Survey Says L.A. Business Smiling—For Now

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

In the opinion of many Los Angeles County business operators, taxes, mandated regulatory costs, and housing costs are too high, but despite those attitudes, two-thirds of the business people responding to the newly released Los Angeles County Business Federation (BizFed) survey are optimistic about their business outlook for 2016.

The annual BizFed survey of member businesses found optimism that their business will improve in 2016. While nearly 41% plan to hire this year, the new minimum wage requirements could alter those numbers. While the state minimum wage bill was signed after the survey was completed, the City of Los Angeles has already approved a $15 minimum wage. More than half the businesses responding said that the effect on their businesses from local minimum wage increases would lead to raising prices (25%) or reducing jobs or employee hours (33%.)

“Los Angeles employers are understandably concerned about the state-mandated large wage increases over a short period of time, and that concern may be reflected in hiring hesitation,” said David Fleming, Founding Chair, BizFed. “But interestingly, more respondents expressed concern about potential regionally-imposed increases in the minimum wage, which may reflect overall concerns about business unfriendliness at the local level.”

Another potential cloud on the horizon for businesses is dealing with the Affordable Care Act. That cloud is all ready overhead according to survey results with 64% of the businesses reporting a negative impact from the law (reduction in employees or employee hours, premium increases and increased employee contributions.) 62% of small businesses (less than 100 employees) reported a negative impact.

Small business, the backbone of the state’s economy, made up 79% of the poll respondents.

For the seventh consecutive year, taxes led all concerns for Los Angeles County businesses followed by transportation problems and regulations. BizFed also queried businesses about packing up and leaving Los Angeles County and the state. The top three factors for businesses leaving were taxes (73%), regulatory environment (63%), and housing costs (63%).

Still, 84% of the businesses surveyed said they plan to remain while 6% are planning to leave.

With transportation and infrastructure worries so high on the list of business concerns, respondents were asked if they would support a half-cent sales tax increase for transportation. The response was split with 40% supporting the idea and 38% opposed.

Personal income taxes have the most impact on small businesses according to the survey, while permits and fees ran second. Income taxes, of course, are a state issue but permits and fees rest with local jurisdictions.

The City of Los Angeles didn’t buck its reputation for being business unfriendly. The survey respondents chose it as the Least Business Friendly city in the county by a wide margin over second place Santa Monica.

On the other hand, the cities of Torrance, Santa Clarita, El Segundo, Burbank and Long Beach were all tabbed at Most Business Friendly cities.

It might be considered ironic that Torrance led the list of most business friendly when a couple of years ago Torrance was in the business news headlines because Toyota chose to move its headquarters out of that city and landed in Plano, Texas.

There was much debate on why Toyota moved but little if any of the reasons had to do with the way Torrance government deals with business. In fact, a year later, the Dallas Business Journal ran a piece on the main reason for the move: Housing costs. Housing costs was identified in the BizFed survey as a major concern for LA County businesses.

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