LOS ANGELES, Calif. (June 17, 2019) –
The 11th annual poll of Los Angeles County Business Federation (BizFed) shows that business owners share the same concerns that most Californians have around homelessness and crumbling infrastructure. The general business outlook has also dipped for the first time in four years, with caution up and optimism slowed.
Homelessness is the fastest rising concern for business owners.In the list of top concerns, homelessness saw the biggest jump from last year’s poll, reaching the #3 spot this year after peaking at #9 in 2018. It was cited by 24% of respondents as one reason why businesses and jobs are moving out of Los Angeles and California. Only 10% of respondents countywide are satisfied in the way local government is reducing the number of homelessness.
When asked about their satisfaction with their local government’s performance on a number of issues, business owners were most disappointed with housing affordability and homelessness. 90% of business owners said they were dissatisfied with their local government’s performance on reducing homelessness, while 94% cited housing affordability as the area were local government is performing the worst.
Pathways out of poverty identified as technical training and child care.
LA County has the highest poverty rate of any California County, according to Stanford’s CA Poverty Measure. In 2018, BizFed announced an initiative to lift 1 million people out of poverty in LA County by 2028. In this year’s poll, 66% of business leaders identified “career technical training and industry specific apprenticeships” as the best way to address poverty in LA. 38% pointed to increased childcare options for working families.
Roads and Freeways in dire need of repair in order for business to grow.
66% of respondents said roads and streets are the infrastructure that need attention most critically in Los Angeles County, followed by highways and freeways at 55%. Technology and communications rounded out the top three at 29%. Street repairs were cited as the number one infrastructure investment that would help LA businesses grow. With their major concerns about transportation infrastructure, it’s easy to see why three times as many respondents (59% vs. 18%) said they oppose Governor Newsom’s proposal to withhold Gas Tax funds from cities who don’t meet their housing goals.
Business Optimism lowest in four years.
34% of poll takers forecasted significant or slightly better business outlook for 2019. This is a sharp drop over the last three years. Since 2016, positive business outlook figures have been in the mid-60%. The number of business owners who say they expect growth to be flat this year has doubled from 22% in 2018 to 46% in 2019.
Threat of split roll causes nearly half of business owners to consider leaving CA
Taxes and fees remain the number one concern of business owners in California for 9 years straight. They are particularly concerned with proposed changes to Proposition 13, which would increase property taxes for industrial and commercial lands. A ballot initiative has already qualified for the November 2020 ballot, causing 40% of survey respondents to say that if passed, it may cause them to consider relocating their business outside of the state. 35% of business owners said that if the initiative passes, it may cause them to consider cutting payroll expenses.
80% of respondents blame high taxes and fees for businesses leaving in California already, far beyond the 59% who cited the state’s rapidly changing regulatory environment. Traffic congestion/transportation and housing costs are cited as the 3rd and 4th reasons that businesses leave the state, respectively.
“The recent failure of Measure EE in Los Angeles proves that voters are starting to feel the same frustration that business owners have” said Tracy Hernandez, BizFed’s Founding CEO. “When our elected officials are not good stewards of public resources, it seems the first thing they do is turn to property owners to raise funds. But increasing taxes on homeowners only makes housing more expensive and less attainable. Raising taxes for business means they can’t invest that money in their workforce, and it increases costs for customers. “
“California is an important marketplace but it’s not like businesses don’t have other options,” points out BizFed Board Chair Steve Bullock. “We’ve seen many major employers move to Texas, Florida, Virginia – the taxes are lower not just for their businesses, but for their employees. Their employees find that housing is more attainable, and traffic is less soul crushing in places that have growing economies and well performing schools.”
Most and Least Business Friendly Cities for 2019
Santa Clarita, the City of Industry, and Torrance were selected as the most business friendly of LA County’s 88 cities. The Cities of Los Angeles and Santa Monica were for the second year in a row to be the least business friendly cities, followed by Carson.