Lawmakers, business groups press for tax credits to alleviate labor shortage

State lawmakers and some of New Jersey’s largest business trade groups are pressing for tax credits to help alleviate the hiring struggles and labor shortages keeping many employers from fully reopening their operations.

A trio of bills are in various stages of the state Legislature, while business groups contend they need some form of financial relief to help overcome the hiring shortages.

Businesses claim the added $300 in federal unemployment weekly benefits has, in turn, disincentivized people to return to work, and fueled a disappointing April jobs report, which saw 266,000 jobs added rather than the projected 1 million.

States like North Dakota, Montana and South Carolina are dropping the benefits, but Gov. Phil Murphy says there are no similar plans in New Jersey.

“Is there some amount of this related to folks still getting their benefits? That is quite possible. I continue to believe the overwhelming amount of folks who are getting benefits are desperately in need of those benefits,” Murphy said at a May 10 press conference.

One bill being introduced would offer tax credits to certain COVID-hit employers. According to one of its sponsors, Sen. Vin Gopal, D-11th District, the tax credits would go toward employee retention, increases to workforce size, and higher wage bumps to lure in more workers.

Companies with up to 100 employees would be eligible for the tax credit, which provides credits up to 10% of wages to businesses, or 20% in “high-impact counties,” which the draft legislation defines as one with a higher monthly unemployment rate than the statewide average. It would be available between 2020 and 2021.

Another proposal, Senate Bill 1958 – called the “New Jobs for New Jersey Act,” creates tax credits for businesses with up to 100 employees for each worker hired after April 1, 2021, who was not employed in 2020 amid the pandemic business closures and ensuing restrictions. Tax credits can be claimed through December 2023, and any employees hired before that date could count towards the incentives.

The bill last passed the state Senate on March 25 and the Assembly Appropriations Committee on May 5.

A proposal introduced on May 11 by several Republicans in the state Senate would create a four-month sales tax holiday, meaning businesses would be exempt on taxes on up to $70,000 of sales for each of those four months.

Sue Altman, who heads the progressive advocacy group New Jersey Working Families, contends that “some corporations still aren’t paying people a living wage” and that higher pay would translate to “a rise in applications.”

But Michele Siekerka, who heads the New Jersey Business & Industry Association, agreed with the assessment that the unemployment bonuses were a disincentive to return to work.

“We cannot drive the sustained economic recovery New Jersey desperately needs by waiting out the summer and ‘passing’ to the end of the enhanced unemployment insurance benefits, which will come too late in September,” she said in a May 10 statement.

Siekerka highlighted the proposal of loosening COVID-19 restrictions on childcare businesses so that workers have someone to watch over their children while they’re at work, and more stringent rules regarding “available for work,” meaning that person has an obligation to “return to work” at the soonest opportunity.

She believes that while some employers have taken the route of offering more pay, that’s simply not an option for many businesses already saddled by cost increases and cratering profits – at least without some form of state financial aid.

“There are too many examples of people taking advantage of the system, and we need accountability,” she said during an NJBIA town hall on May 11, where several business owners lamented their own hiring woes amid the labor shortage.

The White House, in a May 10 statement, said the Biden administration will “reaffirm the basic rules of the unemployment insurance program.”

“Anyone receiving UI who is offered a suitable job must take it or lose their UI benefits,” reads a statement.