Survey points to Optimism
In partnership with the Los Angeles County Business Federation (BizFed), Employers Group conducts an annual 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 2021: Business Outlook and Re-Opening Survey provides significant strategic planning insights for business and HR leaders. The overall level of optimism was striking, but the optimism came with cautions. HR leaders will have their hands full balancing the increased enthusiasm and drive of the business leaders, with the realities of the changed workplace and the possible trepidation of much of the workforce.
Mark Wilbur, President & CEO of Employers Group and EverythingHR summarized the challenge for HR: “COVID has changed how employers and employees view where they work and how they work, whether it’s on-site, part-time in the office or full-time remote work at home.” Further complicating the situation will be some of the new realities “Childcare and flexibility for parents has emerged as a critical and immediate issue that needs to be addressed by businesses of all sizes for purposes of retention and recruitment. Rethinking workforce management is a ‘Now’ discussion for HR and operations.”
Following are some of the key findings from this year’s survey:
Optimism outpaces pessimism by more than 8:1.
63.2% of business leaders responding to the survey express that they have an “Optimistic” (47.9%) or “Very Optimistic” (15.3%) outlook for businesses in the state over the next year.
Only 7.6% of business leaders express that they have a “Pessimistic” (5.9%) or “Very Pessimistic (1.7%) outlook for businesses in the state over the next year.
The optimism comes with a caution though, as another 29.2% express that they are currently “Uncertain” about the outlook for business over the next 12 months.
More business leaders expect their workforce will increase over the next 12 months.
38.3% anticipate their workforce will increase over the next year with 24.4% expecting the increase to be up to 10% and 13.9% anticipating an increase of more than 10%.
Only 7.1% expect a decrease, with 4% anticipating a decrease of up to 10% and 3.1% anticipating a decrease of more than 10%.
The majority (54.6%) expect their workforce to remain pretty much the same.
In the previous survey, conducted last Fall, only 20.3% were projecting workforce increases and 23.4% were projecting decreases, meaning that almost double are now anticipating increases and one-third are now anticipating decreases. This is a significant change over just a six-month period.
Remote work is not going away.
Over 60% of business leaders expect some or all of their employees to continue working remotely post-pandemic.
Only 29.9% anticipate no employees will work remotely and more (34%) anticipate that more than 25% of their employees will continue to work remotely.
This is consistent with last Fall when 62% reported they expect some or all of their employees to continue working remotely and only 28% expected none would.
Childcare challenges may prevent employees from returning to the workplace.
40.4% of respondents report that an employee has cited childcare challenges as a reason for potentially not being able to return to the workplace. This is up from 30.5% in Spring of 2020.
46.5% report that this concern has not been raised, which is down from 57.2% responding to a pulse poll conducted in Spring of 2020.
Additional access to capital is still critical for businesses, but for fewer than a year ago.
40.8% of business leaders report that additional access to capital is important for their business to survive the next 12 months, down from 50.1% that felt it was important in Spring of 2020.
PPP, EIDL and SBA loans continue to be critical for businesses, but participation may have plateaued.
62% of business leaders report that they have applied for the funding and 53.1% of them have been approved and received funding. This is actually down from Spring of 2020 (early in the process) when 68% had either applied, been approved or been rejected.
Business leaders say City Government is listening, but other levels of government – not so much.
55.8% of respondents expressed that they believe City Government is listening to business concerns about reopening and restarting the economy, and only 32.3% feel they are not.
US Congress, the State Legislature, Governor Newsom and County Government all scored negatively. Of particular note are the low scores at the State level. The State Legislature (with 51.3% expressing the belief that they are not listening and only 34.8% expressing the belief that they are) and Governor Newsom (with 54.8% expressing the belief that he is not listening and only 35.4% expressing the belief that he is listening) were viewed as being the least attentive. Only 9.9% expressed that they were “Unsure” in their opinion of the Governor.
In Spring of 2020, when we asked if government officials were listening to business concerns about guidelines and requirements (not specific to any level of government) 53.4% responded “no.” In the current survey, only Governor Newsom (at 54.8%) scored a higher “no” rating.
Business Leaders support relief programs with direct impact on their bottom line.
Tax deductibility for COVID expenses (24%) and a reduction of some or all payroll taxes (22.4%) rate highest on the wish list.
Only 13% included making grants available for investments for improved ventilation/indoor air quality systems, which carries the inference that business leaders may be looking to leave COVID-related protocols and longer-term business modifications behind and just get on with running their business.
Only 17% selected offering liability protection post-COVID as one of their top three choices. While “liability protection” is open to wide interpretation, this is overall consistent with May 2020, when addressing concerns about reopening, only 22.1% identified COVID compliance requirements and only 11.4% identified compliance with employment laws.
74 respondents included “other” as one of their choices and provided their own suggestions. Approximately 50% of these open-ended responses included calls for additional grants or additional tax relief. Several suggested complete reopening with no continued relief.
Business leaders do not feel federal, state and local COVID-response programs helped their business.
Only 15.8% felt their business was helped by programs addressing Paid Sick Leave, Family and Medical Leave, Unemployment Benefits, Hero Pay, Cal/OSHA Regulations and Workers’ Compensation. More than double (39.5%) felt these programs hindered their business.
This question was posed in a neutral way to allow respondents to interpret it either as what impact these programs might have on their employees, or what impact these programs might have on their business. It seems they clearly chose to look at it in terms of impact on the business.
Homelessness continues to be the number one most critical concern for business leaders.
Each year, business leaders are asked to identify and rank their top business concerns. After supplanting Taxes and Fees last year, Homelessness (which as recently as 2017 ranked 17th) is now firmly entrenched in the top spot.
95.3% of respondents identified Homelessness as either Extremely Critical or Somewhat Critical, and only 4.7% rated it as Not Critical at All. This is consistent with last Fall when 96.1% rated it as Extremely Critical or Somewhat Critical,” and only 3.9% rated it as Not Critical at All.
Taxes and Fees continues in the number two spot after being number one every year up until 2020. It was rated as Extremely Critical or Somewhat Critical by 94.1% of respondents, which is down slightly from last Fall when it was at 97%.
The top six finishers this year have all been traditional top considerations, with the exception of Crime, which had been 12th in 2017, 10th in 2018 and 12th in 2019 before making the jump to 3rd last year and this year.
All of the top five 2020 responses remain in the top five in 2021. Crime remains in the 3rd spot. Education moves up from 5th last year to 4th this year. Legislative Gridlock moves from 5th last year to 4th this year.
Biggest Jumps: Healthcare moved from 9th to 7th (the highest it has been since 2014), Energy/Fuel Costs moved from 12th to 9th and Public Infrastructure, which had been as high as 2nd in 2019, comes in 12th this year (increase from 14th in 2020) and Broadband Accessibility (polled for the first time) entered in 14th place.
Noticeable Drops: State and Local Budgets falls from 6th to 15th, Workforce Development drops from 11th to 17th and Environmental Policies falls from 10th back to 18th (the same spot it held in 2019).
Transportation (which had been as high as 2nd in 2016 and 6th in 2019) drops from 18th to 19th. Still, 53.2% rated it as Somewhat Important (the second highest to receive that rating behind Telehealth/Telemedicine).
The lowest-rated concerns remain pretty much the same as last year, with the bottom spots again occupied by Transportation (at 19th), Remote Work/Remote Learning (from 17th to 20th even though they were combined this year), Public Employee Pensions (from 19th to 21st), and Telehealth/Telemedicine at 22nd.
Transportation and Telehealth/Telemedicine scored low on the aggregate, but they were the two highest recipients of Somewhat Important ratings.
Public Employee Pensions received the highest number of Not Critical at All ratings (32.2%).
Local Government’s efforts to reduce homelessness and address housing affordability do not satisfy business leaders.
81.9% of survey respondents report that they are not satisfied with local government’s efforts to reduce homelessness, and only 12.8% report they are satisfied. This is the highest “Not Satisfied” response to this question. Also noteworthy that only 5.4% expressed “No Opinion” as a response, indicating that the opinions expressed are strongly-held.
Only 11.3% expressed that they are satisfied with local government’s efforts to address Housing Affordability (the lowest) and 75.3% are not satisfied.
Business leaders are confident they have a clear understanding of the protocols required for monitoring COVID safety when reopening.
73.6% have a clear understating of the protocols necessary. Only 10.5% do not and another 15.9% are unsure.
The 73.6% “Yes” response to this question was the highest percentage response to any single question in the survey.
This question included vaccinations, so it is comprehensive in terms of the current environment.
In Spring of 2020, when this question was asked (not including vaccinations) the response was split – 51% said they had a clear understanding; 28.1% did not; and 20.9% were unsure.
Time and the vaccines seem to have contributed to business leaders’ confidence in their understanding of what they need to do to monitor health in their workplaces.
In spite of all the challenges of the past year, Los Angeles Area Business Leaders have a far more optimistic outlook for the coming year:
- Almost nine times as many express optimism, as opposed to pessimism;
- Fewer anticipate having challenges paying rent/mortgage or continuing their lease, or feel additional capital is needed to survive;
- Five times as many anticipate an increase in their workforce vs. a decrease.
Homelessness continues to be the top business concern for LA’s business community:
- For the second year in a row, over 95% identify it as an Extremely Critical or Somewhat Critical concern;
- Local government’s efforts to reduce homelessness do not satisfy 81.9% of Business Leaders.
Business Leaders are very focused on the bottom line as they reopen and rebuild their business:
- If government is looking to introduce new relief programs, tax deductibility of COVID expenses and payroll tax reductions would be preferable over some capital improvements or other protections;
- Employee-focused supplemental leaves, additional UI benefits, extra pay and enhanced safety protections were viewed more as a hinderance than a benefit by Business Leaders.
Business Leaders are realistic about some of the adjustments that will have to be made:
- Remote work is here to stay and the business community understands this. Under 30% expect to return 100% of employees to the workplace;
- Over one-fourth feel the issue of remote work is not critical at all;
- Childcare will be a real concern for many businesses as employees try to return to the workplace.