New Jersey Chamber of Commerce Testimony before the Senate Budget and Appropriations Committee regarding Paid Family Leave S-2249

May 24, 2007

Delivered by Joan Verplanck, President, NJ Chamber of Commerce

Good morning Chairman Kenny, Vice Chairman James and members of the Senate Budget and Appropriations Committee. My name is Joan Verplanck and I am the president of the New Jersey Chamber of Commerce and I thank you for the opportunity to speak to you today about the issue of paid family leave.

My staff and I have been inundated over the past week with calls and e-mails from frustrated business owners, executives and managers who are extremely concerned that this committee is actually going to pass the proposed paid family leave legislation being debated today.

I would say that in my 12 years as chamber president, I have never seen such strong opposition to a single piece of legislation. Why is that?

My members tell me they are tired of mandate after mandate being demanded of their companies by state government. This, on top of all the taxes they pay – and the other astronomical costs associated with operating a business in New Jersey. It is becoming difficult – if not impossible for our businesses to survive. They need relief, not more mandates, especially one as onerous as this.

If we are to get out of our structural budget deficit and join the rest of the nation in terms of having a sound fiscal structure, we must grow jobs and improve our economy. Last year the Governor unveiled his Economic Growth Strategy, which was a well thought-out roadmap for growing the economy of New Jersey. Nowhere in that document did it say that mandating paid family leave on ALL New Jersey companies – those with as few as one employee – would pull the state out of its economic funk.

This bill will actually have the opposite affect by placing a big bull’s-eye on New Jersey that the rest of the nation will notice. A study we commissioned last year concluded that New Jersey is rarely considered as a viable option for expansion or relocation by outside companies – being the second state to pass paid family leave and doubling the benefits of the first – will only help cement that position.

My members are extremely upset over this proposal and many have said that its passage – in any form – could be the last straw. I know you have heard this before – and it is often discounted – but I am hearing that Pennsylvania is looking pretty attractive right now to those frustrated with the current atmosphere in our state.

How do we compare with Pennsylvania?

• Pennsylvania has 3.72 million more people than New Jersey, yet our state budget is 23% higher than Pennsylvania’s

• The total tax burden per capita in New Jersey is 19% higher than in Pennsylvania ($2,415 vs. $2,045 as per the Census Bureau)

• And the state and local property tax collections per capita in New Jersey are more than double that of Pennsylvania ($2,206 vs. $1,079 per the Census Bureau)

These statistics drive the messages of frustration we’ve received, as have you from our members.  Let me share a few:

• A member from Newark says, “…it would be disastrous for the state’s business climate and would add another reason for companies to refrain from expanding in New Jersey.”

• A business owner from Sparta said “This bill while well intentioned adds a cost burden to business which is already confronted with a tax and mandatory benefit climate that is almost unrivaled in the US.”

• An employer from Edison wrote, “California is still in the early stages of their paid leave experiment. Why wouldn’t you wait until a study on their law has been completed before you launch into a New Jersey experiment?”

• A business executive from Swedesboro stated, “I urge you and your colleagues to reconsider passing this legislation because I need flexibility to create a benefits plan that fits my employee base.”

Many of my board members serve on the Governor’s Economic Growth Council – an advisory group established to assist the Office of Economic Growth with respect to the development and implementation of statewide economic development policies. They are all extremely concerned about the movement of this legislation in the state legislature. They have unanimously voiced their opposition to the Governor’s Office of Economic Growth.

This legislation is especially burdensome and disruptive for small businesses that require skilled employees. For instance, if a business employs five people and one goes out for 12 weeks, there is no way to easily replace that person. The other four-team members will have to pick up the extra work, forcing them to work longer hours. This will not enhance the work environment and certainly doesn’t do anything to lay a foundation for supporting families in the workplace, as claimed in Senator Sweeney’s press release yesterday. In fact, those left to maintain productivity will experience additional stress on themselves and their families, working longer hours to maintain profitability.

Our members who are able already offer paid leave to employees in their efforts to keep their workforce happy in a competitive environment. Many offer this in addition to the current average 11 weeks utilization of TDI for the birth of a child.  With a shrinking workforce and a higher demand for skills, companies do whatever they can to build employee loyalty.

In closing, I implore this committee to reject paid family leave legislation altogether. There will be palpable negative ramifications for New Jersey. It will hurt the economy, burden already frustrated business owners with another mandate, further erode our image as a place to do business and disrupt the operations of companies all across the state.

Thank you, and I trust you will do the right thing for the economy and people of New Jersey.

May 2007