Government regulations are the top financial concern of chief executive officers of major companies in the coming months, superseding anxieties about future litigation costs and other expenses, according to a Business Roundtable survey released Wednesday.
Of the 120 CEOs who participated in the Business Roundtable’s CEO Economic Outlook study, 39 percent told the association that regulatory expenses were the “greatest area of cost pressure” for their companies during the next six months. The figure is a 4 percent uptick from 2012, which saw regulatory costs surpass expenses for materials as the highest financial concern of CEOs.
After regulatory expenditures, CEOs said health care and labor costs were their biggest worries. Of the CEOs surveyed, 25 percent said labor costs were at the forefront of their expenses pressures, while 21 percent put health care expenditures at the top of their financial concern lists. Both percentages increased from 2012.
On the low end of the list, litigation expenses were among the least pressing concerns for CEOs. Only 5 percent of them said litigation was their biggest financial anxiety. Energy and pension costs were the only other expenditures that worried CEOs less.
Jim McNerney, chairman of Business Roundtable and chairman, president and CEO of The Boeing Co., said during a call with reporters that uncertainty about the implementation of the Affordable Care Act could reflect company leaders’ rising concerns with regulatory and health care expenses. Under Obamacare’s “employer mandate,” which is set to take effect in January 2015, businesses with at least 50 full-time employees, including full-time equivalent workers, must give reasonably priced health insurance to them or risk fines.
McNerney said Obamacare exceptions seem to happen “every other day,” making it difficult for companies to make plans on how they will allocate their money.
“People respond by … hedging investment and hedging employment because the costs are not predictable, and in many cases, the outcomes can be bad,” McNerney said.
