Employers in Los Angeles County are in growth mode, but it’s a trajectory built on equipment and technology investments rather than hiring, according to a new survey.
The eighth annual poll from the Los Angeles County Business Federation found that two-thirds of participants believe that business conditions will improve this year from 2014.
Nearly a quarter of respondents said they plan to expand within the state, compared to fewer than 2 in 10 last year. Increasing per-capita income is a boon to business, most said.
But the sense of optimism is tempered by concerns that although businesses are boosting headcounts, they’re bringing in machinery at even faster rates.
“It’s OK to invest in technology and better operations and efficiency and higher productivity,” said Tracy Rafter, founding chief executive of the federation. “But at the end of the day, we’d like to have a lot of good, higher-paying jobs here.”
Four in 10 surveyed employers said they expect to hire more people this year. That’s 10% more than last year – a much smaller jump than in 2013. However, 59% of companies intend to make capital investments in durable goods, up 28% year over year after an extended period of stagnation.
“Hiring, which it’s a bit better, is not where things are growing – they’re growing in technology,” Rafter said. “People cost so much more than technology over time.”
In Los Angeles, the man-versus-machine issue crops up in debates about restrictive regulations, excessive permitting and the minimum wage.
In the federation’s poll, worries about permitting ranked higher than every complaint other than those about taxes and fees and government compliance.
Partly, the new anxiety is a reflection of how good things are going for businesses. Companies increasingly looking to expand are starting to interact more with building and safety planing departments.
“As the economy is picking up, people are wanting to do more, and they’re running into these stifling roadblocks where the permitting process is slow and cumbersome,” Rafter said. “They’re ready to go, they’re ready to do more, they’re ready to spend, and now it’s more of a pressing point.”
But also, more organizations are integrating machinery and technology into their business strategies. To install that equipment, companies must navigate what’s been called a spaghetti bowl of permit requirements.
Technological advancements also make it easier for local companies to be mobile and conduct the bulk of their business elsewhere, Rafter said.
“There’s the question of whether we’re going to keep optimism here,” she said. “It’s a global economy now – companies can grow and put people and equipment all over the place and they can still have their headquarters here.”
The federation has also made no secret of its position on minimum wage, arguing that an increase limited to the city could lead employers to reduce employee hours and slash headcount.
Businesses could make up the slack using technology. Better to implement a consistent wage boost across a larger area, such as throughout the state, federation officials said.
A statewide minimum wage increase would have a positive effect or none at all, according to 65% of respondents. The same held true of a citywide boost for 59% of respondents.
Poll participants also named Burbank and Long Beach as the most business-friendly cities in the county, followed by Glendale, El Segundo and Santa Clarita. Los Angeles was deemed the least friendly by a long shot, with Santa Monica next in line.
The survey was conducted online from March 3 through April 15, circulated among the federation’s 135 member organizations at the time, 95% of which were represented in the results.
Those responses came from fewer than 600 individual participants, even though the federation’s network includes 268,000 employers total. But survey administrators said the respondents mirror the diverse demographics of the county.
“We think it’s a good representation of the business organizations throughout Los Angeles County,” said Ken Tiratira, chief operations officer of Employers Group, which helped the federation conduct the poll.