Executives surveyed by Wisconsin's largest business lobbying group overwhelmingly say the state is "going in the right direction," a near-complete reversal of sentiment from a year ago that comes against a backdrop of exceptional political animosity.
The 2011 Economic Outlook Survey from Wisconsin Manufacturers & Commerce shows that business leaders have shifted their views sharply in the aftermath of last year's change of political control in Madison from Democrats to Republicans.
That's no surprise - WMC was a major supporter of Gov. Scott Walker and other Republican candidates. The swing in the numbers is so big, though, it's impossible to ignore.
A year ago, 10% of the survey respondents said they believed Wisconsin was going in the right direction. This year, that number jumped to 88%.
"When business leaders are confident, they expand, they hire, they do the things that allow for an economic expansion," said Kurt Bauer, president and CEO of the trade group. "A pro-business message builds confidence among business leaders at a critical time when the state is trying to recover from this deep recession."
But while the survey of 193 chief executives and company owners does show an uptick in plans for hiring and wage increases from a year ago, the improvements are modest.
For instance, 53% of respondents say they expect to add employees in the next 12 months, up from 45% in last year's survey. The portion expecting employment to hold steady was 40% this year, down from 49% a year ago. The portion expecting employment to decrease was 6% in both years.
As for wages, the projections also show some improvement. Those expecting employee wages to grow by the smallest amount - zero to 2% - declined from 51% a year ago to 39% this year, while the percentage anticipating heftier employee wage increases of 3% to 3.5% rose from 17% a year ago to 28% now. The portion anticipating the largest increases - 3.6% and above - was at 5% both years.
For some business owners, there is a sense that much of Wisconsin's economic future hangs in the balance as Walker and Republicans set out to balance the state's budget, reduce taxes and regulations on businesses, and weaken collective bargaining by state employees.
Those proposals have divided the state as never before, resulting in protests, recall elections, courtroom battles and even death threats.
"This is like a civil war out there," said Tom Krist, majority owner and president of at WFA Staffing in Milwaukee. "I've got relatives - same family - one is on one side and one is on the other. My hope is when the dust settles we all take a deep breath and move forward in the right direction."
The intense conflict in the state since February has centered largely on public workers' ability to bargain. Organized labor argues that Walker's policies are a direct assault on working families; business interests counter that the governor simply wants to bring state government in line with private business.
"I would think that if the average working person's wages went up 27%, they'd be very confident in the direction the economy is going - but it hasn't," said Phil Neuenfeldt, president of the Wisconsin State AFL-CIO, referring to the average 27% pay increase that CEOs of publicly traded companies in the state got last year.
"I'm glad that they're optimistic, but it's a little hard from a worker's perspective to be optimistic," Neuenfeldt said.
Walker's goal of balancing the state budget without raising taxes is something businesses are watching carefully, with 40% of survey respondents saying taxes are the top policy issue facing the state. When asked about the issues facing their own companies, the top concern was the economic slowdown (38%), followed by regulation (14%), health care (14%), taxes (9%) and competition (9%).
"I think there is very, very strong approval about what is happening in Madison as far as a business agenda and a better business climate being built for the state of Wisconsin," said Jeff Baum, president and CEO of Watertown-based Wisconsin Aviation, a provider of aviation services including charters, rentals and maintenance. "When business people see things that they perceive are going to have a positive impact on their futures, then they are more optimistic and they tend to start looking at new projects much more easily."
Michael Retzer, executive director of the Milwaukee chapter of the National Tooling and Machining Association, expressed frustration that protesters have garnered so much attention, crowding out the views of businesses.
"We're busy trying to get product out the door and making sure our customers are happy," said Retzer, controller at Strohwig Industries Inc. in Richfield, an engineering and tool-and-die company.
Politics aside, the survey identifies trends that business owners are seeing, including an intensifying shortage of skilled labor.
Krist said he has openings for 40 welders; he's been able to fill six of the positions.
His experience is reflected in the WMC survey, where the number of survey respondents who said they are having trouble hiring workers more than doubled from 2010.
As far as economic growth, 58% of respondents anticipate moderate growth in the state's economy in the next 12 months, with 36% expecting the economy to remain flat.
"From my own personal perspective in business here, I would like to think things are progressing on the right track these days," said Paul Liebe, president and broker at Redefined Realty based in Oconomowoc. "But I guess, too, we're going to have to let things progress a little bit more and see how they play out before we know for sure."Wisconsin WaveWisconsin WaveWisconsin Wave