Release Date: 12/ 01/ 2005
CONTACT: Martyn Hopper or Michael Shaw, (916) 448-9904 or Tony Malandra, (415) 664-9685
Drops in previous quarter’s indicators show measurable signs of uncertainty
SACRAMENTO, Calif. -- The state’s largest employer and biggest generator of net new jobs is not closing out the year on a happy note, according to the latest California Small-Business ConditionsSM report issued today by the National Federation of Independent Business Research Foundation.
Small-business owners are at the center of every state’s economy, a matter of fact universally known, except in the California legislature. NFIB conducts surveys in the nation’s 26 largest economy states, asking how supportive is the state’s business environment – which includes government, banks, media and community groups – to small-business owners. In the March report, Main Street ranked the state’s business environment a net 16 percent supportive; by the June report that number had dropped to net negative 1 percent; it crept back into the left side of decimal point to a net 6 percent in the September report; and today, it has fallen two points to a net 4 percent. By comparison, Iowa mom-and-pop shops gave their state a net 37 percent supportive rating, which is the nation’s top rating, and New York had the country’s worst rating, at net negative 1 percent.
“The steady drum beat of legislative initiatives that call for higher and higher minimum-wage rates, socialized medicine schemes loaded on the backs of small-business owners, and more and more costly medical mandates that drive up health-care premiums, are just a few of the many overcast clouds keeping the California economy from really taking off,” said Martyn Hopper, state director for the 35,000-member NFIB/California. “But small-business owners, unlike their bigger business counterparts, are adaptable people, as witnessed in other key indicators, such as the ranking of the business conditions in their local areas, which is 11th best in the nation, or 12th best in sales, or 11th best in sales prospects. Still, these satisfactory numbers are drops from the previous quarter’s tally.”
Two key indicators from the report are the net percent of small-business owners saying sales were good in the previous quarter, and the net percent predicting the next three months would be good for sales – both indicators dropped eight points. These attitudes were more acutely pronounced among southern California small-business owners than northern or central ones. New to this quarter’s survey was a question on the impact of immigrant labor, with 29 percent claiming it had no appreciable role, another 29 percent saying it filled jobs that would not otherwise be taken, 14 percent noting that immigrants provided skills otherwise not available, and 9 percent believing they crowd out American workers. Twenty percent registered no opinion.
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.
| 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 | 11/2005 | 4 | 7 | 10 | 2 | |
| Prior qtr. | 6 | 9 | 4 | 5 | ||
| Business conditions in market area | ||||||
| Net % "good" | 11/2005 | 41 | 44 | 45 | 39 | |
| Prior qtr. | 48 | 44 | 50 | 49 | ||
| Net % "improving" | 11/2005 | 10 | 11 | 13 | 9 | |
| Prior qtr. | 17 | 16 | 24 | 17 | ||
| Outlook for business | ||||||
| Net % "good" in next three months | 11/2005 | 59 | 58 | 62 | 59 | |
| Prior qtr. | 67 | 66 | 66 | 68 | ||
| Reason for optimism | ||||||
| % Sales prospects | 11/2005 | 42 | 41 | 41 | 43 | |
| Prior qtr. | 42 | 42 | 39 | 43 | ||
| % Lower costs | 11/2005 | 6 | 4 | 7 | 6 | |
| Prior qtr. | 3 | 4 | 3 | 3 | ||
| % Price increases | 11/2005 | 5 | 5 | 5 | 4 | |
| Prior qtr. | 3 | 3 | 3 | 4 | ||
| % Greater productivity | 11/2005 | 17 | 14 | 17 | 18 | |
| Prior qtr. | 16 | 15 | 17 | 17 | ||
| % Government policy | 11/2005 | 5 | 4 | 7 | 5 | |
| Prior qtr. | 4 | 5 | 5 | 4 | ||
| % Seasonal weather | 11/2005 | 9 | 14 | 9 | 6 | |
| Prior qtr. | 9 | 7 | 11 | 9 | ||
| Reason for pessimism | ||||||
| % Sales prospects | 11/2005 | IC* | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Cost increases | 11/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Pressure on selling prices | 11/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Lower productivity | 11/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Government policies | 11/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| Calif. | North. | Central | South. | |||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 11/2005 | 43 | 44 | 51 | 41 | |
| Prior qtr. | 51 | 47 | 53 | 52 | ||
| Profits | ||||||
| Net % profits "good" | 11/2005 | 30 | 32 | 33 | 29 | |
| Prior qtr. | 33 | 31 | 35 | 33 | ||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 11/2005 | 19 | 17 | 19 | 20 | |
| Prior qtr. | 26 | 23 | 23 | 28 | ||
| Per employee payroll cost | ||||||
| Net % "risen" | 11/2005 | 17 | 14 | 15 | 18 | |
| Prior qtr. | 15 | 13 | 15 | 15 | ||
| Employee cost pressures (greater) | ||||||
| % Wages | 11/2005 | 52 | 51 | 50 | 53 | |
| Prior qtr. | 51 | 52 | 51 | 51 | ||
| % Benefits | 11/2005 | 26 | 25 | 26 | 27 | |
| Prior qtr. | 25 | 25 | 27 | 25 | ||
| Calif. | North. | Central | South. | |||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 11/2005 | 46 | 42 | 46 | 47 | |
| Prior qtr. | 45 | 46 | 43 | 45 | ||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 39 | 40 | 40 | 38 | |
| Prior qtr. | 45 | 44 | 41 | 47 | ||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 39 | 36 | 42 | 40 | |
| Prior qtr. | 43 | 38 | 43 | 46 | ||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 11/2005 | 53 | 53 | 53 | 54 | |
| Prior qtr. | 53 | 54 | 52 | 52 | ||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 11/2005 | 37 | 34 | 40 | 37 | |
| Prior qtr. | 37 | 36 | 40 | 38 | ||
| % All credit needs not satisfied | 11/2005 | 8 | 6 | 8 | 10 | |
| Prior qtr. | 5 | 8 | 5 | 4 | ||
| % No credit needs | 11/2005 | 49 | 51 | 47 | 48 | |
| Prior qtr. | 52 | 50 | 49 | 53 | ||
| Calif. | North. | Central | South. | |||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 11/2005 | 55 | 52 | 57 | 57 | |
| Prior qtr. | 50 | 48 | 54 | 50 | ||
| Selling prices (last three months) | ||||||
| Net % increased | 11/2005 | 20 | 24 | 19 | 17 | |
| Prior qtr. | 17 | 20 | 23 | 15 | ||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 11/2005 | 13 | 11 | 13 | 14 | |
| Prior qtr. | 12 | 10 | 11 | 13 | ||
| Single most important business problem | ||||||
| % Weak sales | 11/2005 | 9 | 9 | 9 | 8 | |
| Prior qtr. | 9 | 11 | 7 | 9 | ||
| % Taxes | 11/2005 | 11 | 10 | 11 | 11 | |
| Prior qtr. | 9 | 10 | 10 | 9 | ||
| % Employee quality/costs | 11/2005 | 10 | 12 | 13 | 9 | |
| Prior qtr. | 10 | 12 | 10 | 9 | ||
| % Insurance | 11/2005 | 13 | 15 | 17 | 12 | |
| Prior qtr. | 19 | 19 | 19 | 19 | ||
| % Big-business competition | 11/2005 | 16 | 13 | 12 | 18 | |
| Prior qtr. | 15 | 13 | 12 | 16 | ||
| % Inflation/Rising prices | 11/2005 | 13 | 10 | 11 | 14 | |
| Prior qtr. | 13 | 15 | 11 | 13 | ||
| % Credit availability/Interest rates | 11/2005 | 3 | 2 | 3 | 3 | |
| Prior qtr. | 3 | 3 | 4 | 3 | ||
| % Regulations/Red tape | 11/2005 | 8 | 9 | 9 | 7 | |
| Prior qtr. | 9 | 6 | 10 | 10 | ||
| California Quarterly Spotlight | ||||
| Calif. | North. | Central | South. | |
| In general, how satisfied are you with the direction that California is headed? | ||||
| Very satisfied | 6% | 6% | 7% | 6% |
| Somewhat satisfied | 41% | 41% | 36% | 41% |
| Not too satisfied | 26% | 27% | 31% | 24% |
| Not at all satisfied | 17% | 18% | 19% | 17% |
| Don't know/Refused | 10% | 9% | 7% | 11% |
| Total | 100% | 100% | 100% | 100% |
| Which best describes the role immigrant labor plays in your area? | ||||
| Provides skills not otherwise available | 14% | 15% | 13% | 13% |
| Fills jobs that otherwise wouldn't be filled | 29% | 30% | 36% | 27% |
| Crowds out American workers | 9% | 7% | 9% | 10% |
| No appreciable role | 29% | 29% | 23% | 30% |
| Don't know/Refused | 20% | 20% | 19% | 20% |
| 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.
