CBIA survey; rising cost of business and life concerns employers

Economic uncertainty was reported as a recurring theme among the 2,700 business executives surveyed by the Connecticut Business and Industry Association (CBIA) for its 2024 Survey of Connecticut Businesses. Those surveyed cited increasing cost of business, a lack of skilled job applicants, and a reduced ability to retain employees as tantamount concerns to be addressed in the future. Businesses also cited high healthcare costs , rising energy costs and lack of affordable childcare as detriments to their recruiting and retention efforts.

“As this survey shows, Connecticut businesses continue to demonstrate their resilience, overcoming cost and workforce challenges and positioning for future growth,” said Michael Brooder, Hartford Office Managing Partner of Marcum LLP in the report. “Sustaining that growth requires policies that lower costs for employers and employees and expand talent pipelines.”

According to the report, 86% of surveyed businesses reported that the cost of doing business has increased in Connecticut, with 24% citing labor costs, 18% citing the price of goods and supplies and 16% citing state taxes. While the overall number of businesses concerned with costs is still high, the 86% actually represents a five-point decrease from last year’s survey.

“In light of these challenges, the cost of doing business has become a critical concern,” read the report. “Regulatory burdens are having a direct impact on operating expenses, further influencing the overall business climate.”

73% of surveyed businesses recorded profits this year, down from 76% last year. On the other hand, this percentage exceeded business owners’ own expectations; in last year’s survey , only 66% of businesses anticipated that they would make a profit in 2023. Businesses that recorded a profit noted improved sales and employee productivity, lower interest rates, and technology investments as key factors in their success, while those who experienced losses cited high cost of goods and materials, hiring difficulties, inflation, capital investment challenges, and higher expenses and gas costs as the primary culprits.

Inflation, supply chain issues, high health insurance costs and high business taxes were among the most commonly cited issues among business owners. 80% of those surveyed said that they were impacted by inflation, and another 62% said that they were impacted by supply chain issues.

All in all, these concerns have led to a slight increase in the number of surveyed business owners who felt the state’s business climate is declining, up six points from 33% last year to 39% this year. 41% of those surveyed described the state’s business climate as static, 12% said they were unsure, and only 8% believe the state’s business climate is improving.

62% of businesses cited Connecticut’s proximity to customers and quality of life as the state’s greatest advantages. 45% of those surveyed reported their sales as holding steady, another 36% said that they are growing, and the vast majority of businesses, 73%, indicated that they have not considered moving or expanding their businesses to another state.

The primary difficulty reported among business owners was difficulty in attracting skilled employees. 43% reported difficulties in finding employees, and 34% reported difficulty both finding and retaining employees. Companies reported implementing apprenticeship and intern programs, flexible paid time off plans, and employee engagement and recognition programs as methods to boost their attraction and retention of employees.

Businesses highlighted increased affordability, both for employers and employees, as a goal that should be pursued by the state government to improve Connecticut’s economic outlook. Connecticut’s high cost of life represented the second most cited boundary to economic growth among those surveyed, with 21% reporting it as an issue. Access to affordable childcare was another. 60% of business owners reported affordable, high-quality childcare as an important factor for recruiting and maintaining talent.

“Businesses believe there are additional policy initiatives that Connecticut could implement to drive workforce development across industry sectors,” read the report. “These include reintegrating trades into the education system to better prepare students for technical careers, enhancing childcare policies to support working parents, and lowering taxes to create a more favorable business environment.”

20% of business owners said they would “consider investing in newly established public or private childcare funds in their region to benefit their employees and their families.”The CBIA highlighted New London County’s recent implementation of its tri-share program as a childcare model to be replicated statewide.

“The success of this collaboration underscores the need for more partnerships, which are key to solving workforce challenges,” read the report.

Business owners offered their own recommendations to the state legislature to address their concerns going forward, with the chief areas of concern being a focus on rethinking taxes (22%), state spending controls (19%) and economic growth (18%). They reported that the chief concerns of their employees were high cost of living (26%), healthcare (18%) and taxes (17%). Overall, business owners had a mixed to negative view of the legislature’s performance in terms of facilitating economic growth and job creation, with 47% of respondents feeling neutral about the legislature’s performance, 21% strongly disapproving of it, and another 19% somewhat disapproving of it.

“Business leaders expressed confidence in the administration’s fiscal responsibility track and emphasis on state spending limits, but feel the state legislature is largely “anti-business” and lacks focus on the needs of small businesses, the heartbeat of the state’s economy,” read the report.

Ultimately, health insurance costs ranked as the single highest policy priority that business owners would like to see addressed next legislative session. 88% of business owners surveyed offer healthcare plans to employees, which marks a four-point decrease from last year. 53% of owners reported dissatisfaction with the quality and cost of health insurance, with rising premiums being a chief concern, especially among small businesses. 37% of small business owners reported 6-10%  increases in premiums, and another 26% saw increases between 11- 15%.

“Those findings reinforce that the small group health insurance market in Connecticut is broken—and the General Assembly, which has twice passed on adopting a meaningful, bipartisan solution, needs to act,” read the survey.

Other issues that owners recommended as legislative priorities are rising energy costs, deregulation, tax reform, spending reduction, and workforce development.

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