BARRE — The top three concerns for businesses around the state this year are the lack of qualified employees, the high cost of health insurance and Vermont’s high taxes, according to recent survey results.
The same concerns topped a problem list in 2016 when Davis & Hodgdon Associates CPAs conducted its first statewide economic survey.
Other issues of concern include high property taxes, internet security issues, "over-regulation" and an increase to the state’s minimum wage.
“Not surprisingly, the key issues of over-taxation and the need for economic development, coupled with an improved workforce environment remain at the forefront of business owners' minds,” said Bret Hodgdon, managing partner for Davis & Hodgdon.
The results from this year's survey are based on the answers from 140 Vermont businesses polled in January. The nonscientific survey was sent to approximately 1,200 Vermont small and medium-sized businesses (75% had fewer than 25 employees), according to Jennifer Krause, marketing director for Davis & Hodgdon.
“Although not a scientific survey, we are confident in the results. Whenever you get over 100 responses, the results are pretty reliable, we felt good about the accuracy,” Krause said.
Sixty-nine percent of the respondents reported that difficulty in finding qualified employees is a "top three" problem for them, compared to 57.2% who said so in 2016. Thirty-seven percent placed high Vermont taxes on their top three list compared to 57.2% in the 2016 survey. High property taxes is a major concern for 27.3% of the 140 respondents and 14.3% said a proposed increase in the minimum wage is a major problem for them.
Vermont lawmakers have passed legislation that would increase the current $10.78 minimum wage to $12.55 by 2022. Republican Gov. Phil Scott vetoed the legislation; the Senate has voted to override, but the House had not yet voted at press time.
Also on the 2020 problem list are sources of financing (5.7% of the respondents); overtime compensation changes (1.4%); federal taxes (12.9%); property taxes/education funding (5.7%) and housing (11.5%).
The number of business owners concerned about succession planning increased significantly from 16.6% in 2016 to 20.8% in 2020.
“I’ve had the pleasure of traveling the state with the governor, visiting every region and many different communities, and no matter where we go, businesses share with us that their greatest challenge is finding available workers to fill vacancies,” said Lindsey Kurrle, secretary of the Agency of Commerce and Community Development.
The results from the statewide survey are consistent with concerns of business owners in Rutland County, according to Mary Cohen, executive director of Rutland Region Chamber of Commerce.
“The main thing I hear from businesses in this area is, ‘We need employees.’ It’s been very difficult for them to find qualified employees, regardless of the size of the business,” Cohen said.
Rutland County has had good business news this past year, Cohen said, especially in tourism. Rooms, meals and entertainment tax revenue for Rutland City for the first half of the current fiscal year were up $20,000 from the same period last year.
“That increase represents $2 million in additional sales, a good sign for the region,” she said.
Betsy Bishop, president of the Vermont Chamber of Commerce, said increasing state spending on marketing is a top priority for her 1,500 members. VCC has partnered with Davis & Hodgdon in the release of the economic survey results.
“Our main focus in the Legislature this year is to increase tourism funding by $500,000, which will support the second-largest industry in the state. We have been losing market share for the last few years and we need to reverse that trend,” she said.
Businesses are less pessimistic about the Vermont economy than they were in 2016. According to the 2020 survey, 25.7% of the respondents said Vermont’s economy is in decline compared to 54% who said so in 2016. Only a small percentage, however, 17.8%, said the Vermont economy is improving.
Very few respondents, 22 of 139 (15.8%), reported they "love doing business in Vermont," whereas 31 (22.3%) respondents said they have considered "closing my business or moving it out of state." Twenty-four business owners said, "plans were put in motion" to relocate, although the number that will actually do so is not reported in the survey.
A significant majority, 79 respondents (56.5%), said they expect their business will grow this year, whereas 25 businesses (17.9%) expect a drop in business. Fifty-one business owners predicted their business will increase by less than 10% and six said their business should grow by 30% or more. Of those who expect a decline, 15 predicted a drop of less than 10%, while only one predicted a loss of business of more than 30%.
The 730 members of Vermont Businesses for Social Responsibility have a somewhat different priority list, according to Samantha Sheehan, VBSR communications manager.
According to Sheehan, the top three issues for VBSR members are affordable housing, access to child care and rising cost of health care.
“It depends on how you ask the question. What we ask is what are the major issues for your business and for your employees,” she said. Most of the VBSR members (65%) employ 10 or fewer people, and 700 of the 730 are considered small businesses, she said. VBSR members also are concerned about recruitment and retention of qualified employees.
One top legislative priority for VSBR is to "detach" benefits such as health and dental insurance from businesses and make them a social responsibility.
“Employees could leave one business for another without fear of loss of their benefits,” she said.
Kurrle agrees that finding affordable housing is a problem.
“In addition to labor force and overall cost, the other barrier I hear businesses often discuss is access to affordable and safe housing for their employees," she said. "In 2017, the governor proposed a $35 million housing bond, now $37 million, that has already put hundreds of homes on the market statewide with a focus on housing working families can afford. We’ve also proposed investments and tools to revitalize existing housing stock, which we continue to pursue with the Legislature.”