Release Date: 09/ 01/ 2005
CONTACT: Ellen Valentino, (410) 267-0335 or Jim Jennings, (240) 645-4099
Cost of Insurance Remains the Number One Problem Facing Small Firms
ANNAPOLIS, Md. -- A net 53 percent of Maryland small-business owners say business conditions in their market are “good,” according to the Maryland Small-Business ConditionsSM. Maryland’s business owners offered one of the nation’s most positive assessments of their market, placing fifth among the 26 large-economy states measured. The report’s data, which was released today by the National Federation of Independent Business/Maryland, provides an overview of small-business conditions within Maryland and compares them with neighboring states.
Other positive news came from Maryland small-business owners. A net 49 percent reported sales as “good” though only a net 33 percent indicated that profits were “good.” They also said the outlook for the next three months remains strong with a net 63 percent indicating their business outlook to be “good.” Virginia came in the highest in the region at a net 73 percent, but Maryland fared very well compared to neighboring Pennsylvania’s net 52 percent.
The single most important business problem continues to be the cost of insurance, followed by big-business competition and employee quality/costs. “I am not surprised by the continued concern over the rising costs of insurance,” said Ellen Valentino, NFIB/Maryland’s state director. “As we circle the state, meeting with small business owners about public policy, this issue continues to be in the forefront of the discussion”.
Insurance is just one of costs increasing. Energy prices are rising and 17 percent faced higher compensation costs. Cumulating costs result in a net 49 percent reporting higher prices paid, but only 18 percent were able to raise their selling prices. “Long-term, this situation can't continue,” Valentino said. “It raises concerns about a future earnings squeeze.”
The Small Business Conditions reports are developed from surveys of small-business owners in selected states. The surveys are designed to determine the condition of the small-business economy in each particular state. The surveys are conducted every three months and results are released on the first day of the month following completion. The text of the questions and the complete response set to the survey can be found at www.NFIB.com/research.
| Maryland Small-Business ConditionsSM | ||||||
| This chart shows the results from Maryland and its comparative standing among selected nearby states. | ||||||
| Md. | Pa. | Va. | ||||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 8/2005 | 21 | 10 | 41 | ||
| Prior qtr. | 26 | 22 | 32 | |||
| Business conditions in market area | ||||||
| Net % "good" | 8/2005 | 53 | 30 | 62 | ||
| Prior qtr. | 53 | 30 | 48 | |||
| Net % "improving" | 8/2005 | 16 | 1 | 27 | ||
| Prior qtr. | 18 | 0 | 20 | |||
| Outlook for business | ||||||
| Net % "good" in next three months | 8/2005 | 65 | 52 | 73 | ||
| Prior qtr. | 67 | 53 | 69 | |||
| Reason for optimism | ||||||
| % Sales prospects | 8/2005 | 43 | 41 | 49 | ||
| Prior qtr. | 40 | 37 | 42 | |||
| % Lower costs | 8/2005 | 5 | 4 | 2 | ||
| Prior qtr. | 4 | 1 | 4 | |||
| % Price increases | 8/2005 | 5 | 5 | 2 | ||
| Prior qtr. | 5 | 4 | 3 | |||
| % Greater productivity | 8/2005 | 14 | 12 | 9 | ||
| Prior qtr. | 16 | 18 | 15 | |||
| % Government policy | 8/2005 | 5 | 3 | 5 | ||
| Prior qtr. | 5 | 4 | 4 | |||
| % Seasonal/Weather | 8/2005 | 8 | 9 | 10 | ||
| Prior qtr. | - | - | - | |||
| Reason for pessimism | ||||||
| % Sales prospects | 8/2005 | IC* | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Cost increases | 8/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Pressure on selling prices | 8/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Lower productivity | 8/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Government policy | 8/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| Md. | Pa. | Va. | ||||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 8/2005 | 49 | 43 | 56 | ||
| Prior qtr. | 44 | 35 | 50 | |||
| Profits | ||||||
| Net % profits "good" | 8/2005 | 33 | 27 | 37 | ||
| Prior qtr. | 27 | 21 | 33 | |||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 8/2005 | 22 | 21 | 26 | ||
| Prior qtr. | 23 | 19 | 21 | |||
| Per employee payroll cost | ||||||
| Net % "risen" | 8/2005 | 17 | 21 | 19 | ||
| Prior qtr. | 12 | 15 | 18 | |||
| Employee cost pressures (greater) | ||||||
| % Wages | 8/2005 | 53 | 44 | 58 | ||
| Prior qtr. | 59 | 51 | 61 | |||
| % Benefits | 8/2005 | 27 | 36 | 27 | ||
| Prior qtr. | 25 | 31 | 25 | |||
| Md. | Pa. | Va. | ||||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 8/2005 | 45 | 38 | 43 | ||
| Prior qtr. | 43 | 43 | 41 | |||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 8/2005 | 40 | 38 | 41 | ||
| Prior qtr. | 36 | 42 | 43 | |||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 8/2005 | 42 | 38 | 39 | ||
| Prior qtr. | 42 | 40 | 37 | |||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 8/2005 | 51 | 49 | 47 | ||
| Prior qtr. | 49 | 52 | 51 | |||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 8/2005 | 37 | 37 | 37 | ||
| Prior qtr. | 45 | 43 | 43 | |||
| % All credit needs not satisfied | 8/2005 | 6 | 4 | 7 | ||
| Prior qtr. | 5 | 4 | 6 | |||
| % No credit needs | 8/2005 | 49 | 52 | 50 | ||
| Prior qtr. | 40 | 45 | 45 | |||
| Md. | Pa. | Va. | ||||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 8/2005 | 49 | 59 | 56 | ||
| Prior qtr. | 47 | 59 | 50 | |||
| Selling prices (last three months) | ||||||
| Net % increased | 8/2005 | 18 | 18 | 18 | ||
| Prior qtr. | 21 | 18 | 16 | |||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 8/2005 | 12 | 10 | 13 | ||
| Prior qtr. | 11 | 11 | 11 | |||
| Single most important business problem | ||||||
| % Weak sales | 8/2005 | 7 | 9 | 8 | ||
| Prior qtr. | 11 | 13 | 12 | |||
| % Taxes | 8/2005 | 9 | 15 | 11 | ||
| Prior qtr. | 9 | 11 | 11 | |||
| % Employee quality/costs | 8/2005 | 12 | 7 | 13 | ||
| Prior qtr. | 11 | 10 | 9 | |||
| % Insurance | 8/2005 | 16 | 18 | 12 | ||
| Prior qtr. | 13 | 19 | 12 | |||
| % Big-business competition | 8/2005 | 14 | 14 | 17 | ||
| Prior qtr. | 14 | 13 | 18 | |||
| % Inflation/Rising prices | 8/2005 | 11 | 13 | 15 | ||
| Prior qtr. | 11 | 13 | 14 | |||
| % Credit availability/Interest rates | 8/2005 | 4 | 3 | 3 | ||
| Prior qtr. | 4 | 3 | 3 | |||
| % Regulations/Red tape | 8/2005 | 6 | 7 | 6 | ||
| Prior qtr. | 11 | 7 | 6 | |||
| Maryland Quarterly Spotlight | |
| If you were to give your employees a compensation increase equivalent to $1 per hour, how would you do it? Would you give it to them in:? | |
| Wages or salary | 62% |
| Health benefits | 7% |
| Retirement benefits | 5% |
| Paid leave | 2% |
| Some other way | 5% |
| (Wouldn't give the increase) | 3% |
| Don't know/Refused | 16% |
| Total | 100% |
| If your employees could choose, how would they like to receive a compensation increase of $1 per hour? Do you think they would like the increase in:? | |
| Wages or salary | 71% |
| Health benefits | 7% |
| Retirement benefits | 3% |
| Paid leave | 5% |
| Some other way | 3% |
| Don't know/Refused | 13% |
| Total | 100% |
The Poll
NFIB’s Maryland Small-Business ConditionsSM is a telephone survey of a random sample of Maryland small employers regarding business conditions within the state. “Small employer” is defined here as employing between one and 250 people (not including the owner(s)) in a for-profit business. Each edition of the survey has a minimum of 350 respondents. The sampling error is ± 5 percentage points. 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.
