Candidates should hear how economy affecting businesses

New survey reveals business view of state’s challenges, strengths

(Sept. 8, 2008) Candidates campaigning for the General Assembly this fall should be hearing from employers throughout Connecticut about the challenges they’re facing, especially under the weight of a volatile national economy.

In the meantime, legislative candidates can read all about the state’s business climate in the 2008 Survey of Connecticut Businesses, by CBIA and Blum Shapiro. The survey report outlines the various challenges Connecticut employers are facing, from rising energy costs and price increases for commodities to a decline in skilled workers. Some of these challenges are more acute in Connecticut than in other parts of the country.

Still, the report shows how employers in the state are staying generally optimistic and are adapting and changing their strategies in order to succeed here. They’re also looking to state government to promote policies that will help them drive job creation and economic growth.

Most Connecticut businesses responding to the survey performed well last year, and more than half expect their companies to grow over the next 12 months. But a third expect no growth for their companies, and 14% expect negative growth.

Top challenges
The cost of doing business in Connecticut remains the single greatest challenge for the vast majority (70%) of survey respondents. Employers cited the following as their most problematic costs:
• Health care (53%)
• Energy (15%)
• Payroll (15%)
• Regulatory compliance (7%)
• Workers’ compensation (7%)

Health care costs
Health care costs weigh heavily on Connecticut businesses, and employers are not optimistic about relief in the near future. Almost all reported higher health care expenses last year, and about 70% expect costs to increase more than 10% over the next year.

Business owners say that ways to help make health care more affordable include providing employee health savngs accounts and incentives for healthy living. They also believe reducing the number of medical procedures and services with state-mandated coverage would help.

Connecticut has one one of the highest totals in the U.S. (currently 51). The sheer number of mandated coverages contributes to the state’s higher health care costs overall.

Energy
The cost of energy is another concern for employers, with 79% of those surveyed saying higher prices are affecting their operations. More than half were forced to raise the price of their products and services as a result; another 27% said the cost of energy has limited their ability to expand their businesses, and 23% said it has similarly limited their ability to hire additional workers.

Most (85%) are taking steps to reduce their energy consumption through sustainable business practices. That’s up from 75% who reported reducing their energy use last year, 69% who did so in 2006 and 50% in 2005.

Skilled workers
In addition to the financial challenges facing employers, 61% are coping with workforce shortages, a problem expected to intensify as baby boomers approach retirement age. Almost three-quarters of respondents report a lack of qualified job applications, with 34% seeing applicants who are simply not job-ready.

Employers also cited the cost of living in Connecticut, and high housing costs in particular, as a key obstacle to attracting workers. The state’s transportation issues were blamed as well.

For more information, contact CBIA’s Jason Giulietti at 860-244-1946 or jason.giulietti@cbia.com.