The Great Recession has given way to a not-so-great recovery as Chief Executive Officers and business owners from across Pennsylvania say that over the past six months economic conditions have at best remained sluggish; and in many cases have worsened. Among the contributing factors is the uncertainty and cost surrounding implementation of the Affordable Care Act, better known as Obamacare, and a state government that appears unable to arrive at consensus on many of the most pressing problems facing the commonwealth.
Those were the key findings of the Fall 2013 Keystone Business Climate Survey conducted by the Lincoln Institute of Public Opinion Research, Inc. Confusion and concern surrounding implementation of Obamacare have 78% of the business leaders responding expecting an increase in employee health care costs. Conversely, only three percent actually expect the Affordable Health Care Act to be more affordable. As a result of Obamacare, 21% of the companies participating in the poll said they have increased employee co-pay; 15% have reduced their number of employees; 15% have raised their prices; 11% have cut staff hours and 7% have discontinued providing employees with health care coverage.
Three-quarters of the respondents say Obamacare should be entirely repealed, while another 10% support delaying implementation. Eleven percent said the act should be implemented as scheduled. The intensity of opinion surrounding Obamacare is so strong that 69% of the CEOs/owners support congress voting to defund the Affordable Health Care Act even if it triggers a general shut-down of the federal government.
Business Climate Worsens
Not only is the economy not improving, the Lincoln Institute survey found by over a two-to-one margin the business chieftains said the state’s business climate has gotten worse over the past six months. Thirty-one percent indicated business conditions are worse, while 14% say it has improved; 55% say the economic climate has remained about the same. Looking ahead six months 30% expect business conditions to continue deteriorating; 15% expect conditions to improve.
All of this adds up to bad news on the employment front. Twenty-seven percent reported employment levels at their company are lower than they were six months ago, 18% have increased their number of employees. Employment levels remained constant at 55% of the businesses participating in the survey. Looking ahead six months the state’s employment picture is expected to remain static. Sixty-seven percent anticipate employment numbers remaining the same; 16% expect to have more employees, 16% forecast having fewer employees.
Sales are down at 38% of the companies surveyed, and up at 29%. This is an improvement from the Spring survey when only 17% reported increased sales and 46% said sales were down. There is some optimism that sales will continue to improve modestly over the coming six months: 31% expect sales increases while 21% expect sales to decline.
Job Performance Ratings
The Lincoln Institute’s Fall 2013 Keystone Business Climate Survey revealed profound disapproval of the job being done by elected officials at both the state and national levels. The only elected officials with higher positives than negatives are U.S. Senator Pat Toomey and Governor Tom Corbett – and their positive job approval numbers are down significantly from the Spring survey.
Scoring the highest disapproval rating was President Barack Obama who got a thumbs down from 86% of the CEOs/owners polled; only 9% gave the president a positive job approval rating. Fifty-two percent disapprove of the job being down by outgoing Federal Reserve Chairman Ben Bernanke; 23% approve. U.S. Senator Robert P. Casey, Jr.’s positive job approval among the business leaders stands at 14%; 62% disapprove. As for U.S. Senator Patrick J. Toomey, 45% approve of the job he is doing while 26% disapprove. However, Toomey’s positive rating is down 13% since the Spring survey when 58% approved of the job he is doing in Washington, D.C.
At the state level, 43% of the business leaders participating in the survey approve of the job being done by Governor Tom Corbett, 42% disapprove. That is a seven percent erosion from the governor’s Spring rating when 50% approved of his job performance and 32% disapproved. Among the three statewide constitutional or “row” officers, only Attorney General Kathleen Kane drew strong opinions. Forty-five percent disapprove of her job performance while 17% approve. State Treasurer Rob McCord registered a 13% negative rating against a 6% positive rating; but 81% offered no opinion of his job performance. Likewise, 78% had no opinion of the job performance of state Auditor General Eugene Depasquale. Of those that did, 17% disapprove of his performance in office; 5% approve.
Business CEOs/owners also disapprove of the job being done by congress and by the Pennsylvania General Assembly. Ninety percent voiced a negative opinion of the U.S. Senate, only 4% offered a positive assessment. Seventy-six percent disapprove of the job being done by the U.S. House of Representatives; 18% approve. State government fared a bit better. Sixty percent offered a negative view of the job being done by the state Senate, 17% approve. Fifty-six percent disapprove of the performance of the Pennsylvania House of Representatives, 20% approve.
State Policy Issues
The collapse of Governor Tom Corbett’s legislative agenda at the end of the Spring session resulted in considerable finger pointing over who was to blame. The Lincoln Institute’s 2013 Keystone Business Climate Survey found more blame assigned to the legislature than to the governor. Fifty-seven percent said the state Senate is to blame for the failure of the governor’s agenda; 56% blame the state House. The governor himself is blamed by 43% of the respondents. Going forward, 45% expect there will be action on transportation funding as the Fall legislative session gets underway. Thirty-seven percent think the General Assembly will act on pension reform, 35% expect movement on privatizing the state’s liquor stores.
In terms of transportation funding, 80% report there have been no disruptions to their business as a result of the Pennsylvania Department of Transportation placing weight limits on a number of bridges due to structural deficiencies. However, 11% report having to adjust delivery routes and 7% have had shipping and/or deliveries disrupted. Six percent report that employee commutes have been affected. To fund repairs to state roads and bridges, 59% of the CEOs/business owners surveyed said they favor shift money from other parts of the state budget; 57% support diverting funds from low priority projects. Twenty-six percent support raising license and/or registration fees; 12% say taxes should be increased. Another 20% want to hold transportation spending at current levels.
There is a carve out in current state law that permits labor unions and businesses to stalk, harass, or threaten to use a weapon of mass destruction during a labor dispute. Eighty-four percent of the business leaders said they disapprove of this carve out, 80% strongly disapprove. Three percent said they agree with the carve out, while 13% offered no opinion.
Current law allows governmental entities (state, counties, school districts & municipalities) to deduct labor union dues and PAC (Political Action Committee) contributions from employee paychecks and turn over the proceeds to unions. Eighty-nine percent of those participating in the 2013 Keystone Business Climate Survey disapprove of the practice and say unions should collect their own dues. Three percent support the practice.
As the debate continues over reforming Pennsylvania’s public employee pension systems, 85% of the business CEOs/owners said state government should transition to a defined contributions system. Four percent favor retaining the current defined benefits system.
The Lincoln Institute’s Fall 2013 Keystone Business Climate Survey was conducted electronically from September 9, 2013 through September 23, 2013. A total of 306 business leaders responded of which 78% were the owner of the company, 17% work as a CEO/COO/CFO; 2% are a local manger and 1% a state manager. Results included a representative sample from all geographic regions of Pennsylvania. Complete numeric results of the poll are available on-line at www.lincolninstitute.org