Weak recovery, health care costs are top concerns for 2014
(Madison, WI) – The stubbornly weak economic recovery, spiking health care costs and difficulty hiring qualified employees are the top concerns for Wisconsin business leaders heading into the New Year, according to a survey of 341 Wisconsin CEOs conducted by the state chamber of commerce.
Forty-seven percent of employers say that the U.S. economy will see moderate growth during the first six months of 2014, while 44 percent predict growth will be flat, and 8 percent say the economy will contract.
Survey respondents are more optimistic about the state economy during the first half of the New Year. Sixty-five percent say the Wisconsin economy will experience moderate growth; 31 percent say growth will be flat. Just 2 percent say growth will be good and 1 percent said the state economy will weaken.
Further, 95 percent say Wisconsin is going in the right direction, while 89 percent say that state government is either very or somewhat pro-business.
When asked to list their top business concerns, respondents said the sluggish economic recovery was number one (33 percent), followed by health care (21 percent), regulations (18 percent), labor shortage (9 percent) and taxes (8 percent).
“It appears that the not so great recovery from the Great Recession may continue,” said Kurt R. Bauer, president/CEO of Wisconsin Manufacturers & Commerce (WMC). “The open-ended responses from business leaders show they are very frustrated with federal policies they see as weighing down the economy, however business executives are very confident about the growth in their own companies and that optimism may translate into growth.”
Case in point, in answering the open-ended question “what is holding back the economy,” one executive said: “I think most companies trimmed back in [2009] and have been reluctant to make any bold moves because of all the unknown big issues driven by the government.” Another said: “Lack of trust, direction and leadership at the federal level.”
Ninety-three percent of survey respondents said they offer employer-sponsored health insurance coverage to their employees. Of those, 87 percent said their costs will increase. Forty-two percent said their premiums will rise between 11-20 percent; 40 percent said rates will rise between 1-10 percent.
Seventy-eight percent of business leaders blame the federal Patient Protection and Affordable Care Act (ACA) for the rate increases and 55 percent say that ACA compliance had led to changes in the plans they offer employees.
Respondents say they will pass on some or all of their higher health care costs to employees. Specifically, 54 percent said they will increase employee contributions and 22 percent said they will reduce benefits.
Overall, 54 percent say that ACA has had a negative impact on their employees, 30 percent say it is too early to tell. Just 1 percent said ACA’s impact has been positive. Even so, 87 percent say they don’t plan to reduce the number of full time employees because of ACA.
Despite a 7 percent national unemployment rate, 60 percent of Wisconsin employers report having trouble hiring employees. Of that number, 69 percent say the reason is a lack of qualified applicants.
Other findings:
Improving Wisconsin’s Business Climate: When asked what reforms would help improve Wisconsin’s business climate, 23 percent said cut taxes, while 18 percent urged more regulatory relief.
Employment and Wages: Only 7 percent of business leaders say they plan to reduce the number of employees in 2014, 44 percent said they will add employees, 49 percent said they expect no change. Hourly wages will increase by 2.1 to 2.9 percent, according to 37 percent of respondents. Thirty-one percent plan to increase wages from 0 to 2 percent, while 28 percent will give raises between 3 and 3.5 percent.
Uncertainty Index: WMC counted how many times survey respondents mentioned the words “uncertain” or “uncertainty” in the verbatim section of the last two economic surveys (the only two where there have been a verbatim section). In June 2013, 12 percent mentioned uncertain/uncertainty in answering the question “what is holding back the economy.” In December 2013, it was 18 percent. The question is whether a decrease in uncertain/uncertainty mentions in future surveys will correspond with an uptick in the economy.
Exports: More than 2/3rds (70 percent) don’t expect to increase exports in 2014, while 30 percent will increase product exports.
Expansions: Thirty-three percent of business leaders said their company will expand in Wisconsin during the next two years compared to 67 percent who have no expansion plans, while 23 percent plan to expand in another state. Two companies (1 percent) said they plan to relocate to another state or country between 2014 and 2015.
About the Survey: The WMC Economic Outlook Survey is conducted semi-annually, and has been conducted since 1997. In late November through mid-December, WMC surveyed 1,291 member CEOs via mail and email. Of those, 341 responded.
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Click here to view the complete survey results.
For more information contact Kurt Bauer, 608.258.3400
