New Jersey’s business climate ranks worst for the 8th year in a row

Recently, the New Jersey Business and Industry Association released its annual regional business climate analysis, and the results confirm a downwards trend for the state. For the eighth year in a row, New Jersey placed last in competitiveness among seven states in the Northeast and mid-Atlantic corridor, which also included New York, Connecticut, Massachusetts, Maryland, Delaware, and Pennsylvania. Pennsylvania took the top position for the second consecutive year, while Maryland and Delaware followed behind it. 

The NJBIA measured competitiveness across six cost-related categories: corporate, sales, income, and property tax rates, payroll tax burdens, and state minimum wage levels. Each state received a score from one to seven in each category, with seven representing the most favorable conditions. New Jersey's combined score of just 12 points placed it firmly at the bottom of the pack, compared to Pennsylvania's dominant score of 34. The association's chief government affairs officer, Chris Emigholz, pointed out that New Jersey performs worst in property taxes and corporate taxes in particular. The state carries the region's highest corporate tax rate at 11.5%, and its property tax burden, measured as a share of personal income at 4.38%, outpaces every neighboring state.

Pennsylvania's strength, by contrast, stems from a combination of favorable conditions across multiple categories. The Keystone State currently carries the lowest minimum wage and income tax in the region, and its corporate tax rate is already on a scheduled decline, set to drop from 7.49% down to 4.99% by 2031.

Experts offered mixed opinions on the significance of this, with Stockton University finance professor Michael Busler arguing that elevated taxes compress employee purchasing power, which in turn forces businesses to offer higher compensation just to remain attractive. He also flagged New Jersey's strict environmental regulations as a hidden cost driver, noting that land-use restrictions frequently require companies to acquire larger parcels than necessary. Rutgers University economist James Hughes argued the opposite, saying that New Jersey's deep reservoir of highly educated workers, proximity to both New York and Philadelphia, and strong public school system give businesses compelling reasons to stay, even amid the financial headwinds.

NJBIA leadership, however, expressed alarm that pending legislation could compound existing problems. President Michele Siekerka specifically flagged the proposed Climate Superfund Act, which could levy up to $50 billion in retroactive penalties on certain businesses, as a measure that would deepen the state's already unfavorable reputation. With New Jersey's budget deadline approaching at the end of June, industry groups are urging state lawmakers to focus on reducing costs rather than introducing new financial burdens on the business community.