About the survey
In January 2024, the DC Policy Center’s Rivlin Initiative on Economic Policy and Competitiveness launched its quarterly Business Sentiment Survey. The intent of the Business Sentiment Survey is to provide detailed, real-time information on the experiences of businesses in DC and the greater region to elected officials, the media and the public. Conducted quarterly, the survey examines business performance over the past three months, economic expectations for the next six months, and covers specific topics such as public safety, location considerations, talent acquisition and access to capital.
In its inaugural year, the survey tracked the sentiments of established businesses – large and small.
In its inaugural year, the Business Sentiment Survey documented the sentiments of a diverse group of businesses in DC and the greater region. During the year, the survey expanded its scope. The first round had 91 respondents, the second increased to 411, the third included 214 and the fourth ended with 220 participants.
In the first round, the survey received responses from large, established businesses, particularly those in the real estate sector and, to a lesser extent, the professional, scientific and technical services sector. In subsequent rounds, the group of respondents shifted towards small and established businesses, with the professional, scientific and technical services sector consistently making up the majority of participants.
The shift in composition resulted from a change in recruitment strategy: the first round relied on social media, email and word of mouth, while subsequent rounds drew respondents from a comprehensive list of registered DC businesses.
Despite the observed sample sizes, we classify our findings as qualitative, as they, like any survey results, are subject to some limitations. With these considerations in mind, this article highlights five key insights from the survey’s inaugural year.
Finding #1: A jurisdiction’s tax and regulatory regime weighs on business location decisions.
Most respondents emphasized the importance of a jurisdiction’s tax and regulatory regime in business location decisions. has typically found that while taxes shape behavior, modest tax changes are unlikely to affect location decisions in a decisive way. If these sentiments reflect increased responsiveness to tax changes, it would be prudent for district tax policies to account for these shifts.
Regarding the regulation, the sentiments of the participants indicate the need for periodic review and refinement of the business regulations. Such a task is challenging. Many of the regulations that affect businesses are spread across multiple agencies. However, the task is essential to ensure that regulations are kept up-to-date and cost-effective.
Finding #2: Pessimism about the district’s economy eased slightly in late 2024.
When asked about their expectations for the district’s economy over the next six months, respondents expressed pessimism for much of the survey’s inaugural year.
The pessimism may reflect the weak economic recovery since the COVID-19 pandemic, with the District underperforming the region and the nation. For example, between January 2023 and March 2024, district off-farm employment growth lagged behind national off-farm employment growth.
Optimism for DC began to emerge in the fourth round, with more respondents in that round expecting a stronger DC economy than a weaker economy over the next six months. This optimism coincided with a recent surge in off-farm employment growth in the District. Between August and November of 2024, non-farm employment increased by 2.4 percent.
Finding #3: Hiring or retaining employees has become more difficult since the pandemic.
Businesses surveyed reported that hiring or retaining employees became more challenging since the pandemic. This sentiment is consistent with responses to related questions. When asked about changes in the number of employees in the past three months, respondents in all four rounds of the survey often reported minimal or no changes. This lack of movement in headcount may reflect the difficulty businesses face in attracting talent. Similarly, when asked about their six-month outlook, most did not foresee any change in the number of employees in their respective businesses.
Businesses surveyed identified lack of relevant technical skills, lack of experience and salary expectations of applicants as the main employment challenges. Businesses reported increased wages or benefits and increased schedule flexibility as the main means of addressing these challenges.
Finding #4: When deciding where to locate, businesses prioritize visibility and accessibility.
When making location decisions, surveyed businesses indicated that they place significant weight on a jurisdiction’s appearance and accessibility. Businesses were repelled by vacant or blighted signs and preferred locations that are walkable or easily accessible by public transportation.
Although not explicitly asked in the survey, it is likely that businesses avoid jurisdictions with high levels of crime. In response to elevated crime levels in 2023, a number of businesses surveyed invested in crime prevention measures, such as installing security cameras and hiring security personnel. The costs of these investments reflect the financial burden faced by businesses due to the crime committed. With lower crime rates, such funds could have been used for business growth.
Finding #5: Businesses that pursued external financing struggled to obtain the desired amount.
A large number of businesses that participated in the survey indicated that they had attempted to secure lines of credit or debt financing during the past year. However, many of these businesses faced challenges in obtaining the desired amount of external financing. High interest rates and cumbersome application processes were the two main obstacles reported.
Plans for 2025
In 2025, the Rivlin Initiative will continue to conduct the survey in January, April, July and October. Our goals include:
- Increasing participation beyond the large sample sizes of the inaugural year.
- Development of an index of business sentiment.
- Using survey data to inform and support legislative proposals.
- By expanding its reach and refining its tools, the Rivlin Initiative aims to provide actionable knowledge to guide policymakers and support the district’s business community.
Read more about each round in 2024
First quarter 2024 results
Second quarter 2024 results
Third quarter 2024 results
Fourth quarter 2024 results
For example, it cannot be assumed with a high degree of confidence that the sentiments expressed by survey participants were representative of those who did not complete the survey.
