Survey: Workforce, Affordability Top Concerns for Connecticut Businesses

The labor shortage and the high costs of living and running a business are key factors hampering Connecticut’s economic growth according to a new survey.

The 2023 Survey of Connecticut Businesses, produced by CBIA and the accounting and business advisory firm Marcum LLP, found that 81% of employers experienced difficulty finding and retaining workers—essentially unchanged from last year.

The survey, released today at the annual The Connecticut Economy conference in Hartford, also showed that 91% of business leaders say the cost of doing business is increasing. 

Only 10% of business executives believe the state’s business climate is improving, while 41% say it’s static, and 33% believe it’s declining. 

Key findings:

• Finding and/or retaining employees is difficult for 81% of surveyed businesses—essentially unchanged from last year
• The percentage of top executives who say the lack of skilled job applicants is the greatest obstacle to growth increased seven points over last year to 46%
• 76% of companies reported profits in 2022, up from 68% the previous year and the highest since 2019
• Two-thirds (66%) expect a profitable 2023, with just 7% projecting losses
• One-quarter of business leaders believe Connecticut’s economy will expand over the next 12 months, with 29% forecasting national growth
• 91% say the cost of doing business in Connecticut is increasing, with rising labor costs (25%) and state taxes (16%) the primary drivers
• Inflation remains a challenge for 83% of businesses
• Only 10% of executives feel the state’s business climate is improving, while 41% say it’s static and 33% believe it’s declining
• 60% expect their employment levels to remain stable over the next six months, with 30% projecting increases
• 92% of employers offer employees health insurance benefits and 86% report coverage costs increased in the latest renewal period
   

CBIA president and CEO Chris DiPentima said the survey highlights the impact the growing labor shortage crisis is having on Connecticut businesses. 

“The U.S. labor force has fully recovered from the pandemic and is in growth mode—yet Connecticut is lagging behind,” he said.

“Job openings are 30% above pre-pandemic levels, and through July 2023, the state’s labor force has lost 41,100 people (2.1%)—31,900 in just the last 12 months alone.

“It’s clear that the jobs are there—what we need are the people to fill those jobs. 

“Connecticut’s quality of life, technology and innovation, and education scores are among the best in the country. 

“However, the high cost of living and doing business undermine our competitive advantages and employers’ ability to offer career opportunities for workers.”

The survey also showed the resilience of Connecticut businesses, with 76% of companies reporting profits last year—the highest since 2019.

“Businesses continue to navigate challenging times through innovation, adapting, relying on one another for support, and leaning into one of the most productive workforces in the world,” DiPentima said.

“Despite various hurdles, Connecticut businesses remain cautiously optimistic after demonstrating Yankee Ingenuity to not only thrive but pave the way for a hopeful outlook in 2023,” said Marcum’s Hartford office managing partner Michael Brooder. 

“Lowering cost burdens for both employers and employees is crucial for sustaining ongoing success and attracting and retaining top talent.”

The policy recommendations from respondents focus on lowering the cost of living and doing business, improving access to affordable housing and healthcare, and attracting new residents and businesses to the state. 

“This survey highlights the need for aggressively pursuing solutions to the main challenges undermining our economy: the labor shortage, the state’s high cost of living, and the high cost of doing business,” said DiPentima.

“The survey shows that employers are losing patience. The longer the labor shortage continues, the greater the risk that companies will look elsewhere to meet their workforce needs.

“Policymakers must seize on all opportunities and solutions to unlock Connecticut’s tremendous potential and build a sustainable economy that emphasizes affordability, meaningful careers, and a positive business climate.”

CBIA mailed and emailed the 2023 Survey of Connecticut Businesses to more than 3,100 top executives throughout the state from June 12 through July 17.

The majority of surveyed firms are small businesses—79% employ less than 50 people, with 11% employing 50-99 workers, 6% between 100 and 249, 2% 250 to 499, while 2% employ more than 500 employees.

The survey’s response rate was 18.9%, with a margin of error of +/- 2%.

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CBIA is Connecticut’s largest business organization, with thousands of member companies, small and large, representing a diverse range of industries from every part of the state. For more information, please contact Scott Beaulieu (860.244.1929).