Survey Indicates Increase in Pessimism
Employers Group and BizFed Survey Indicates Increase in Pessimism Among Los Angeles Business Leaders in 2022
In partnership with the Los Angeles County Business Federation (BizFed), Employers Group annually conducts a survey of business leaders throughout the Los Angeles area to get their opinions and insights on the key issues and concerns they deem most critical to the ongoing operation and growth of their business.
The 2022 BizFed Annual Pulse Poll was open from April 9th through May 9thand generated responses from a record 938 LA-area business leaders. Of those, 87.5% were manager level or above, and 54 % were top decision makers (owner, president or CEO). Responses came from 19 industries, led by Professional Services (23%), Real Estate Investment and Development (9%), Realtor (9%), Chamber of Commerce/Trade Association (8%), Retail and Wholesale (6%) and Manufacturing (5%).
Reversing a trend that had been consistent even through the depths of the pandemic, the 2022 poll results showed a significantly higher level of pessimism about business conditions as opposed to a markedly optimistic perspective that had been voiced over the past few years.
For a summary of some of the key findings, please continue to our blog
Caution, concern, uncertainty and frustration replace optimism as the primary theme among Los Angeles Business Leaders in 2022
Overall tone of responses was less positive than a year ago. Consider:
- Business leaders expressing that they have an optimistic or very optimistic outlook for business over the next year is below 50%, marking a significant drop from last year when it was over 60%.
- The workforce will grow, but fewer business leaders expect to increase their employee count this year compared to last year.
- Business leaders are of a strong belief that no single level of government or regulatory agency is listening to their business concerns.
- Homelessness continues to be the top business concern and few business leaders believe that local government is doing a satisfactory job of addressing the issue.
- Concerns with inflation and supply chain (issues that cannot be legislated) have come from nowhere to be top of mind for most business leaders.
Optimism vs Pessimism
An optimistic outlook for business over the next 12 months is still a prevalent theme for business leaders, but the ratio of optimistic to pessimistic has decreased by 38% over the past year.
- 2% of business leaders express that they have an “Optimistic” (38.4%) or “Very Optimistic” (6.8%) outlook for business in the state over the next year.
- 15% of business leaders express that they have a “Pessimistic” (11.9%) or “Very Pessimistic (3.1%) outlook for business in the state over the next year.
- In 2021, expectations were significantly more positive, as 63.2% expressed they were “Optimistic” (47.9%) or “Very Optimistic” (15.3%) and only 7.6% expressed that they were “Pessimistic” (5.9%) or “Very Pessimistic” (1.7%).
- Last year we pointed to the high number of “Uncertain” responses (29.2%) as a reason for caution. Caution based on “Uncertain” responses is higher now, as this year they increased significantly to 39.9%
Business leaders forecast slightly lower workforce increases over the next 12 months.
- 34.2% anticipate their workforce will increase over the next year with 22.1% expecting the increase to be up to 10%, and 12.1% anticipating an increase of more than 10%.
- Only 9.2% expect a decrease, with 5.7% anticipating a decrease of up to 10% and 3.5% anticipating a decrease of more than 10%.
- The majority (56.6%) expect their workforce to remain pretty much the same.
- These expectations are slightly below last year when 38.3% expected an increase, 7.1% expected a decrease and 54.6% expected to stay about the same.
- The trend is still positive when compared to fall of 2020, when only 20.3% were projecting workforce increases and 23.4% were projecting decreases.
Homelessness, for the third consecutive year, is the number one most critical concern for business leaders.
- After supplanting perennial number one (Taxes and Fees) in 2020, Homelessness (which as recently as 2017 ranked 17th) is now firmly entrenched in the top spot.
- 96.6% of respondents identified Homelessness as either Extremely Critical (80.3%) or Somewhat Critical (16.3%), and only 3.4% rated it as Not Critical at All. This is up slightly from last year when 95.3% rated it as Extremely Critical or Somewhat Critical, and 4.7% rated it as Not Critical at All.
- Inflation, which was included as an option for the first time this year, came in a close second as measured by Extremely Critical ranking (76%). Factoring in Extremely Critical and Somewhat Critical, Inflation had the highest ranking and had the lowest number of Not Critical at All responses with only 16.
- Crime, moved up from fourth last year to third this year as a business concern for business leaders, and saw a significant jump from 62.8% to 75.1% as an Extremely Critical concern.
- Energy/Fuel Costs saw the most noticeable increase over the past two years, going from 12th in 2020 to ninth in 2021` to fourth in 2022, with an Extremely Critical rate of 73.5%. The last time it ranked in the top five was in 2014 (right about the time oil hit $107.95 per barrel), when it was ranked second.
- Taxes and Fees came in fifth – after coming in first or second every year the poll has been conducted. This is not necessarily a reflection of diminished concern about taxes and fees; rather, it is quite possibly a result of other immediate priorities taking precedent. This is evidenced by the 73.2% rating as an Extremely Critical business concern this year, which is actually higher than last year (70.6%) or the 70% it received in 2019 when it was number one.
- In addition to Inflation, two other options were added to the poll this year and they also had significant impacts. In particular, Access to Goods/Services (Supply Chain) came in seventh, with 63.8% identifying it as Extremely Critical. The other, Employee Recruiting/Retention came in 14th, and was identified by 47.6% as Extremely Critical.
- Access to Goods/Services (Supply Chain) was ranked as the number one concern by the highest percentage of respondents that included it as an Extremely Critical business concern (19.6%), followed by Crime (19.1%), Homelessness (12.7%) and Inflation (9.8%).
- In the last pre-pandemic poll, Transportation ranked sixth, but dropped to 18th in 2022 after coming in at 19th in 2021.
- In spite of the high-ranking new additions and the movement at the top this year, seven of the top ten from last year are in the top ten again this year.
- Only two responses had significant jumps this year, and they were Energy/Fuel Costs from eight to fourth, and Housing/Land Use from tenth to sixth.
- Noticeable Drops: Legislative Gridlock fell from fifth to ninth, Education from fourth to 13th (its lowest ranking ever), and Healthcare from seventh to 17th (tied for its lowest ranking, matching 2019).
- Public Employee Pensions (as it did last year) received the highest number of Not Critical at All ratings (33.5%), and was the only option to not be selected by any respondents as the number one business concern.