Tag Archive for 'contractors'

TRIP Reports: Driving on deficient roads costs West Virginia motorists a total of $1.4 billion annually

WEST VIRGINIA TRANSPORTATION BY THE NUMBERS:  

Meeting the State’s Need for Safe, Smooth and Efficient Mobility

Ten Key Transportation Numbers in West Virginia

 

$1.4 billion

Driving on deficient roads costs West Virginia motorists a total of $1.4 billion annually in the form of additional vehicle operating costs (VOC), congestion-related delays and traffic crashes.
 

$647

TRIP estimates that driving on rough roads costs the average West Virginia motorists an average of $647 annually in extra vehicle operating costs. Costs include accelerated vehicle depreciation, additional repair costs, and increased fuel consumption and tire wear.
1,548

310

A total of 1,548 people were killed in West Virginia traffic crashes from 2011 to 2015, an average of 310 fatalities annually.
 

1.35

West Virginia’s overall traffic fatality rate of 1.35 fatalities per 100 million vehicle miles of travel in 2015 was significantly higher than the national average of 1.13.
3X The fatality rate on West Virginia’s rural roads is nearly three times higher than the fatality rate on all other roads in the state (2.24 fatalities per 100 million VMT vs. 0.81).
 

29%

Statewide, 29 percent of West Virginia’s major roads are in poor condition. Fifty-five percent are in mediocre or fair condition and the remaining 17 percent are in good condition.
$119 Billion Annually, $119 billion in goods are shipped to and from sites in West Virginia, mostly by truck.
17%

5th

A total of 17 percent of West Virginia bridges show significant deterioration and are rated as structurally deficient. West Virginia ranks 5th nationally in its share of bridges rated structurally deficient. This is up from 2015 when 15% percent were structurally deficient – the 8th highest share in the U.S. at the time.
 

16%

From 2000 to 2015, West Virginia’s gross domestic product, a measure of the state’s economic output, increased by 16 percent, when adjusted for inflation. U.S. GDP increased 27 percent during this time.
 

$1.00 = $5.20

The Federal Highway Administration estimates that each dollar spent on road, highway and bridge improvements results in an average benefit of $5.20 in the form of reduced vehicle maintenance costs, reduced delays, reduced fuel consumption, improved safety, reduced road and bridge maintenance costs, and reduced emissions as a result of improved traffic flow.

 

Executive Summary

Nine years after the nation suffered a significant economic downturn, West Virginia’s economy continues to struggle. The rate of economic growth in West Virginia, which will be greatly impacted by the reliability and condition of the state’s transportation system, continues to have a significant impact on quality of life in the Mountain State.

An efficient, safe and well-maintained transportation system provides economic and social benefits by affording individuals access to employment, housing, healthcare, education, goods and services, recreation, entertainment, family, and social activities. It also provides businesses with access to suppliers, markets and employees, all critical to a business’ level of productivity and ability to expand. Reduced accessibility and mobility – as a result of traffic congestion, a lack of adequate capacity, or deteriorated roads, highways, bridges and transit facilities – diminishes a region’s quality of life by reducing economic productivity and limiting opportunities for economic, health or social transactions and activities.

With an economy based largely on natural resource extraction, manufacturing, agriculture, biotechnology and tourism, the quality of West Virginia’s transportation system plays a vital role in the state’s economic growth and quality of life.

In this report, TRIP looks at the top transportation numbers in West Virginia as the state addresses modernizing and maintaining its system of roads, highways, bridges and transit.

In December 2015 the president signed into law a long-term federal surface transportation program that includes modest funding increases and allows state and local governments to plan and finance projects with greater certainty through 2020. The Fixing America’s Surface Transportation Act (FAST Act) provides approximately $305 billion for surface transportation with highway and transit funding slated to increase by approximately 15 and 18 percent, respectively, over the five-year duration of the program. While the modest funding increase and certainty provided by the FAST Act are a step in the right direction, the funding falls far short of the level needed to improve conditions and meet the nation’s mobility needs and fails to deliver a sustainable, long-term source of revenue for the federal Highway Trust Fund.

COST TO WEST VIRGINIA MOTORISTS OF DEFICIENT ROADS

An inadequate transportation system costs West Virginia motorists a total of $1.4 billion every year in the form of additional vehicle operating costs (VOC), congestion-related delays and traffic crashes.

  • Driving on rough roads costs West Virginia motorists a total of $758 million annually in extra vehicle operating costs. Costs include accelerated vehicle depreciation, additional repair costs, and increased fuel consumption and tire wear.
  • Traffic crashes in which roadway design was likely a contributing factor costs West Virginia motorists a total of $461 million each year in the form of lost household and workplace productivity, insurance and other financial costs.
  • Traffic congestion costs West Virginia motorists a total of $225 million each year in the form of lost time and wasted fuel.
  • The chart below details the average cost per driver in the state’s largest urban areas and statewide.

 

POPULATION AND ECONOMIC TRENDS IN WEST VIRGINIA

The rate of population growth in West Virginia has resulted in increased demands on the state’s major roads and highways, leading to increased wear and tear on the transportation system.

  • West Virginia’s population in 2015 was approximately 1.84 million residents.
  • West Virginia had 1.2 million licensed drivers in 2015.
  • In 2015, West Virginia’s roads carried 19.5 billion vehicle miles of travel.
  • From 2000 to 2015, West Virginia’s gross domestic product, a measure of the state’s economic output, increased by 16 percent, when adjusted for inflation. U.S. GDP increased 27 percent during this time.

WEST VIRGINIA ROAD CONDITIONS

A lack of adequate state and local funding has resulted in 29 percent of major roads and highways in West Virginia having pavement surfaces in poor condition, providing a rough ride and costing motorists in the form of additional vehicle operating costs.

  • The pavement data in this report, which is for all arterial and collector roads and highways, is provided by the Federal Highway Administration (FHWA), based on data submitted annually by the West Virginia Department of Transportation (WVDOT) on the condition of major state and locally maintained roads and highways.
  • Pavement data for Interstate highways and other principal arterials is collected for all system mileage, whereas pavement data for minor arterial and all collector roads and highways is based on sampling portions of roadways as prescribed by FHWA to insure that the data collected is adequate to provide an accurate assessment of pavement conditions on these roads and highways.
  • Twenty-nine percent of West Virginia’s major locally and state-maintained roads are in poor condition, while 55 percent are in mediocre or fair condition. The remaining 17 percent are in good condition.
  • The chart below details the share of major roads in poor, mediocre, fair and good condition in West Virginia’s largest urban areas:
  • Roads rated in mediocre to poor condition may show signs of deterioration, including rutting, cracks and potholes.       In some cases, these roads can be resurfaced, but often are too deteriorated and must be reconstructed.
  • Driving on rough roads costs West Virginia motorists a total of $758 million annually — $647 per driver — in extra vehicle operating costs. Costs include accelerated vehicle depreciation, additional repair costs, and increased fuel consumption and tire wear.

WEST VIRGINIA BRIDGE CONDITIONS

Approximately one in six of locally and state-maintained bridges in West Virginia show significant deterioration. This includes all bridges that are 20 feet or more in length.

  • Seventeen percent of West Virginia’s bridges were structurally deficient in 2016, the 5th highest share nationally. This is up from 2015 when 15 percent of the state’s bridges were structurally deficient, the 8th highest share in the nation at that time. In 2014, 13 percent of the state’s bridges were structurally deficient, the 12th highest share at the time. 
  • A bridge is structurally deficient if there is significant deterioration of the bridge deck, supports or other major components. Structurally deficient bridges are often posted for lower weight or closed to traffic, restricting or redirecting large vehicles, including commercial trucks and emergency services vehicles.
  • The chart below details the share of bridges in the state’s largest urban areas that are structurally deficient.

 

HIGHWAY SAFETY AND FATALITY RATES IN WEST VIRGINIA

Improving safety features on West Virginia’s roads and highways would likely result in a decrease in the state’s traffic fatalities and serious crashes. It is estimated that roadway features are likely a contributing factor in approximately one-third of all fatal and serious traffic crashes.

  • A total of 1,548 people were killed in West Virginia traffic crashes from 2011 to 2015, an average of 310 fatalities per year.
  • West Virginia’s overall traffic fatality rate of 1.35 fatalities per 100 million vehicle miles of travel in 2015 was significantly higher than the national average of 1.13.
  • The fatality rate on West Virginia’s non-interstate rural roads in 2015 was nearly three times higher than on all other roads in the state (2.24 fatalities per 100 million vehicle miles of travel vs. 0.81).
  • The chart below details the average number of people killed in traffic fatalities in the state’s largest urban areas over the last three years.

  • Traffic crashes in West Virginia imposed a total of $1.4 billion in economic costs in 2014. TRIP estimates that traffic crashes in which roadway features were likely a contributing factor imposed $461 million in economic costs in 2014.
  • According to a 2015 National Highway Traffic Safety Administration (NHTSA) report, the economic costs of traffic crashes includes work and household productivity losses, property damage, medical costs, rehabilitation costs, legal and court costs, congestion costs and emergency services.
  • Roadway features that impact safety include the number of lanes, lane widths, lighting, lane markings, rumble strips, shoulders, guard rails, other shielding devices, median barriers and intersection design. The cost of serious crashes includes lost productivity, lost earnings, medical costs and emergency services.
  • Several factors are associated with vehicle crashes that result in fatalities, including driver behavior, vehicle characteristics and roadway features. TRIP estimates that roadway features are likely a contributing factor in approximately one-third of fatal traffic crashes.
  • Where appropriate, highway improvements can reduce traffic fatalities and crashes while improving traffic flow to help relieve congestion. Such improvements include removing or shielding obstacles; adding or improving medians; improved lighting; adding rumble strips, wider lanes, wider and paved shoulders; upgrading roads from two lanes to four lanes; and better road markings and traffic signals.
  • Investments in rural traffic safety have been found to result in significant reductions in serious traffic crashes. A 2012 report by the Texas Transportation Institute (TTI) found that improvements completed recently by the Texas Department of Transportation that widened lanes, improved shoulders and made other safety improvements on 1,159 miles of rural state roadways resulted in 133 fewer fatalities on these roads in the first three years after the improvements were completed (as compared to the three years prior).   TTI estimates that the improvements on these roads are likely to save 880 lives over 20 years.

WEST VIRGINIA TRAFFIC CONGESTION

Increasing levels of traffic congestion cause significant delays in West Virginia, particularly in its larger urban areas, choking commuting and commerce. Traffic congestion robs commuters of time and money and imposes increased costs on businesses, shippers and manufacturers, which are often passed along to the consumer.

  • Based on Texas Transportation Institute (TTI) estimates, the value of lost time and wasted fuel in West Virginia is approximately $225 million per year.
  • The chart below details the annual number of hours lost to congestion and the cost of lost time and wasted fuel as a result of congestion for the average driver in each of the state’s largest urban areas.

  • Increasing levels of congestion add significant costs to consumers, transportation companies, manufacturers, distributors and wholesalers and can reduce the attractiveness of a location to a company when considering expansion or where to locate a new facility. Congestion costs can also increase overall operating costs for trucking and shipping companies, leading to revenue losses, lower pay for drivers and employees, and higher consumer costs.

TRANSPORTATION FUNDING IN WEST VIRGINIA

Investment in West Virginia’s roads, highways and bridges is funded by local, state and federal governments. The five-year federal surface transportation program includes modest funding increases and provides states with greater funding certainty, but falls far short of providing the level of funding needed to meet the nation’s highway and transit needs. The bill does not include a long-term and sustainable revenue source.

  • According to the 2015 AASHTO Transportation Bottom Line Report, a significant boost in investment in the nation’s roads, highways, bridges and public transit systems is needed to improve their condition and to meet the nation’s transportation needs.
  • AASHTO’s report found that based on an annual one percent increase in VMT annual investment in the nation’s roads, highways and bridges needs to increase 36 percent, from $88 billion to $120 billion, to improve conditions and meet the nation’s mobility needs, based on an annual one percent rate of vehicle travel growth. Investment in the nation’s public transit system needs to increase from $17 billion to $43 billion.
  • The Bottom Line Report found that if the national rate of vehicle travel increased by 1.4 percent per year, the needed annual investment in the nation’s roads, highways and bridges would need to increase by 64 percent to $144 billion. If vehicle travel grows by 1.6 percent annually the needed annual investment in the nation’s roads, highways and bridges would need to increase by 77 percent to $156 billion.

TRANSPORTATION AND ECONOMIC GROWTH IN WEST VIRGINIA

The efficiency of West Virginia’s transportation system, particularly its highways, is critical to the health of the state’s economy. Businesses rely on an efficient and dependable transportation system to move products and services. A key component in business efficiency and success is the level and ease of access to customers, markets, materials and workers.

  • Annually, $119 billion in goods are shipped to and from sites in West Virginia, mostly by truck.
  • Seventy-two percent of the goods shipped annually to and from sites in West Virginia are carried by trucks and another 10 percent are carried by courier services or multiple mode deliveries, which include trucking.
  • Increasingly, companies are looking at the quality of a region’s transportation system when deciding where to re-locate or expand. Regions with congested or poorly maintained roads may see businesses relocate to areas with a smoother, more efficient and more modern transportation system.
  • Highway accessibility was ranked the number two site selection factor behind only the availability of skilled labor in a 2015 survey of corporate executives by Area Development Magazine.
  • The Federal Highway Administration estimates that each dollar spent on road, highway and bridge improvements results in an average benefit of $5.20 in the form of reduced vehicle maintenance costs, reduced delays, reduced fuel consumption, improved safety, reduced road and bridge maintenance costs and reduced emissions as a result of improved traffic flow.

Sources of information for this report include the Federal Highway Administration (FHWA), the American Association of State Highway and Transportation Officials (AASHTO), the Bureau of Transportation Statistics (BTS), the U.S. Census Bureau, the Texas Transportation Institute (TTI) and the National Highway Traffic Safety Administration (NHTSA).

 

‘Dirtiest Man on TV’ Mike Rowe Joins CONEXPO-CON/AGG 2017 Tech Talks Lineup

CONEXPO-CON/AGG 2017 is pleased to announce that Executive Producer and Host Mike Rowe, best known as the “dirtiest man on TV” from the hit TV series Dirty Jobs, is a featured speaker at the show’s new Tech Talks forum.

Rowe will share the surprising lessons he learned as an apprentice traversing all 50 states and attempting 300 different jobs, during a special session, “Lessons from the Dirt.”

CONEXPO-CON/AGG, March 7- 11, 2017 at the Las Vegas Convention Center in Las Vegas, Nevada, USA, is the international gathering place every three years for the construction industries.

The Tech Talks forum offers short content-rich presentations to inspire and inform. The Talks are an integral component of the show’s new Tech Experience, focused on emerging trends and solutions directly affecting the construction industries in key areas of the jobsite, workforce and infrastructure.

“We’re very excited to welcome Mike Rowe to the Tech Talks forum and CONEXPO-CON/AGG to connect with our attendees; he is a longtime industry supporter advocating for a skilled workforce, the manufacturing sector and infrastructure investment,” said Sara Truesdale Mooney, show director and vice president exhibitions and business development, Association of Equipment Manufacturers (AEM).

In a new effort, Rowe is collaborating with the National Excavator Initiative, founded in October 2016 to reach excavators and contractors with safe-digging messages, especially the importance of contacting an 811-notification center before digging.

Most recently, Rowe launched The Way I Heard It, a weekly five-minute podcast of short mysteries for the curious mind with a short attention span. He also runs the mikeroweWORKS Foundation, a 501(c)(3) public charity that works hard to debunk myths about the skilled trades and help close the skills gap by giving scholarships to people getting trained for skilled jobs that are in demand.

40-Session Line-up Also Features Local Motors’ CEO

Also joining the Tech Talks forum lineup is John Rogers, President, CEO and co-founder of Local Motors, a next-generation car company changing the designing, building and ownership of cars.

In “The Future of Mobility,” John will discuss how the mobile landscape will look very different in the future, autonomous vehicles as well as projects and expectations for 2020 and beyond.

View the Tech Talks forum 40-session lineup online. For the latest show information and to register, visit www.conexpoconagg.com.

JWH Equipment Supports Team Rubicon on Operation Iron Bird

Team Rubicon uses trained heavy equipment operators to demolish 17 houses and clear an additional 13 properties of debris created by an EF3 tornado that hit the region in January    

 

Veteran-led disaster relief organization Team Rubicon deployed its heavy equipment operators to Hattiesburg, Mississippi February 2-10, 2017 to assist in demolishing damaged houses and

From left to right, Team Rubicon Heavy Equipment Operators Patrick Smith, Brian Foy, Emiliano Sanchez and Victor Civitillo

clearing debris caused by the EF3 tornado that hit the city on January 21, 2017. CASE dealer JWH Equipment (Jackson, Mississippi) supplied an excavator and compact track loader for Team Rubicon’s http://Operation Iron Bird, which demolished 17 houses and cleared an additional 13 properties of tornado debris for free.

“Our goal while we’re out here as volunteers is to help as many people as we can, to get them to the point where they can rebuild their properties,” says Victor Civitillo, a certified heavy equipment instructor and operator with Team Rubicon who managed the heavy equipment deployment. “Having the CASE heavy equipment here means we can accomplish in two hours what would normally take a full day for a crew working with hand tools. So together we can help families get back on their feet faster, and then the whole community and the local economy recover faster.”

Operation Iron Bird is the most extensive heavy equipment deployment conducted by Team Rubicon in a disaster zone. The heavy equipment competency within the organization was created with training support from The U.S. Fish & Wildlife Service, and equipment and training support through an ongoing partnership between CASE Construction Equipment and its dealers.

“Helping real people and communities rebuild with nothing but determination and a sense of service was what drew us to Team Rubicon and the work they do – this was a perfect execution of what this partnership was intended to be,” says Scott Harris, vice president – North America, CASE Construction Equipment. “JWH Equipment stepped up and saw an opportunity to help people in their own community, and we’re proud of the work all partners accomplished in Mississippi.”

Team Rubicon and CASE continue to work on additional heavy equipment operator training sessions throughout the U.S. For more on Team Rubicon, and to volunteer or donate, visit TeamRubiconUSA.org.

CASE Construction Equipment sells and supports a full line of construction equipment around the world, including the No. 1 backhoe loaders, excavators, motor graders, wheel loaders, vibratory compaction rollers, crawler dozers, skid steers, compact track loaders and rough-terrain forklifts. Through CASE dealers, customers have access to a true professional partner with world-class equipment and aftermarket support, industry-leading warranties and flexible financing. More information is available at www.CaseCE.com.

About Team Rubicon

Team Rubicon unites the skills and experiences of military veterans with first responders to rapidly deploy emergency response teams. Team Rubicon is a nonprofit organization offering veterans a chance to continue their service by helping and empowering those afflicted by disasters, and also themselves. Programs and services are made possible by the support of individual donors, corporate partners, and the dedication of volunteers across the country. To join or support Team Rubicon’s mission, visit http://www.TeamRubiconUSA.org.

Roadtec Reviews Its 2016 Performance and Looks At 2017 Possibilities

Roadtec, Inc., an Astec Industries company finished 2016 exceeding its sales performance goals and is expecting 2017 to be even better. Founded in 1981, Roadtec is an asphalt milling and paving equipment manufacturer based in Chattanooga, Tennessee.

2016 Performance

The asphalt paving market benefited from the passage of the 6-year FAST-ACT Highway Bill on December 4, 2015. Astec Industries and Roadtec were instrumental in an industry-wide campaign that resulted in 200,000 emails, letters, and calls to legislators urging them to pass the bill.

“Through these efforts and many others in our industry, jobs were created, optimism returned, new roads began the design cycle, and our customers started buying new equipment again,” stated John J. Irvine III, president of Roadtec. “Roadtec experienced a 10% growth in sales for the year, right from the beginning of the year.”

The passing of the FAST-ACT Highway Bill was considered the catalyst in 2016. In that year, the company hired and trained more than 100 new factory employees and signed nine new equipment dealers. The dealers represent Roadtec in 15 states, where they have been trained in service and sales support. The dealers are fully stocked with parts and components, and carry inventories of machines to facilitate timely deliveries.

“We feel the market in 2016 had a real wait and see attitude up until the election,” Irvine said. “With the current administration’s plans for a $1 trillion infrastructure program over 10 years, we are very optimistic about our industry.”

A significant contributor to the company’s success in 2016 was its Guardian™ Telematics System for Roadtec e-series milling machines or cold planers, pavers, and shuttle buggy material transfer vehicles. The Guardian Telematics System is designed to diagnose service issues and provide production reports. With the software, a contractor can log into the machine from any computer and the equipment operator can view the information on the machine’s display screen in the operator’s compartment. The same information is available to the Roadtec service center remotely where technicians are available on a 24/7 basis to troubleshoot problems and reset fault codes. Circuits and systems are displayed as live schematics to help identify and solve issues quickly.

The Roadtec Guardian software received significant refinements and enhancements in 2016. The telematics system can now monitor the equipment for possible electrical or hydraulic failures before they occur, sends emails to the Roadtec service center and the customer when systems are outside preset parameters.

“In a sense, we are developing the ‘Holy Grail’ on how to maintain and prevent failures in the field,” Irvine said. “Roadtec can service a machine in the field and fix many items over the internet, update programming, and even locate lost machines via GPS tracking.”

“We were not expecting a big year because the two previous years we had bet on a new highway program and lost,” said Irvine. “Ending 2015, we were carrying too much inventory. We liquidated most of our finished goods inventory by year’s end and, of course, a bill was passed in December. We had a small amount of component inventory coming in first quarter 2016. We rallied and turned it up, hiring people, training, pulling component purchases up in our schedule and finished with our best year ever.”

2017 Expectations

A core element of the Roadtec business model has changed, which the company management expects will have a positive impact on its 2017 performance. From the beginning, Roadtec has sold directly to its customers and provided start-up and service technicians from its Chattanooga base of operations.

“We have shifted our model from selling and servicing direct to the customers because they were telling us, ‘we love your company, we love your equipment, but we need local parts and service support,’” Irvine said. “Our sales had plateaued and to grow we needed that local presence, thus our decision to add qualified, quality dealers who can service and sell our products to the level we provide.”

A challenge for Roadtec has been reaching customers in the less populated areas. Plus, there just weren’t enough service staff to start-up every machine sold in the Spring-season crunch each year.

“With the addition of dealers to our business model, we have not cut one head at Roadtec,” stated Irvine. “We plan to keep all the good people our customers have leaned on in the past to help them be successful. These people will also be training dealer personnel so we can multiply ourselves to service and better support our customers in the field wherever they are located.”

Roadtec continues to look for dealers “that are financially sound, have experience in our industry, and most importantly align with our core principles of ‘taking care of customers, honesty and integrity in all we do, and respecting all individuals,’ Irvine added. “These are critical values that our employees, suppliers, and dealers must adhere to. We have signed four additional dealers since the first of the year covering 10 more states. These are experienced roadbuilding dealers that know the business.”

For 2017, the company will be pursing markets west of the Mississippi which will be easier to target through its newly established dealer network.

Roadtec is expecting growth in all the states that have passed new gas taxes that will allow them to get FAST-ACT Highway Bill matching federal funds to build new and repair existing roads in their respective states.

New products or product line expansions for 2017 include the Guardian Telematics System which is now available on the Shuttle Buggy SB2500, a new Tier 4 Final SX-6 Soil Stabilizer, and a new MTV1100e Material Transfer Vehicle. The company is entering its second year of production for the new RP170e and RP175e Tier 4 final asphalt pavers and they are in production of the CB100 Conveyor Broom. Various ancillary options are being added to all other equipment as part of the company’s on-going product improvement program.

Additionally, Roadtec has three goals for 2017 according to John J. Irvine III:

We want to have the safest year we have ever had at Roadtec and wish the same for our customers. Our employees know we care about them and place a premium on their safety.

We have an internal goal of 20% sales growth. We can accomplish this aggressive goal with the help of our new dealer partners.

We want to turn our inventory 4-5 times this year with more seasonal forecasting of parts. Our parent, Astec Industries, is making an investment in Roadtec’s shop so we can turn completed machines quicker and supply parts in a timelier manner.

As Irvine reflected on the company accomplishments in 2016 and the expectations for 2017, he concluded: “Traditionally, the second year of a highway bill is the great year. The first year, states and specifying agencies are designing new projects and securing funding. The second year, they let the projects and optimism abounds. This is that year. We are going to enjoy it!”

About Roadtec

Roadtec, Inc., Chattanooga, Tenn., is a part of ASTEC Industries. Founded in 1981, the company engineers, designs, and manufactures road construction equipment that includes asphalt pavers, asphalt milling machines, asphalt screeds, stabilizers / reclaimers, material transfer vehicles, broom machines, and cold-in-place recycling trailers.

Wells Fargo Reports: Small Business Confidence Remains Strong in January

After surging 7.5 points in December, the NFIB’s Small Business Optimism index rose another 0.1 percentage point in January. Five of the indices 10 series rose during the month and five fell, all by a small amount.

Small Business Owners Remain Optimistic

The National Federation of Independent Business (NFIB) Small Business Optimism Index rose 0.1 percentage point in January to 105.9. Small business confidence has risen 11.6 percent over the past three months and is currently at its highest level since December 2004. The improvement has been driven by the resurgence in the proportion of business owners that feel the next three months will be a good time to expand, which has more than doubled since October to an expansion high of net 25 percent.

Small business owners are much more optimistic about future conditions than they are about the current business environment. The percentage of firms reporting higher sales over the past three months rose 5 points in January but remain at a historically low level at -2. That means that slightly more business owners reported sales were lower over the past three months than during the preceding three months. By contrast, expectations for sales have improved dramatically, although they did dip slightly in January. Expectations for sales over the next three months fell 2 points in January to 29, after surging 20 points in December and rising 10 points in November.

Sluggish sales growth has been a persistent challenge for business owners throughout this expansion. Real GDP growth has averaged just a 2.1 percent pace since the Great Recession ended more than seven and a half years ago. With little pricing pressure, overall revenue growth in the economy has struggled to reach 4 percent each year, which has simply been too slow to cover the rising operating and regulatory costs.

Compensation costs continue to accelerate. The net proportion of firms reporting that compensation cost increased during the past three months rose 4 points in January to 30 percent and is now at its highest level of this expansion. The increase comes at a time that many states and localities have raised the minimum wage and also coincides with reports of unusually large hikes in healthcare premiums. By contrast, the net proportion of firms planning to boost compensation costs fell 2 points in January to 18 percent. The contrast between expectations for sales and actual sales and expectations for compensation costs and actual compensation costs is striking. Sales are not growing as fast as business owners expect while compensation cost have consistently outpaced expectations.

Despite the squeeze on operating margins, more business owners report they plan to boost hiring in the next three months. Hiring plans rose 2 points in January to 18 and are up a cumulative 8 points since October. While more businesses plan to add staff, a rising proportion of firms also report they are having difficulty filling open positions. Attracting skilled workers has persistently ranked as one of the most pressing issues problems facing small business owners, following taxes and regulation.