Read original article on Denver Business Journal
Colorado employers continue to laud the unparalleled quality of life the state offers as well as its talent pool, but the increasing costs of living, exacerbated by increasing state regulations, are making it harder to do business here, according to a new study.
The Colorado Chamber of Commerce worked with business consulting firm Dietrich Partners to survey company leaders’ perceptions about the current business ecosystem as well as the state’s strengths and vulnerabilities. What emerged in the Colorado Competitive Landscape Report was a mixed bag of reasons that the state continues to attract top talent and companies seeking to expand operations. The report also found employers who are located within the state say they are looking increasingly at growing in states such as Texas or Arizona rather than in Colorado.
Respondents listed the state’s natural beauty, climate, outdoor recreation and open space as its top asset, noting that they continue to attract and keep workers who want to be a part of this lifestyle. Other strengths include Colorado’s diverse industry base, its innovative technology sector, its competitive business-friendly environment and the “positive, hard-working people” who make up its labor pool, according to the report.
But the increasing costs of housing, wages and benefits make it harder to justify expansion in the state if there are other options, respondents also said. The report also states that an “overwhelming majority” of respondents said that increasing government regulations in areas from paid family leave to wage transparency are negatively impacting business in Colorado.
Steve Swinney, CEO of Highlands Ranch-based housing-supply company Kodiak Building Partners, said he’s experienced the dueling conditions as he’s tried to recruit executives particularly to come and work for his multistate firm. Many are attracted by living in a place like Colorado, but more have expressed concerns about the prohibitive cost of living here versus Florida or Texas, where Kodiak also does significant business, as they talk about how much they must spend on housing and the impact it has on savings or vacation spending, he said.
“Honestly, the only reason our company is still based here is because I love the mountains,” Swinney said during an event at the chamber that unveiled the report Tuesday. “Twenty years ago, there were so many other things that made it a great place to live. But the cost of living and all these other things we have talked about have left us only with the lifestyle, and I think that’s scary.”
The report noted that regulations are impacting business competitiveness negatively not just because of their perception but because of their cost to businesses.
Jackie Brookshire, president of American Furniture Warehouse said she expects the implementation of the new Family and Medical Leave Insurance program to reduce profits at the chain’s 10 Colorado stores by 10%.
While the program, which allows as much as 12 weeks of partially paid leave to greet newborns or deal with illnesses for employees or family members, is funded just by a 0.9% paycheck fee, it impacts a business that is as employee-driven as a retail company more heavily, she said.
American Furniture Warehouse is expecting to have to backfill a lot of employees who will be taking time off — a process that either requires overscheduling staff and lowering profits or risking staff shortages that reduce the ability to sell and deliver goods.
The chain expanded eight years ago into the Phoenix area and two years ago into Houston, and expected to have a hard time finding workers who would want to move to Texas to staff those locations, Brookshire said. But as more workers have found the cost of living to be so much cheaper in that state, the company has had a much harder time staffing its Colorado stores fully than staffing its Texas stores — and has shifted its expansion focus away from its home state to its two emerging markets, she added.
“Bottom line, we’ll probably be less profitable here,” Brookshire said of the effect of the increasing wage pressures as well as the new regulations. “You’re certainly more likely to open stores in places where you’re likely to be more profitable. That’s just business sense.”
Celia Dietrich, executive chair and founder of Dietrich Partners, said along with Colorado Chamber leaders that business executives need to work to convey to elected officials the potentially unintended consequences of new policies on employment in this state. The state continues to be “a great place” to live, Dietrich said, but also one whose decade-long ability to attract company expansions and relocations could ebb if it doesn’t address its costs of living and burdens on employers.