Treading Water: PA business owners/CEOs don’t see economic recovery


Although many key economic indicators are pointing to a slowly improving economy, employers in Pennsylvania say – at best – the state’s business climate is stagnant. More report lower employment levels than increased levels; and more businesses say over the past six months sales have declined rather than increased. Looking ahead six months, there is little expectation for a significant improvement in economic conditions.

Results of the Spring 2013 Keystone Business Climate Survey of business owners and Chief Executive Officers found by a two-to-one margin they say business conditions in the state have gotten worse over the past six months rather than better. Thirty-five percent said that business conditions in Pennsylvania have gotten worse, 17% say they have improved, 47% said business conditions remained about the same. Those numbers track almost exactly results of the 2012 Spring survey indicating the state’s economy has made little progress over the past year. Looking ahead, 33% expect business conditions to get worse, 19% say they expect some improvement, 47% expect conditions to remain about the same.

The business leaders surveyed continue to report declining employment levels. Twenty-seven percent said employment levels at their company are lower than six months ago, while 9% report having more employees. Sixty-two percent say their employment levels have remained about the same. The employment picture is worse than a year ago when 13% of the employers said they have increased their employee compliments and 20% reported a decrease. Looking ahead, 15% say they expect to increase the number of employees at their business, 17% are planning on a workforce reduction. Sixty-five percent say employment to remain about the same.

Sales are another area of concern. Forty-seven percent of the CEOs responding to the Lincoln Institute survey said sales have dropped over the past six months, while 17% reported an increase in sales. Another 36% said sales have remained steady. These numbers are considerably more negative than those reported last spring when 35% reported decreased sales and 28% reported a sales upswing. Looking ahead there is a bit of optimism: 27% expect sales to increase while 19% forecast declining sales.

Job Approval Ratings

President Barack Obama continues to be highly unpopular among Pennsylvania’s business leaders. Twelve percent offered a positive view of his job performance, while 84% disapproved. The job approval rating of Pennsylvania’s two U.S. Senators are going in opposite directions. U.S. Senator Pat Toomey’s positive job approval jumped from 47% last spring to 58% in the current survey, while his negative rating dropped from 23% last year to 19% this year. Meanwhile, U.S. Senator Robert P. Casey, Jr.’s negative rating increased from 62% last spring to 69% this year. His positive job approval also increased from 11% last spring to 14% in the current poll.

At the state level, Governor Tom Corbett’s job approval rating remains steady. Fifty percent give him positive reviews, up from 48% last year. His current negative number is 32%, exactly where it was one year ago. Attorney General Kathleen Kane’s first job approval test resulted in a 21% positive – 28% negative rating. New Auditor General Eugene Depasquale’s inaugural numbers found a 9% positive – 14% negative rating. State Treasurer Rob McCord weighed in with a 13% positive – 14% negative rating.

As for legislative bodies, respondents to the survey gave the U.S. Senate a 95% negative rating with only 3% having a positive view of the upper chamber. Seventy-one percent hold a negative view of the U.S. House of Representatives while 23% give them a positive rating. At the state level, approval of the job being done by the House of Representatives has increased over the past year: 32% now approve of the state House up from 20% last Spring, but 48% hold a negative view of that chamber. Fifty-four percent disapprove of the job being done by the Pennsylvania Senate, while 25% approve.

State Issues

Governor Tom Corbett has outlined an ambitious legislative agenda, with privatization of the state’s monopoly liquor stores at the top of the list. The business owners and Chief Executive Officers responding to the Lincoln Institute’s Spring 2013 Keystone Business Climate Survey are in strong agreement with the governor that the time for privatization has arrived. Eighty-five percent indicated their support of ending the liquor monopoly and placing distribution and retail sales of shine and spirits into private hands. Of that number, 65% said they “strongly approve” of the Corbett plan. Twelve percent expressed their opposition.

Support for the governor’s other privatization plan, that to remove administrative operations of the Pennsylvania Lottery from government employees and place them into private hands received less support, but 53% did agree with privatizing lottery operations. Twenty-eight percent expressed opposition and 19% offered no opinion.

The controversial decision by Governor Corbett to not set up a state-based Medicaid health care exchange under provisions of the Affordable Care Act (Obamacare) drew support from 65% of the business leaders polled with 25% in disagreement and ten percent offering no opinion. To date, 62% said they have had to take no steps to comply with provisions of the act, while 15% reported having to increase employee co-pay to cover additional costs; 10% have cut staff or reduced hours; 8% have raised their prices and 5% have discontinued offering health care coverage to their employees.

A number of public employee retirement systems, ranging from those covering state employees to school districts and municipalities, are projected to experience a significant shortfall in funding in the near future. To deal with that, respondents to the Lincoln Institute survey said governments should require higher employee contributions (77%), cut benefits to retirees (57%), divert spending from other areas to cover the shortfall (25%), or raise taxes to cover the shortfall (4%). Eight percent suggested all of the above mentioned steps should be taken to deal with the problem.

Governor Corbett has proposed lifting the cap on the Oil Company Franchise Tax to raise additional state revenue for spending on transportation infrastructure improvements including roads and bridges.   Fifty-seven percent of the business owners/CEOs said they agree with that idea while 38% disagree. But, when asked if lifting that cap would result in an increase of the cost of gasoline at the pump of over 20 cents per gallon, support for the plan dropped to 28% while opposition increased to 69%. Of that 69% who disagreed, 47% expressed strong disagreement.

To provide additional funding for infrastructure, eighty-eight percent said the state should cut administrative overhead; 45% opined that spending in other areas should be cut and diverted to transportation; 30% would raise driver license renewal feels; 19% would raise gasoline taxes and 5% would raise general fund taxes. Fifteen percent said the funding crisis is overblown and no additional funds are needed.

As the governor and the general assembly work toward adoption of a 2013-2014 state budget, 56% of the business leaders participating in the Spring 2013 Keystone Business Climate Survey said state spending is too high and spending levels should be cut further. Thirty-seven percent said the current levels of spending are appropriate while 4% suggested state government should increase taxes and spending.

Federal Issues

In the debate over enactment of additional restrictions on the sale and purchase of firearms 31% said they would support additional restrictions, with 11% saying they strongly support additional restrictions. But, 68% said they oppose the placement of additional restrictions on the sale and purchase of firearms with 50% being in strong opposition to such additional restrictions.

Automatic federal spending cuts, official known as sequestration, took effect the beginning of March. Eighty percent of the businesses said the federal spending cuts have had no impact on their business. Twelve percent indicated sequestration had negatively impacted their business while 3% said the cuts have had a positive impact.

There has been much discussion and debate over the rising national debt. Ninety percent of the business owners/CEOs said the rising national debt will have a negative impact on the U.S. economy with 77% predicting a significantly negative impact. Five percent suggested the rising national debt will have a positive impact on the economy while 4% predict no impact at all.

Methodology

The Spring 2013 Keystone Business Climate Survey was conducted by the Lincoln Institute of Public Opinion Research, Inc. from March 8, 2013 through April 5, 2013. A total of 260 business leaders participated in the electronic survey. Of that number 80% were the owner of the business; 15% serve as CEO/COO/CFO; 2% are a local manager and 1% a state manager. Complete numeric results are available at www.lincolninstitute.org.

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