It has long been known that high housing costs in Fairfield County are negatively affecting businesses there as workers have had to move farther and farther away to find an affordable place to live. But according to a recent survey by the Connecticut Business & Industry Association, the housing crunch is harming businesses beyond the confines of the prosperous county.

Thirty-four percent of the 627 businesses that returned the survey – which was done in partnership with the West Hartford-based business consulting firm Blum Shapiro – said that housing costs have made recruitment and retention of workers either difficult or very difficult.

“That’s a pretty high number compared to what we’ve seen in the past,” said Peter M. Gioia, economist at CBIA.

Gioia said he expects many of the businesses that complained about high housing costs are in Fairfield County, but the numbers reveal that the problem goes further afield. Twenty-five percent of the businesses that responded to the survey were from Fairfield County, according to Gioia. And since 34 percent cited housing costs as a problem, the issue is apparently affecting businesses in other parts of the state, as well.

“I took that as somewhat alarming,” Gioia said.

CBIA and Blum Shapiro decided to reintroduce the housing question this year after 12 years of not asking it because they have been hearing that the cost of housing is becoming more of a problem, particularly for businesses in Fairfield County. The responses were alarming because, traditionally, prices in Connecticut have been low compared to those in and near Boston and New York City.

“Our prices have been fairly benign,” Gioia said.

In fact, CBIA has a survey out now in Fairfield County that will ask more specific housing questions. The results are due out in December.

The cost of housing was not the most worrisome issue to businesses, but a question about housing has not been asked on the annual survey for 12 years. The top concerns of businesses were health care costs and taxes, including property taxes. Fifty-eight percent of respondents named the rising cost of health care benefits as their top concern, while another 30 percent cited property taxes as theirs. Twenty-two percent said unemployment compensation taxes were their largest worry and 15 percent said corporate income taxes were affecting their business.

Seventy percent of businesses that filled out the survey said the overall cost of doing business in the state is a serious concern that could affect decisions about future growth.

“With such a high figure, state leaders need to focus on creating a climate conducive to investments and job creation,” said Kenneth O. Decko, CBIA’s president and chief executive officer, in a prepared statement.

‘On the Radar Screen’

Although housing costs are not the top concern – indeed, 62 percent of respondents said the costs did not affect their businesses, and 5 percent said housing costs helped their businesses – the lack of affordable housing in the state is becoming more of a problem.

“To me, with 34 percent, it’s on the radar screen,” Gioia said.

But overall, most of the respondents were profitable in 2004, are reinvesting in their businesses, are relying more on international trade and continue to value their employees and Connecticut’s skilled workforce.

“While businesses continue to be profitable, rising interest rates combined with taxes and double-digit increases in heath care costs will impact future operations,” Gioia said in a prepared statement. “Attention to state cost burdens on companies will be more important than ever if Connecticut is to see continued job-producing economic growth.”

But the high housing costs have made it difficult for companies to find employees in some sectors. The results of the survey also showed that business executives are less optimistic about workforce growth than they have been in the past. Many companies are having a hard time filling manufacturing positions, with 18 percent saying skilled machinists are in short supply. Sales, marketing, customer service and entry-level positions also have been difficult to fill.

Many of the difficulties filling certain positions likely hinge on location.

“A lot of it might depend on the firm and where they’re getting people from,” Gioia said.

In Fairfield County, prices likely will continue to go up, Gioia said. There is not much opportunity to introduce new housing supply in the county, especially since the prices of building materials are rising as a result of Hurricane Katrina. And when combined with the difficulties commuters face as they battle their way down Interstate 95 during the daily rush hour and the fact that interest rates will probably remain reasonable for a while, it will probably take some time there for the housing market to cool.

“That makes it even more difficult,” Gioia said.

Increasing the percentage of the state budget dedicated to transportation could help, according to Gioia. Better transportation in and out of Fairfield County could diffuse the need for housing somewhat, he noted.

Twenty years ago, the state committed 7 percent of its budget to transportation, according to Gioia. Now, it’s 2.6 percent.

“Their commitment to transportation has precipitously declined,” he said.

The state needs to control spending in other areas to dedicate more to transportation, he said.

“In the long run, our economy must have an adequate level of affordable housing,” said Donald Klepper-Smith, an economist at DataCore Partners, in the report.