we must increase energy output here at home. That includes exploration of the Outer-Continental Shelf (OCS), ANWR and actually building a refinery from time to time. If we fail to, it's going to get pretty cold and dark around here.

Thanks again to Congressman Garrett.

Monday in Trenton: Final Vote on Plant Closing Notification Bill

On Monday the General Assembly will consider a Plant Closing Notification Bill that would put requirements on New Jersey companies above and beyond what the federal government and other states require.

Under federal law, a company needing to close a facility and layoff a large amount of employees must give notice 60 days in advance. A1044 would require those wishing to close a facility or transfer operations in New Jersey to give at least 90 days notice, even if they are moving to another facility within our borders. It gives companies yet another reason to decide against expanding their operations in the Garden State. It also puts New Jersey companies at a competitive disadvantage. Those doing business here must now announce their plans 30 days earlier than their competitors are required to. That gives competitors more time to plan and react and can hurt New Jersey-based companies.

Successful companies in the modern economy are both flexible and mobile. This bill limits both.

Mayor Booker and the Urban Schools Scholarship Act

In his column which appears in today's Washington Post, George Will addresses Newark's past, and future while aluding to Mayor Booker's position on the Urban Schools Scholarship Act.

Regular blog readers know all about the USSA. The bill would allow companies to make tax deductible contributions to scholarship funds. These funds could be used to pay for children in failing school districts in Camden, Newark, Orange and Trenton to attend other public or non-public schools.

You read that correctly. The bill would set up a pilot program to use corporate money to help up to 4,000 children in failing school districts. Not only would the program not use state money to fund these scholarships, it would actually save money. Currently, per-pupil spending in these districts is nearly $20,000 per child. Scholarship recipients would be educated for a maximum of $9,000.

Saving money while helping children in failing school districts. To most, it seems like a good idea, but the state's education lobby still opposes it.

Will's piece closes with the following remarks.

Today, per-pupil spending tops $17,000, which is 75 percent above the national average and a (redundant) refutation of the public education lobby's not disinterested judgment that in primary and secondary education, cognitive outputs correlate with financial inputs. Seventy percent of Newark's 11th-graders flunk the state's math test. Booker says that under the previous mayor's administration, every elected official sent his or her children to private schools.

"I'm the Malcolm X of education -- 'By any means necessary,' " Booker promises. He says Newark should reverse the assumption that in education "time will be a constant, achievement will vary." If children are not succeeding, extend their school day, bring them in on Saturdays, extend the school year.

He also favors school choice, although he tiptoes around the word "vouchers," which inflames the more than 190,000 members of the state's teachers union. He advocates giving tax credits to companies for money contributed for scholarships to private as well as public schools. "Who," he has asked, "can object to a pool of money that will give poor children the same opportunities as middle-class kids?"

Who? Start with those 190,000, yet another mob afflicting Newark.

The Carmela Vote

New Jersey's main stream media is busy covering all things Sopranos this week, and now even national political pundits are weighing in.

Uber-talented writer and blogger extraordinarie Howard Mortman penned an article for The Politico on the "Carmela Soprano" vote in the GOP's Presidential Primary.

Aside from taking a pot shot at the Cradle of Civilization, it's a very good read.

Update on 6/8 at 1:44 p.m. - Even Forbes is commenting on the finale and what it will mean to the immediate future of HBO.

John Corio to Head NJSCPA

Congratulations to John Coiro, board member of the Commerce and Indsutry Association of New Jersey and Totowa Mayor, who was named President of the New Jersey Society of Certified Public Accountants.

The Commerce and Industry Association is proud of its long working history with the NJSCPA. They will be well-led, as always, during the next year.

Record coverage here.   

Fair Question

John Stossel has a bit of a field day following the House of Representatives' passing of an impossible to interpret "anti-gouging" bill.

At a recent press conference Sen. John Kerry was upset as he snarled, "Oil companies in America are reporting record profits. Record profits."

When did profit become a dirty word?"

Even if gasoline prices set no record, Congress surely set a record for inanity. What else are we to say about an anti-"gouging" bill passed last month by the House that would make it a crime to charge "unconscionably excessive" prices, "tak[e] unfair advantage of unusual market conditions," and "increase prices unreasonably" during an emergency?

And Congress should know better. After Hurricane Katrina, Congress had the Federal Trade Commission investigate price gouging, and so the FTC studied price spikes going back years. But it found "no instances of illegal manipulation."

Head on over to RealClearPolitics for the full article.

More Truth About The EFCA

Danielle Ringwood of the Associated Builders and Contractors corrects some of the myths thrown about by big labor as they try to push through the hopelessly-misnamed Employee Free Choice Act. Remember that  a poll conducted by Zogby International found that 90 percent of workers prefer a secret ballot. Employees' opinions notwithstanding, big labor is pushing ahead.

In today's edition of The Hill Ringwood aptly notes that the claims of mass firings of employees seeking to organize are simply untrue.

Secret-ballot elections happen swiftly under the current law. The average time for a federally supervised election is 39 days, and almost all elections take place within 56 days.
According to the National Labor Relations Board (NLRB), employees are illegally fired in just over one percent of all organizing drives. In the rare instance when an employee is illegally fired, the NLRB has plenty of tools, including ordering that the union be recognized, to remedy the violation.

As if denying a secret ballot to workers on the issue of unionization isn't bad enough, remember that workers may also be denied the right to vote on their first contract.

This legislation also contains a compulsory, binding arbitration provision on first contracts. If the employer and union cannot reach a contract agreement within 120 days, the federal government mandates a labor contract that is binding on both parties for two years.

Compulsory binding arbitration means that employees do not have the opportunity to accept or reject their new labor contract. They will be stuck with this contract for two years, regardless of whether it meets their needs.

You'd think that an organization that claims to represent workers' interests, would at least let them vote on their first collective contract. No?

PENPAC-Endorsed Candidates Successful in Primary Campaigns

Four candidates endorsed by the Private Enterprise Political Action Committee (PENPAC) were successful in their Primary Elections yesterday. PENPAC is affiliated with the Commerce and Industry Association of New Jersey.

Assemblyman Alex DeCroce (R-26), Assemblywoman Alison McHose (R-24), and Assemblyman David Russo (R-40) all won primary contests in their bids to return to the General Assembly. Assemblyman Kevin O'Toole (R-40) won his primary campaign to be elected to the State Senate. Congratulations to all four who have been guided by the principles of limited government and lower taxes as a way to make New Jersey an even greater place to live, learn and do business.

Assemblyman Guy Gregg (R-24) was defeated in his campaign to move to the New Jersey Senate. Congratulations to Freeholder Oroho on his victory.

PENPAC will consider further endorsements in all 120 legislative races over the summer.

The Prospering Middle Class?

Steve Perlstein, who is oft quoted by the American left, wrote an astoundingly on-point column in last Wednesday's Washington Post. We're surprised that we missed it, but then again this is not the type of story that is run heavily by the mainstream media.

Periodically, economist Stephen Rose puts together a study titled Social Stratification in the United States. Rose, among other positions, was an economist in President Clinton's Labor Department and his reports are typically fodder for the class warfare crowd and used as justification to push through a host of anti-free market plans. That crowd may need a hug or two after this year's report. As Perlstein notes,

...rumors of the demise of the American middle class are greatly exaggerated. In fact, living standards for most Americans are improving. Not everyone is flipping hamburgers or working at Wal-Mart. To the degree that the middle class is shrinking, it is because more people are rising out of it than falling from it.

Shockeroo. Even more surprising, the study adds,

• "...it is often reported that the median household income in the United States is $44,500. Of course, that takes in households of varying size, from singles to the Brady Bunch. It also includes households headed by workers in the prime of their working years (29 to 59), as well as those just beginning or ending their careers, when earnings tend to be lower. So, to get a truer picture of economic well-being, Rose adjusts the data for household size and excludes those headed by people younger than 29 or older than 59. And when he does, it turns out that the median income for the "typical American family" jumps to $63,000, which in most parts of the country buys a pretty comfortable middle-class lifestyle."
• "...the percentage of households in the "middle class" category -- those with incomes of $30,000 to $90,000 -- fell to 39 from 47 percent. But it would be hard to describe that as bad news when the proportion of well-off households -- those with incomes of more than $90,000 -- rose by nearly nine percentage points."
• "...the number of lousy, low-skilled jobs has been on a long, steady decline since 1979, while the number of "elite" jobs has been growing steadily. The number of "good" jobs has declined marginally as skilled office work has replaced skilled factory work."
  

Be sure to check out the entire story and remember it when politicians try to convince you that you need them to sustain a high quality of life.

Labels: class warfare

Freedom Without a Ballot

In Saturday's Boston Globe, AFL-CIO President John Sweeney lays out his case for supporting the misnomered Employee Free Choice Act.

Both you regular blog readers know that the EFCA is big labor's most recent attempt to stop the hemmoraging of their membership. First they blamed President Reagan and President Bush's National Labor Relations Board. Then under President Clinton, they blamed the bad economy. Then under President Clinton, they blamed the good economy.

Now, as spelled out in Saturday's Globe, the blame falls on American companies who, according to Sweeney, embark on all sorts of nasty intimidation tactics to get their way. I guess he didn't see the story on SEIU Local 49.

So once again we ask a simple question: What is the best way to avoid intimidation? We would argue that keeping a secret ballot, which is completed by an employee with no one else present, is the best remedy. Thankfully, the best proponents of the EFCA can hope for is to see their bill vetoed.

Labels: Employee Free Choice Act, forced unionization

PENPAC Endorses Assemblywoman McHose for Re-Election

The Private Enterprise Political Action Committee (PENPAC) today announced the endorsement of Assemblywoman Alison Littell McHose (R-24) for re-election to the General Assembly. On key issues, Assemblywoman McHose has voted for policies that would expand the state’s economy and help create jobs.

“PENPAC is proud to support candidates who have embraced free market principles of limited government, reduced regulation and less spending.” said PENPAC Chairman Richard Goldberg, “Assemblywoman McHose has demonstrated a commitment to these principles and the General Assembly would benefit from her return.”

PENPAC is affiliated with the Commerce and Industry Association of New Jersey (CIANJ), a free enterprise advocacy association comprised of 850 businesses located throughout the state. For decades, PENPAC has endorsed candidates of any political party who have demonstrated a commitment to improving the state’s economic vibrancy, business climate and to creating jobs. This election cycle, PENPAC has also endorsed Assemblyman Alex DeCroce (R-26) and Assemblyman David Russo (R-40) for re-election to the General Assembly and Assemblyman Guy Gregg (R-24) and Assemblyman Kevin O’Toole (R-40) for election to the State Senate in their primaries. Following the Primary Election, PENPAC will consider further endorsements in all 120 legislative races.

“The business community and state’s citizens’ needs legislators in Trenton committed to principles that will allow New Jersey’s businesses to remain in the state and to grow. The vision of all five endorsed candidates can move N.J. toward that goal,” Goldberg concluded.

Labels: PENPAC

Bringing the Beat

The Private Enterprise Political Action Committee (PENPAC) is featured in this week's CIANJ Business Beat after endorsing four candidates prior to Tuesday's Primary Election. PENPAC endorsed Assemblyman Alex DeCroce (R-26) and Assemblyman David Russo (R-40) in their campaigns to be re-elected to the General Assembly. The group also endorsed Assemblyman Guy Gregg (R-24) and Assemblyman Kevin O'Toole (R-40), who are seeking the support of Republican voters to move up to the State Senate.

That story, plus CIANJ members' opportunities to meet five former DEP Commissioners and what every employer needs to know about civil unions are all available in this week's CIANJ Business Beat.

Labels: CIANJ Business Beat