The city of Los Angeles, LA County’s largest city, is the county’s worst city in which to do business, while Santa Clarita ranks as the county’s most business-friendly city, according to the Los Angeles County Business Federation Annual Pulse Poll released Wednesday.
Results from the BizFed survey demonstrate a growing concern for housing costs and homelessness throughout the county.
These issues moved from low-level concerns in 2017 to among highest priorities of the business community in this year’s poll.
Taxes and fees again ranked as the number one business concern, as it has since 2011, and despite a growing economy, the employment outlook is largely similar to recent years’ results.
“Business leaders are ringing the alarm bell on the housing crisis,” said Tracy Hernandez, BizFed founding CEO. “Most importantly they’re drawing the connection between the high cost of housing and the County’s astronomically high poverty rate, as well as their evaluation of whether to relocate their business.”
The annual BizFed poll represents a snapshot of key issues of concern in the Los Angeles County business community. The BizFed Pulse Poll was first taken in 2008 and has for a decade asked business owners and executives about issues they deem most critical to the ongoing operation and growth of their business.
This year, the BizFed poll received 710 responses from business leaders in more than two dozen industries throughout Los Angeles County.
“This marks 10 years of measuring business sentiment in LA County, and we have here a unique and valuable yardstick for how the view of employers have evolved over the last decade,” said David Fleming, founding chair of BizFed.
“In BizFed’s first poll, taken in the midst of the financial meltdown in 2008, Access to Capital was the #1 concern of business. Just behind it was State and Local Budgets, which were plagued by deficits at the time,” he said. “Now we see Housing – already one of BizFed’s key advocacy issues – rising to the top.”
Taxes, Fees Top Business Leaders’ Minds – Housing Concerns Rising, Employment Outlook Stable
Taxes and Fees topped the list of business concerns for the eighth straight year in BizFed’s poll, and it was the most cited factor (81 percent) contributing to businesses and jobs leaving LA County and/or California. Among the taxes and fees surveyed in the poll, Personal Income Tax led with 32.2 percent of respondents saying it has the highest impact on the business community.
“The impact of taxes and fees on business cannot be understated, and is a loud message in these results — as it has been for nearly a decade,” said Mark Wilbur, CEO of Employers Group and past BizFed chair. “It is the #1 cause for businesses and jobs leaving the state, and digging deeper we uncovered that personal income taxes are the most problematic for our small-mid sized businesses where the owners are generally paying personal income tax on their business earnings.”
Overall, the employment outlook among business leaders is mostly unchanged from the last two years, with 41% of respondents saying they are either slightly or much more likely to be hiring, the same percentage as 2016 and 2017. However, the percentage saying they are much more likely to hire has grown from 3 percent to 8 percent in the last two years. Similarly, layoff anticipation is unchanged from 2017, with just 10 percent of employers expecting some or significant layoffs.
But housing costs also leaped to the top of mind of business leaders in this year’s poll. The issue moved from a relatively low priority concern just one year ago, to the top three most pressing issues facing the region. Housing affordability was also identified as by far the most important underlying factor to high rates of poverty in the county. More than half of respondents (51.6 percent) identified housing as among the reasons business and jobs were leaving LA County and/or California.
“The housing crisis affects all sectors and all people in Los Angeles County,” said Greg McWilliams, chief policy officer of FivePoint. “What’s important to note is that taxes and fees halt development, resulting in less housing, business stagnation, higher rents, and higher rates of poverty. Everything is connected here and the business community is actively engaging in solutions that will grow our housing stock and resolve the crisis for LA residents.”
Transportation and Infrastructure Remain Top Concerns
Though public infrastructure dropped from the number two concern in 2017 to number four in 2018, still nine in 10 members of the business community feel moderate or immediate attention is needed on roads, streets, highways and freeways. Commuter light rail and rail, in particular, saw a jump in “infrastructure needs” between this year and last (rail up from 19 percent in 2017 to 31 percent in 2018).
“LA County has made tremendous strides in transportation infrastructure and investment, always with BizFed right at its side,” said Hilary Norton, BizFed 2018 chair and the executive director of Fixing Angelenos Stuck in Traffic (FAST).
“BizFed will continue to partner with all levels of government to ensure that our hard-won transportation funds are invested wisely and leveraged to meet the region’s mobility, goods movement, infrastructure enhancement, and innovation needs,” Norton said.
Trump Administration Actions Get Mixed Reviews
While more than half of respondents held a positive view of recent federal tax reforms, large majorities did not believe they would lead to higher wages, new hires or more a competitive business environment. This is reflected in the relatively static employment outlook reported in the poll this year. Additionally, business leaders were positive on infrastructure investment but held net-negative opinions on administration actions on immigration, trade, healthcare and the environment.
Housing is the Key to Addressing Poverty
At the start of the year, BizFed announced the #BusinessMakesLAWork initiative – a goal that seeks to lift one million LA County residents from poverty in the next 10 years. As part of that initiative, a new poll question was added this year to identify core policy priorities.
Housing affordability was identified by poll respondents very clearly as the most critical issue for combatting poverty, with 56 percent of respondents selecting it as one of their top three policy issue areas to tackle. Job training was second with 38 percent of respondents, and Immigration Reform (34 percent), Improving School Performance (32 percent) and Regulatory Reform (31 percent) all following.
“The results of this year’s poll further prove that affordable housing is the first step in lifting Angelenos out of poverty,” Hernandez said. “Business is the only vehicle with the capacity to build housing, to create jobs and true pathways to the middle class and drive needed changes to alleviate this crisis. BizFed members are the most civically engaged business people in the state – they will get it done.”
Local Government Broadly Viewed as More Business Friendly than State
City government is viewed as more business-friendly than Los Angeles County or state government. Nearly half of respondents feel their local city is “Business Friendly”, up from 40 percent in 2016. Only 24 percent of respondents believe Los Angeles County is business friendly, and just 14 percent believe California State Government is business friendly, showing the same sentiment as the previous two years.
The survey ranked Santa Clarita as the most business-friendly city of the couties 83 cities.
“I am thrilled to see Santa Clarita’s longtime commitment to being business friendly recognized by the County’s business leaders,” said Holly Schroeder, president and chief executive officer of the Santa Clarita Valley Economic Development Corporation and past chair of BizFed.
“Santa Clarita is a city that makes investment in economic development and views its business community as a true partner, and the results are clear that has an impact,” she said.
Conclusions and the Path Forward
BizFed leadership and its diverse member associations will use the vital insights from this year’s survey to advance a policy agenda that aggressively works to support pro-job policies, invest in LA County neighborhoods, build housing to lift Angelenos out of poverty and encourage a more supportive environment for local businesses.
· The emergence of housing as a major concern is striking in this year’s poll. It moved from #10 in last year’s poll to #3 in 2018, and was cited as the #1 issue contributing to high poverty rates in LA County. BizFed has already been engaged in an array of pro-housing policies, including supporting major developments and initiatives designed to grow supply of homeless, affordable and market rate housing, as well as opposing anti-housing measures such as rent control, Costa Hawkins repeal, transfer taxes and Measure S.
· Taxes and Fees continue to weigh heavily on business leaders’ minds, ranking as the #1 issue for the eighth year running, and cited overwhelmingly as the leading cause of businesses leaving LA County and California. BizFed is a relentless advocate of improving the business climate in LA County, and California as a whole. BizFed has long argued for the phasing out of the City of Los Angeles’ gross receipts tax, and opposed hikes in state and local taxes and fees that do not directly contribute to infrastructure or other needed investment.
· Trump Administration actions are receiving mixed results from business leaders. More than 52 percent of respondents had positive views of recent federal tax reforms, but administration actions on immigration and healthcare were split and slightly negative. 43 percent said trade policies were either not likely to help or would hurt business, and nearly half of respondents said action on climate change/environment were negative for business in Los Angeles.
· 9 in 10 business leaders feel moderate or immediate action needed on transportation infrastructure. BizFed has steadfastly supported investment in mobility and goods movement, including LA County’s Measure M and Measure R, LAX Modernization and other local initiatives.
· Local Governments receiving higher marks for business friendliness. Nearly half (46%) of respondents feel their local city is “Business Friendly,” up from 40 percent in 2016. LA County Government saw a slight decline from 27 percent to 24 percent in this year’s poll, while the state government has held steady at 14 percent approval the last three years running.
The BizFed 2018 Pulse Poll was on online poll distributed throughout BizFed’s membership and their member networks from March 1 through April 12. This year’s participation was one of the highest on record, with 710 responses. Employers from an array of industries across Los Angeles County, including business, financial and professional services, Realtors, non-profits, chambers of commerce and construction companies, expressed their opinions in the Pulse Poll. In total, more than 90 percent of BizFed’s 178 member-based associations are represented in this year’s poll.
Since 2008, the Los Angeles County Business Federation has amassed a powerful grassroots alliance of more than 170 diverse business groups, including industry trade groups, chambers of commerce, ethnic business groups, business improvement districts, premier independent companies and agencies. BizFed members have mobilized and advocated on key policy issues at the local, regional, state and federal levels of government to ensure sustainable economic growth and are committed to creating high wage jobs for L.A. County residents.
The organization represents more than 390,000 businesses that employ over 3.5 million employees across all 88 cities in Los Angeles County. BizFed is recognized as the credible voice for business in Los Angeles, Sacramento and Washington, DC.
To learn more visit bizfedlacounty.org or follow us on Facebook and Twitter.