Fifty-four percent of Upstate New York CEOs say business conditions have worsened over the last year and only 19 percent, down from 36 percent a year ago, expect improvement in the coming year according to the 16th annual Upstate New York Business Leader Survey from Siena College Research Institute (SCRI), sponsored by the Business Council of New York State, Inc and released March 10.
Only 23 percent of CEOs say the economy has improved this year and 54 percent up from 41 percent last year see worsening conditions in the next year, according to the survey. Thirty-eight percent, (down from 47 percent last year), predict increasing revenues in 2023 while 26 percent, (down from 34 percent), anticipate growing profits in the year ahead.
Still, unchanged from last year, over half, 55 percent, intend to invest in fixed assets in 2023. Eighty-five percent say inflation is having a negative impact on profitability.
One-third of CEOs, down from 44 percent last year, plan to increase the size of their workforce this year, but 82 percent say that there is not an ample supply of appropriately trained local workers. Seventy-five percent are having difficulty recruiting for their open positions despite 72 percent offering increased wages and 53 percent being flexible with work hours.
By 61-5 percent CEOs believe increasing the minimum wage to $15 an hour Upstate would have a negative rather than positive impact on the economy and they oppose the increase by 59-31 percent.
“It’s impossible to sugarcoat the findings of this survey. CEO confidence is down dramatically from a year ago once again reaching the low point we saw in 2020 and greater now only than during the Great Recession of 2008,” said Siena College Research Institute Director Don Levy. “Only about 1 in 5 CEOs now say conditions have been and will continue to improve while about half say the opposite—conditions have and will continue to worsen.”
“Our index of business leader sentiment, a measure that considers both the current and future views of CEOs is down to 68.8 from 94.4 last year and about equal to 68.7 recorded in 2020 during the raging pandemic,” said Levy. “Two disturbing insights from these numbers. First, a score of 100 indicates equal levels of optimism and pessimism, we’ve got a long way to go, and secondly, in 2020, the current component was the problem as CEOs then predicted a better future, now both the current and future measures are over 30 points below 100.”
Leading a long list of challenges, 65 percent of CEOs, up from 56 percent, name adverse economic conditions. Eighty-five percent say that inflation is having either a moderately (52 percent) or substantially (33 percent) negative effect on their company’s profitability. And in response, 73 percent are turning around and raising the prices they charge their clients and customers. Only 14 percent think the recently passed Inflation Reduction Act will have a positive impact.
“CEOs are struggling to maintain profitability in the face of inflation,” Levy said. “While governmental regulation, rising supplier costs, healthcare costs, taxes and energy costs all weigh on Upstate CEOs, many are raising their prices while still trying to cut their costs. Currently the solution to this Rubik’s cube is unclear to most CEOs. Is there a ray of hope? Sixty-seven percent of CEOs, up from 59 percent a year ago expect that their business will still be doing business in New York in ten years.”
The survey also addressed attitudes toward government. Only 11 percent think the government of New York is doing either an excellent or good job of creating a business climate in which companies like theirs can succeed. Over half would like to see the governor and Legislature focus on business and personal tax reform and spending cuts while about 40 percent call for infrastructure development, workforce development and business development incentives.
Looking to the future, only 17 percent are confident in the ability of New York’s government to improve the business climate over the next year.
Most CEOs oppose paying the nearly $8 billion Unemployment Insurance (UI) debt through increased payroll taxes paid by the employer and 84 percent say increased UI taxes would have a very (33 percent) or somewhat (51 percent) serious impact on their business.
Most, 60 percent, say that the Climate Leadership and Community Protections Act (CLCPA) will have a negative impact on their profitability and by 64-16 percent, CEOs think the CLCPA will have a negative rather than positive impact on the state economy.
“Loudly and clearly, Upstate CEOs say that Albany isn’t making it any easier for them to be successful,” Levy said. “Business leaders are telling New York’s leaders to cut spending, curtail regulation, and work to make it easier rather than harder for businesses, the engine of New York, to be successful. At present, while 38 percent say that if they had it to do all over again they would locate their business in New York, a majority, 53 percent say that they would if they could have located someplace else.”