Minnesota Business Barometer Results

2012 Business Barometer

2012 Business Barometer:
Is Growth on the Horizon?


Methodology
 Co-sponsored by MN Chamber & Himle Rapp since 2004

 Conducted July 16 - August 8, 2012

 350 randomly selected owners & managers
– Balloon 50+ employees to 100
– Balloon Chamber members to 100

 Sample reflects Minnesota’s business community
– Size
– Location
– Business category — retail, service, manufacturing

 Margin of error + 5.3 percent


General Economic Indicators


Profitability Reports Remain Weak


Profitability Reports: Trendline

All Employers


Some Optimism About the Economy Has Returned


Optimism About Economy: Trendline
All Employers

NOTE: Chamber members are somewhat more optimistic than the general business population


Job Picture May Be Turning the Corner

Confidence in Minnesota’s Economic
Future (10 Yrs) is Still High

All Employers 2009 All Employers 2010 All Employers 2011 All Employers 2012


Compared to Other States, Minnesota
is Seen as Having a Favorable Business Climate


Favorable Business Climate: Trendline

All Employers

53% of Chamber members agree Minnesota has a good business climate


Encouraging a Pro-Growth Economy


Employers’ Memo for St. Paul: We Need a Better Effort
Role for Governor and Legislature Success in That Role
in Determining Business Climate

35% 20%
Somewhat Important Positive 33%
Negative

19%
Not Very/
No Role

45%
1% 47%
Very Important
Other Mixed (Vol)

MN Chamber members are more likely to feel negative about government’s performance


Taxes Remain the Primary
Barrier to Job Creation
All Employers — Top Two Choices

2008 2009 2010 2011 2012

Taxes 63% Taxes 72% Taxes 64% Taxes 74% Taxes 69%

Lower Costs Lower Costs
Cost of Gov’t Cost of
in Other 45% in Other 31% Health Care 29% Regulations 38% Health Care 34%
Countries Countries

Lower Costs
Trained Cost of Trained Trained
Workers 18% Health Care 22% Workers 25% in Other 23% Workers 33%
Countries

Lower Costs
Cost of Trained Lack Gov’t
Health Care 18% Workers 18% in Other 18% Capital 19% Regulations 24%
Countries


Modest Differences in Opinions on
Barriers to Job Creation
Top Two Choices

All Large Chamber
Employers Employers Members
High Taxes 69% 71% 80%

Cost of Health Care 34% 43% 23%

Trained Workers 33% 34% 24%

Gov’t Regulations 24% 15% 23%

Lack Capital 14% 11% 23%

Foreign Competition 4% 4% 16%


Impact of Stability/Predictability
of Government Regulations

Important Factor Most Important
in Decisions on Investment Change We Can Make
18% 69%
Strong Yes 2% The Right 29%
DK/R 2% Decisions Quicker
Strong No Decisions

11%
No

67%
Yes 2%
DK/R


Tax Burden


Tax Burden Continues to Grow
Compared to Five Years Ago

53% say locals
want new revenue
61%
report
business 27% say we are
property replacing LGA
taxes
increasing
15% say change
in value

Actual Increase in Statewide Business Property Tax

Rate2012 Business Barometerfor Employees
of Tax Increase vs. Cost
2007 - 2011

State & Local Employee
Business Taxes Costs


Goals of Tax Reform

Highly Rated Modestly Rated Poorly Rated

Simplify Reduce Dependency Reduce Business
on Property Taxes Taxes By Increasing
Income Taxes
Tax Voluntary
Behavior Progressive

Predictable
Revenues

Tax Activity,
Not Income


Impacting Future Investment Decisions: Tax Reform

Make Very No
Significant Impact Impact

Immediate Sales Tax Exemption
on Capital Equipment 46% 14%
Eliminate Statewide Business
Property Tax 43% 13%
Eliminate Sales Tax on Tech,
Computers and Software 43% 21%

Reduce State’s Income Taxes 35% 17%
Reduce Tax on Business Income
Flowing Through Personal Returns 32% 15%

Repeal the Corporate Income Tax 29% 26%


Health Care


Use of Health Insurance as a Benefit

All Employers

2005 2006 2007 2008 2009 2010 2011 2012


Differences in Willingness
to Cover Employees Continues


For Those Who Offer Coverage, Costs Are Increasing

Only 3% would
47% believe stop providing
costs will coverage in
increase due five years if
to federal costs keep
reform increasing at
current rate


As Costs Increase, What is the Reaction?


Employers Believe Responsibility for Coverage Falls
With Individuals, Not Business or Government

38% or more
likely to offer a
lump sum
benefit
because of
insurance
exchange

Chamber members are even more certain this is an individual responsibility


Workforce

The Minnesota Jobs Outlook
Between 2008 and 2018:
Jobs requiring postsecondary education will grow
by 152,000 jobs
902,000 job vacancies from new jobs and job
openings due to retirement
620,000 job vacancies will require postsecondary
training
227,000 job vacancies for high school graduates

55,000 job vacancies for high school drop outs

Source: Georgetown Center on Education and Workforce “Help Wanted: Protecting Jobs and Education Requirements through
2018” (2010) http://www9.georgetown.edu/grad/gppi/hpi/cew/pdfs/FullReport.pdf

The Minnesota Jobs Outlook

Source: Georgetown Center on Education and Workforce “Help Wanted: Protecting Jobs and Education Requirements through
2018” (2010) http://www9.georgetown.edu/grad/gppi/hpi/cew/pdfs/FullReport.pdf


Workforce Availability and Training

Plenty of
Skilled Workers Enough
in My Industry Workers,
Need the
Right Skills

Good Training,
Not Enough
Workers

Number of Workers
and Training
DK/R
are Problem

Minnesota job vacancies and unemployment claims by occupation
Occupational Group (in order of least unemployment)
Vacancies1
1 - Life, Physical, and Social Science Occupations
Excess 10,000 2 - Protective Service Occupations
demand Skills mismatch
9,000 3 - Legal Occupations

4 - Community and Social Service Occupations
8,000 5 - Architecture and Engineering Occupations
20
6 - Arts, Design, Entertainment, Sports, and Media Occ
7,000
7 - Computer and Mathematical Occupations
19
6,000 8 - Personal Care and Service Occupations

9 - Healthcare Practitioners and Technical Occupations
5,000
10 - Farming, Fishing, and Forestry Occupations
18
4,000 11 - Education, Training, and Library Occupations

9 15 12 - Installation, Maintenance, and Repair Occupations
3,000 21
8 17 13 - Building and Grounds Cleaning and Maintenance Occu
7 14
2,000 11 16
14 - Business and Financial Operations Occupations

4 5 12 15 - Healthcare Support Occupations
1,000 1 6 13 22 16 - Management Occupations
23 10
17 - Transportation and Material Moving Occupations
0
18 - Food Preparation and Serving Related Occupations
0 2,000 4,000 6,000 8,000 10,000 28,000
19 - Office and Administrative Support Occupations
Unemployment claims2
20 - Sales and Related Occupations
Supply
Excess
meets 21 - Production Occupations
supply
demand 22 - Construction and Extraction Occupations

1 Vacancies by occupational group (Standard Occupational Classification) as of fourth quarter 2011
2 Unemployment claims by occupational group (Standard Occupational Classification) as of December 2011
SOURCE: Minnesota Department of Employment and Economic Development

33


Are Schools Preparing Workers In Life Skill Sets?

Four point scale with percent saying “Excellent” highlighted
3.18

3.02
2.94
2.85 2.85
2.78


More Believe MN
K-12 Schools Better than Rest of Country

All Employers

2011 2012


Strong Support for Tenure Reform


Energy Policy


Concerns About Affordability
and Reliability Continue
All Employers


Support Lacking for Full Transition From
Cross-Subsidization of Electric Rates
All Large Chamber
Employers Employers Members
Businesses should
not subsidize
residential customers 15% 11% 15%
Subsidization is okay to help
those who have trouble paying
electric bills
35% 45% 29%
Current system
works if electric rates
are kept competitive
45% 40% 51%

Don’t know/ Refused 6% 4% 5%


States with Lower Electric Rates
Than Minnesota by Sector, 2010

Commercial Industrial

AL
IA ND SD
NE WA OR
IN NC WY
KY UT ID
OK AR KS
MO VW
VA LA MT NM
SC GA

TN MS

Residential


Role for Government


Most Important Issue For Legislature
and Governor to Address
All Employers — Top Two Choices
2011 2012

Taxes/ Most Second
Issue Total
Spending 73% Important Important

Spending 29% 21% 50%
Health Care 41%
Health Care 25% 16% 41%
Redesign Tax Reform 13% 25% 38%
Government 28%
Services
Workforce 11% 13% 24%
Workforce 22% Redesign 3% 12% 15%


Most Important Issue For Legislature
and Governor to Address
Top Two Choices
All Employers Large Employers Chamber Members

Spending 50% Health Care 53% Spending 56%

Health Care 41% Spending 48% Health Care 41%

Tax Reform 38% Workforce 36% Tax Reform 37%

Workforce 24% Tax Reform 23% Workforce 24%


Role of Business
Community in Political Affairs


Does Business Community Play a
Large Role in State Elections
Yes No

All Employers – 2011 53% 42%

All Employers – 2012 69% 26%

Chamber Members – 2011 72% 27%

Chamber Members – 2012 83% 16%


Summary
 Strong loyalty to Minnesota

 Recession hangover remains
– Profitability
– Hiring plans
 Four key factors:
– Tax burden (what does reform mean?)
– Health care (can we stabilize raising costs?)
– Workforce (are we preparing workers for tomorrow?)
– Energy (can we keep a competitive advantage?)
 Business to St. Paul for answers

Minnesota Business Barometer Results

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