A new Connecticut Business and Industry Association (CBIA) survey identifies high costs, the lack of legislative predictability and a growing demand for skilled workers as among the factors hampering business growth in the state.
The 2017 Survey of Connecticut Businesses, produced by CBIA and the accounting, tax, and consulting firm BlumShapiro, found that 49 percent of businesses are holding steady compared with 51 percent in 2016; 36 percent are growing, unchanged from last year; and 16 percent are contracting, up from 13 percent last year.
“We continue to see positive signs for Connecticut’s business community — profitability is still up from five years ago and losses are at a 10-year low — despite the turmoil and lack of a state budget,” BlumShapiro CEO Joseph A. Kask said.
The state’s high cost of living was the top factor impacting business growth, cited by 78 percent, followed by the uncertainty and unpredictability of legislative decision-making (72 percent), high business taxes (69 percent), government mandates (68 percent) and inadequate skilled job applicants (55 percent).
Sixty-five percent expect profits this year compared with 66 percent last year, 24 percent say they will break even compared with last year’s 17 percent and 11 percent forecast losses compared with 17 percent last year.
When it comes to growth, increased customer sales (58 percent), tax incentives and lower business costs (27 percent), and investments in workforce talent (15 percent) were cited as the biggest profit-driving factors.
Meanwhile, the survey found that factors driving losses include high costs of taxes, regulations, and mandates (80 percent), decreased sales and loss of customers (13 percent), and retiring workers and difficulty finding qualified workers (7 percent). As to the last point, 61 percent of businesses said they anticipated losing up to 15 percent of their workforce to retirement over the next two to five years.
Strategies being used in preparation for such losses include leadership succession plans (53 percent), increased recruitment efforts (53 percent), job training programs (42 percent) and older worker retention options (23 percent).
Eighty-three percent of businesses surveyed reported employing people under 35 years old, while 43 percent reported problems recruiting and retaining young workers; 29 percent said they had experienced no difficulty.
Businesses were also asked about legislative priorities, including their support for additional state employee retirement system reforms that go beyond the union concessions deal narrowly approved by the legislature in July.
Ninety-one percent said they supported eliminating the use of overtime in pension calculations (6 percent were neutral, 3 percent not supportive); 88 percent supported delaying medical coverage until early retirees reach a certain age and ending early retirement plans (8 percent neutral, 4 percent not supportive); 88 percent supported implementing a defined contribution plan for all new state employees (8 percent neutral, 4 percent not supportive); and 83 percent supported increasing the retirement age (12 percent neutral, 6 percent not supportive).
The survey also found that 81 percent of respondents do not support increasing the state’s minimum wage to $15 an hour. When asked about paid family medical leave, 75 percent said they believe a state mandated program would negatively impact their business.
On the federal level, 80 percent of those surveyed said their business would be impacted positively if the federal government implemented a 15 percent corporate tax rate or lowered personal income tax rates. Sixteen percent were neutral, while 5 percent disagreed.