According to the survey, 37 percent of Fairfield County businesses surveyed have direct ties to the financial services sector, and 59 percent report being directly affected by the crisis on Wall Street.

An overwhelming majority, 75 percent, of survey respondents described southwestern Connecticut’s current economic climate as “poor” or “fair.”

Even more, 78 percent, anticipate that the local economy will worsen either somewhat or significantly, and roughly half expect the same for their own firms.

“If the cost of doing business wasn’t that bad, perhaps the economic downturn wouldn’t be so terrible,” said Peter Gioia, vice president and economist of CBIA in a Journal report on the survey. “There’s not a whole heck of a lot [state] government can do about the overall economy, but there’s a whole hell of a lot they can do about the cost of doing business.”

Mr Gioia said the gloom among business owners has if anything worsened since CBIA conducted its survey of local businesses included with this week’s edition of the Fairfield County Business Journal, culled from 450 local responses to a statewide poll last fall following the banking bailout. If there has been one bright spot, he said, it is that many businesses appear to be considering making acquisitions, which provide an escape hatch for some companies lacking the capital to stay in business, while preserving at least some of the jobs that might otherwise be lost.

“I don’t think there were any surprises,” said Jack Condlin, CEO of the Stamford Chamber of Commerce, which partnered in producing the survey. “We … are dealing with economic times that we have never experienced before.”

Executives responding to the survey echoed the concerns of business leaders statewide — rising health care costs, taxes, and the skilled labor shortage.

Misclassifying Costs

In other labor force news, the CBIA reported recently that a new state commission is set to explore whether some employers are misclassifying part-time and temporary employees as independent contractors to try to skirt state and federal labor and tax laws.

The Joint Enforcement Commission on Employee Misclassification, comprised of the labor commissioner, revenue services commissioner, state attorney general, and the chief state’s attorney, was established last year by Public Act 08-156, and recently held its first meeting.

Hiring independent contractors is common across many industries, especially in this tough economy. But sometimes, employers are labeling their employees as “independent contractors” on government agency filings to avoid paying workers’ compensation, wage withholding, and unemployment taxes.

This practice — classifying someone as a contractor when he or she clearly is an employee — costs the state millions in lost tax revenue each year. In addition, when those workers suffer a job-related injury, the state often has to cover the costs of workers’ compensation medical claims.

Misclassification also harms the state’s business community by giving an unfair advantage to dishonest employers who do not pay their fair share of tax and insurance obligations — and then use that advantage to outbid law-abiding employers.

Among other things, the commission is likely to evaluate the actions and best practices of other states that have addressed misclassification issues, and clarify the definition of “employee” across state agencies to ensure consistency and uniform application, and help employers understand employee classification laws and requirements.

Ultimately, the group will make recommendations for action to the governor. For more information about the commission, contact CBIA’s Kia Murrell at 860-244-1931 or kia.murrell@cbia.com.