Release Date: 06/ 01/ 2005
CONTACT: Martyn Hopper or Michael Shaw, (916) 448-9904
or Tony Malandra, (415) 664-9685
Drop of 17 points from previous survey. Only the State of Washington cushions it from being dead last
SACRAMENTO, CALIF., June 1 -- The state's small-business environment dropped 17 points from the previous quarter, according to the latest California Small-Business ConditionsSM report, which was released today. Only the equally high-regulation state of Washington kept California from ranking dead last in the nation.
The first question the Research Foundation of America's largest small-business advocacy group (NFIB) asks Main Street business owners is to rank how supportive the state’s business environment – which includes government, banks, the media and community groups – is to them. California tallied the second-worst rating in the nation, a negative 1 percent in net-percent supportive. Only the State of Washington had a worse rating, negative 4 percent. By comparison, neighboring Arizona had a positive 32 percent and Oregon racked up a positive 20 percent. The best rating among the 26 largest state economies was North Carolina with a 42 percent net-supportive environment.
"Before anyone panics, read the report fully," cautioned Martyn Hopper, state director for the 35,000-member California arm of NFIB. "California did come in around the middle on four other key categories, such as business conditions, sales, profits and prospects. This report tells a tale of two states: one where small businesses survive in spite of a legislature hostile to them; and another of a legislature that cannot quite kill the entrepreneurial spirit in spite of its best attempts."
The report divides California into three regions: north, south and central. One of the most alarming drops came when Main Street business owners were asked to rate business conditions in their areas. Central California small-business owners, which had given a 55-percent net good response the previous quarter, only gave it 40-percent net good response this time. Northern California's rating also dropped 15 points, from 41 percent last quarter to 26 percent this quarter. Only small-business conditions in Southern California held steady, dropping just four points to 41 percent.
Visit www.NFIB.com/CA for information about NFIB’s activities in California. For information about the Small-Business ConditionsSM project and other small-business research studies conducted by the NFIB Research Foundation, visit www.NFIB.com/research.
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| California Small-Business ConditionsSM | ||||||
| This chart shows the results within California and its principal regions. | ||||||
| Calif. | North. | Central | South. | |||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 5/2005 | -1 | 0 | 1 | -2 | |
| Prior qtr. | 16 | 17 | 16 | 15 | ||
| Business conditions in market area | ||||||
| Net % "good" | 5/2005 | 36 | 26 | 40 | 41 | |
| Prior qtr. | 45 | 41 | 55 | 45 | ||
| Net % "improving" | 5/2005 | 14 | 15 | 15 | 14 | |
| Prior qtr. | 18 | 24 | 26 | 13 | ||
| Outlook for business | ||||||
| Net % "good" in next three months | 5/2005 | 60 | 57 | 64 | 60 | |
| Prior qtr. | 63 | 66 | 71 | 59 | ||
| Reason for optimism | ||||||
| % Sales prospects | 5/2005 | 41 | 42 | 43 | 40 | |
| Prior qtr. | 41 | 43 | 39 | 41 | ||
| % Lower costs | 5/2005 | 3 | 2 | 3 | 4 | |
| Prior qtr. | 5 | 2 | 4 | 7 | ||
| % Price increases | 5/2005 | 5 | 6 | 5 | 4 | |
| Prior qtr. | 4 | 5 | 7 | 3 | ||
| % Greater productivity | 5/2005 | 14 | 15 | 11 | 15 | |
| Prior qtr. | 14 | 13 | 18 | 14 | ||
| % Government policy | 5/2005 | 6 | 4 | 5 | 7 | |
| Prior qtr. | 7 | 4 | 6 | 8 | ||
| % Seasonal weather | 5/2005 | 10 | 13 | 12 | 9 | |
| Prior qtr. | - | - | - | - | ||
| Reason for pessimism | ||||||
| % Sales prospects | 5/2005 | IC* | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Cost increases | 5/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Pressure on selling prices | 5/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Lower productivity | 5/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Government policies | 5/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| Calif. | North. | Central | South. | |||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 5/2005 | 41 | 31 | 43 | 46 | |
| Prior qtr. | 37 | 36 | 51 | 34 | ||
| Profits | ||||||
| Net % profits "good" | 5/2005 | 27 | 18 | 25 | 32 | |
| Prior qtr. | 24 | 23 | 32 | 24 | ||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 5/2005 | 22 | 19 | 17 | 24 | |
| Prior qtr. | 19 | 22 | 21 | 17 | ||
| Per employee payroll cost | ||||||
| Net % "risen" | 5/2005 | 16 | 13 | 19 | 17 | |
| Prior qtr. | 13 | 12 | 19 | 12 | ||
| Employee cost pressures (greater) | ||||||
| % Wages | 5/2005 | 52 | 49 | 49 | 53 | |
| Prior qtr. | 53 | 52 | 48 | 55 | ||
| % Benefits | 5/2005 | 27 | 26 | 26 | 27 | |
| Prior qtr. | 27 | 32 | 30 | 24 | ||
| Calif. | North. | Central | South. | |||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 5/2005 | 44 | 43 | 44 | 44 | |
| Prior qtr. | 45 | 41 | 50 | 46 | ||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 5/2005 | 38 | 38 | 43 | 37 | |
| Prior qtr. | 41 | 39 | 42 | 41 | ||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 5/2005 | 39 | 39 | 39 | 39 | |
| Prior qtr. | 38 | 39 | 38 | 37 | ||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 5/2005 | 52 | 50 | 49 | 53 | |
| Prior qtr. | 55 | 57 | 57 | 53 | ||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 5/2005 | 39 | 39 | 41 | 39 | |
| Prior qtr. | 39 | 38 | 36 | 40 | ||
| % All credit needs not satisfied | 5/2005 | 7 | 6 | 5 | 8 | |
| Prior qtr. | 7 | 7 | 7 | 6 | ||
| % No credit needs | 5/2005 | 47 | 47 | 46 | 47 | |
| Prior qtr. | 49 | 50 | 52 | 48 | ||
| Calif. | North. | Central | South. | |||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 5/2005 | 48 | 46 | 59 | 46 | |
| Prior qtr. | 43 | 45 | 49 | 41 | ||
| Selling prices (last three months) | ||||||
| Net % increased | 5/2005 | 19 | 19 | 23 | 19 | |
| Prior qtr. | 17 | 18 | 19 | 15 | ||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 5/2005 | 12 | 12 | 16 | 12 | |
| Prior qtr. | 13 | 13 | 11 | 14 | ||
| Single most important business problem | ||||||
| % Weak sales | 5/2005 | 9 | 13 | 9 | 8 | |
| Prior qtr. | 9 | 10 | 7 | 10 | ||
| % Taxes | 5/2005 | 11 | 11 | 13 | 10 | |
| Prior qtr. | 9 | 11 | 9 | 9 | ||
| % Employee quality/costs | 5/2005 | 8 | 7 | 9 | 9 | |
| Prior qtr. | 9 | 9 | 10 | 9 | ||
| % Insurance | 5/2005 | 17 | 15 | 22 | 16 | |
| Prior qtr. | 18 | 19 | 22 | 17 | ||
| % Big-business competition | 5/2005 | 16 | 15 | 13 | 16 | |
| Prior qtr. | 14 | 13 | 12 | 15 | ||
| % Inflation/Rising prices | 5/2005 | 11 | 9 | 11 | 12 | |
| Prior qtr. | 10 | 7 | 9 | 11 | ||
| % Credit availability/Interest rates | 5/2005 | 3 | 2 | 1 | 3 | |
| Prior qtr. | 4 | 5 | 4 | 4 | ||
| % Regulations/Red tape | 5/2005 | 10 | 10 | 9 | 10 | |
| Prior qtr. | 11 | 11 | 12 | 11 | ||
| California Quarterly Spotlight | ||||
| Calif. | North. | Central | South. | |
| Over the last year, which type of business insurance has had the most rapidly rising premiums? | ||||
| Vehicle collision and liability | 7% | 5% | 10% | 7% |
| Workers' compensation | 32% | 32% | 35% | 31% |
| Product or professional liability | 10% | 10% | 7% | 11% |
| Property and casualty | 6% | 4% | 7% | 6% |
| Employee health | 22% | 25% | 19% | 21% |
| Don't know/Refused | 23% | 23% | 22% | 24% |
| Total | 100% | 100% | 100% | 100% |
| Which type of tax increase would have the most adverse effect on your business? | ||||
| Payroll taxes | 24% | 26% | 29% | 21% |
| Corporate income or franchise taxes |
10% | 10% | 8% | 11% |
| Real property taxes | 7% | 5% | 5% | 7% |
| Sales taxes | 10% | 9% | 8% | 11% |
| Personal income taxes | 14% | 16% | 15% | 13% |
| Personal property, including inventory, taxes |
11% | 10% | 12% | 11% |
| Other | 2% | 2% | 1% | 3% |
| All/Any | 3% | 2% | 2% | 3% |
| Don't know/Refused | 19% | 19% | 22% | 19% |
| Total | 100% | 100% | 100% | 100% |
The Poll
NFIB’s California Small-Business ConditionsSM is a telephone survey of a random sample of California’s small employers regarding business conditions within the state. “Small employer” is defined here as someone employing between one and 250 people (not including the owner(s)) in a for-profit business. Three separate regional surveys are conducted, each with a minimum of 350 respondents. The Northern California survey samples small employers in ZIP codes 94000-95199 and 95400-96199. San Jose, Sacramento and the Lake Tahoe area are included. The Central California survey samples small employers in ZIP codes 93200-93999 and 95200-95399. Stockton, Modesto, Salinas and Bakersfield are included. The Southern California survey samples small employers in ZIP codes 90000-93199. Santa Barbara, Oxnard and Barstow are included. The sampling error of each survey is ± 5 percentage points. State totals result by population weighting regional totals. Data are collected quarterly in the months of February, May, August and November, beginning in February 2005. The MRCGroup of Las Vegas conducts the survey for the NFIB Research Foundation.
The Sponsor
The NFIB Research Foundation is a 501 (c)(3) organization that provides policy-makers, media, educators, small-business owners and other interested parties empirically based information on small business and small-business owners. The Foundation is affiliated with the National Federation of Independent Business, the nation’s largest small- and independent-business advocacy organization, and is located in Washington, D.C.
