Posts Tagged jobs
It was a simple, yet revealing summary of the problems plaguing Pennsylvania’s businesses. “Please stop trying to ‘fix’ it,” the business owner begged. “Leave us alone.” That plaintive plea came as three new studies show our state’s economy is sagging under the weight of new regulations, higher taxes, and unsustainable government spending.
Recovery from the Great Recession of 2008-2009 has been one of the slowest in history. But, some states have bounced back faster and farther than others. Pennsylvania is not one of those states. The Fall 2016 Keystone Business Climate Survey conducted by the Lincoln Institute of Public Opinion Research found half of the business owners/chief executive officers surveyed saying the state’s business climate has gotten worse over the past six months, and only five percent reporting improving business conditions.
Like other states the people who actually run businesses reported a dramatic deterioration in economic conditions in Pennsylvania during the Great Recession. Optimism returned briefly during the Corbett Administration, but tanked less than three months into Governor Tom Wolf’s tenure.
Governor Wolf began his administration pushing for historic increases in both state spending and in taxes. The Republican-controlled legislature successfully derailed that effort last year, but then caved into $1.4 billion in higher spending this year – earning the disapproval of 86% of the owners/CEOs. All of this creates a climate of uncertainty leaving one owner to comment: “We expect another shoe to drop making it difficult to operate in Pennsylvania.”
The biggest shoe that hasn’t dropped is who will pay to bail out Pennsylvania’s massively underfunded public pension system. Business owners fear a significant portion of that burden will fall upon them. And the problem is, to use a currently popular word, huge.
The American Legislative Exchange Council (ALEC) recently released a study of state pension systems entitled Unaccountable and Unaffordable. It pegged Pennsylvania’s unfunded pension liability at nearly $212 billion dollars. The commonwealth has amassed the 44th largest unfunded pension liability among the fifty states.
Compounding the problem is Pennsylvania has little room in which to maneuver in finding new revenue streams (taxes) to fund the public pension system. The Tax Foundation’s State Business and Tax Climate Index found we have the 24th highest state tax burden in the nation. We already have the most damaging taxes on the books: the Personal Net Income tax, Corporate Net Income tax, and a broad-based state sales tax. Already suffering from a poor tax climate, any move to expand, increase or create new taxes would further erode our competitiveness.
These factors weigh heavily on the minds of business owners/CEO as they consider locating or expanding in Pennsylvania. Forty percent said Governor Wolf’s proposed tax hikes have caused them to not expand their businesses. That factor was second only to the explosion of new federal regulations in impeding business growth.
Why should non-business owners care about all of this? Business relocation into Pennsylvania and the expansion of existing businesses will result in the creation of new jobs. Penn’s Woods has lagged the national average in job creation in large measure due to state taxes and regulations. The 2016 Keystone Business Climate Survey found 21% of the responding businesses reduced their employee compliment over the past six months while only 11% added employees.
Thus Pennsylvania continues on a downward spiral. And there is little optimism among those on the front lines of business activity in the state for improvement at any point in the near future. Uncertainty is Kryptonite to business development. At the state level uncertainty abounds. Governor Wolf continues to press for increased spending and higher taxes at a time when the commonwealth already faces a structural budget deficit. The recent record of legislative Republicans has shaken confidence in their ability to either deal with cost drivers like the pension crisis or to successfully oppose future tax hikes.
The bottom line is Pennsylvania’s business climate will not improve, and significant job creation resume, until and unless state government gets spending under control, addresses the looming pension crisis, cuts onerous regulations and provides some measure of tax relief to businesses ready to expand but which are being held back by the heavy hand of government.
(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is firstname.lastname@example.org.)
Permission to reprint is granted provided author and affiliation are cited.
Pennsylvania’s business climate remains sluggish as the commonwealth continues to struggle in the aftermath of the Great Recession. Business conditions, employment levels and sales have all backslid over the past six months with owners blaming high taxes, government regulation and a lack of skilled workers for the malaise.
The Fall 2016 Keystone Business Climate Survey conducted by the Lincoln Institute of Public Opinion Research found half of the business owners and chief executive officers survey saying the state’s economy has gotten worse over the past six months, only five percent felt Pennsylvania’s business climate had improved during that time frame.
Comparatively, one year ago 42% felt the business climate had gotten worse, while six percent at that time said it had improved. There is little optimism that business conditions will improve soon. Forty-four percent say they expect the state’s economy to continue getting worse over the upcoming six months, five percent expect to see an improvement in the business climate.
Along with that pessimistic overall prognosis twice as many businesses report having reduced their workforce as say they have added jobs. The majority of businesses – 66% – reported that employment levels remained about the same over the past six months. But, 21% said they have reduced their employee compliment while 11% added employees. The picture improves slightly as the owners/CEOs look ahead to the coming six months. Sixteen percent say they plan to add employees, 12% expect to reduce their workforce.
Sales have also taken a hit over the past six months. Thirty-nine percent said their sales remained about the same from March thru September. But, 39% reported decreased sales and were off-set by only 21% having reported sales increases. Looking forward, 51% expect sales to remain stable. Twenty-Four percent forecast an increase in sales, 23% are braced for a sales decrease.
Factors Impacting Business Growth
Among the factors cited by businesses for why they considered expanding their businesses over the past two years, but decided against expansion taxes and regulation topped the list of barriers. Onerous federal regulations were cited by 41% of the businesses that considered, but rejected, expansion plans. Coming in a close second was Governor Tom Wolf’s proposed tax increases cited by 40% as a reason why they did not expand. Pennsylvania’s tax structure was listed by 29% as having frustrated expansion plans.
Thirty-six percent cited onerous state regulations as a barrier to expansion, while another 35% cited the lack of a skilled work force. Nearly half of the businesses surveyed said they currently have open positions for which they have been unable to find qualified applicants. Forty-two percent say they have been unable to fill one to five jobs; 2% have six to ten open positions; one percent has more than ten jobs unfilled due to lack of qualified applicants.
Pennsylvania fiscal condition continues to be of concern to the business owners and CEOs participating in the Fall 2016 Keystone Business Climate Survey. Eighty-five percent disagreed – 70% strongly so – with Republicans in the General Assembly having agreed to a $1.4 billion spending increase and then raising taxes to enact the current year’s state budget.
Looking ahead to what will likely be another epic budget battle next summer, 92% say the General Assembly must address cost drivers such as pension reform before considering an increase in taxes. In fact, 34% said the state’s massive unfunded pension liability has caused them to not consider expanding in Pennsylvania.
Among pension reforms being considered is moving state employees from the current defined benefit pension system to a defined contribution plan. Thirty-nine percent of the businesses surveyed said they offer employees a company administered defined contribution plan to which the company contributes. Only 3% of the private businesses surveyed continue to offer a defined pension plan. Another 40% offer employees no retirement plans at all.
Earlier this year the General Assembly did pass, and Governor Tom Wolf signed into law, some modest changes to the state’s century-old liquor laws. Business owners/CEOs said those reforms did not go far enough. Fifty-two percent would like for the state to completely privatize both retail sales and wholesale distribution of alcoholic products. Another 26% would like to see just retail sales privatized. Twelve percent said the recent changes were sufficient.
Pennsylvania has an abundant supply of natural gas, but additional pipelines are needed to get that gas to market. Eight-nine percent agree – 60% strongly agree – that this resource should be developed and more pipelines built. Nine percent disagree. Twenty-five percent said easier access to natural gas would be a benefit to their business with an additional 14% saying it would be a major benefit. Thirty percent said they do not utilize natural gas in their business.
Over the past nine years since the passage of Act 44 the Pennsylvania Turnpike Commission has diverted $5.2 billion to PennDOT to help pay for state highways and public transit. This has resulted in annual fare increases for turnpike travelers. Sixty-three percent of those participating in the Fall 2016 Keystone Business Climate Survey said this should end and fare revenue be used only to maintain and improve the turnpike. Twenty-nine percent felt the sharing of revenue should continue.
Job Approval Ratings
President Barack Obama and Governor Tom Wolf continue to suffer from significantly low job approval ratings among the business community. Eighty-four percent have a negative view of the President’s job performance; 86% disapprove of the job being done by Governor Wolf.
U.S. Senator Pat Toomey, who faces re-election in November, received a 50% job approval rating against 23% with a negative view of his job performance. The job being done by U.S. Senator Robert P. Casey, Jr. is viewed negatively by 56% of the business owners/CEOs, 18% give him positive marks. Likewise, 54% say Federal Reserve Chair Janet Yellen is doing a poor job, 15% approve.
Pennsylvania has three statewide constitutional or “row” offices. Two are serving by appointment, their elected predecessors having resigned after being convicted of crimes. Auditor General Eugene DePasquale is the surviving official elected in 2012 still in office. Seventy-three percent have no opinion of his job performance, with 14% saying he is doing a good job and 14% having a negative opinion of his job performance. Likewise about two-thirds offered no opinions on state Treasurer Tim Reese or Attorney General Bruce Beemer. Of those who did, 18% give Beemer a negative rating, 6% a positive one while 15% hold a negative view of Reese, 5% a positive view.
As has been the case throughout the Keystone Business Climate Survey’s 22-year history the owners and chief executive officers hold the federal congress and the state legislature in very low regard. Just 8% approve of the job being done by the United States Senate, 11% approve of the job being done by the U.S. House of Representatives. Seventeen percent approve of the job performance of the Pennsylvania Senate; 19% approve of the job being done by the Pennsylvania House of Representatives.
Finally, the Lincoln Institute asked participants in the survey who they support for President of the United States and United State Senator from Pennsylvania in the upcoming November General Election. Seventy-three percent said they will vote for the Republican nominee Donald Trump, 12% support the Democratic nominee Hillary Clinton and 6% say they will vote for Libertarian Gary Johnson. Republican incumbent U.S. Senator Pat Toomey has the support of 81% of the owners/CEOs, Democratic challenger Katie McGinty has 12% support.
The Fall 2016 Keystone Business Climate Survey was conducted electronically by the Lincoln Institute of Public Opinion Research, Inc. from September 13 through October 5, 2016. A total of 370 businesses responded to the survey invitation. Of those 81% are the owner of the business, 14% are the CEO/COO/CFO and one percent a business manager.
Twenty-five percent of the responses came from the Philadelphia/southeastern part of the state; 18% from Pittsburgh/southwestern Pennsylvania; 16% from south/central Pennsylvania; 13% from northwestern Pennsylvania; 11% from northeastern Pennsylvania; 10% from north-central Pennsylvania; 4% from the Lehigh Valley and 3% from the Altoona/Johnstown area.
Complete numeric results are posted on-line at http://www.lincolninstitute.org
The Governor of Pennsylvania decided to use his perceived electoral mandate to take on one of the biggest issues that has confronted and confounded the commonwealth for decades: property tax reform. So he advanced a plan that would raise sales and personal income taxes in exchange for a cut in property taxes.
Sound familiar? The year was 1989 and the Governor was Robert P. Casey whose tax reform plan was put on a statewide ballot referendum and was soundly defeated by voters. Fast forward to 2015 and Governor Tom Wolf has placed on the table a property tax reform plan that strongly resembles the doomed Casey proposal. Except the Wolf plan doesn’t even include the dollar for dollar reductions required of the Casey effort.
As despised as property taxes are, and polling consistently finds the levy to be the most disliked, finding an acceptable alternative remains elusive. The Wolf plan appears to have little support in the General Assembly; in fact House Republicans have passed their own proposal. But it too fails to totally eliminate school property taxes leaving the door open for millage rates to simply increase again over time.
An indication of how unpopular the Wolf tax reform plan is can be found in the recent Keystone Business Climate Survey of business owners and chief executive officers conducted by the Lincoln Institute of Public Opinion Research. Nearly 70% of the business leaders said the Wolf property tax shift would result in only a temporary drop in property taxes which would then go back up. Another 14% predicted his plan would actually lead to property tax increases; only 15% expect to see property taxes decline under the Wolf proposal.
Not only does the poll demonstrate disapproval of the Wolf property tax plan, but the survey found the biggest six month decline in business climate optimism since the onset of the Great Recession in 2008. In fact, in the 20 year history of the poll only during that recession and in the aftermath of the 2001 terrorist attacks has business climate optimism dropped so far so fast.
Last September, for the first time since George W. Bush was re-elected in 2004, more business leaders said the state’s economic climate had improved that felt it had gotten worse. The indicator rose into positive territory by just 1%, but it capped a steady move in a positive direction. All of that has changed. The number of owners/CEOs saying business conditions have improved over the past six months has fallen to just 13%, while the number saying business conditions have gotten worse has nearly doubled since last Fall.
The only variable to change during that six month period was the election of Governor Tom Wolf. Governor Tom Corbett left office with a 52% job approval rating. Governor Tom Wolf’s first job approval test yielded just 15% approval with 69% of the state’s business leaders saying they disapprove of the job he is doing.
Driving the dour mood among the people who actually run businesses – big and small – is a general disapproval of Governor Wolf’s budget proposals. A total of 78% disapprove of his proposed budget. Overall 80% say the governor’s proposed state budget will harm the state’s business climate. As a side note, Pennsylvania’s high tax rates and stringent regulatory policies are viewed by the owners/CEOs as the biggest impediments to conducting business in the commonwealth. They now fear that situation is about to get even worse so the state’s job creators are bracing themselves for higher taxes.
Overall the survey results represent a sound and complete repudiation of Governor Tom Wolf’s first proposed state budget along with the major revisions and tax hikes contained within the proposal. Like Governor Casey before him, his ambitious tax reform plans are deeply unpopular and may be destined for the same fate.
(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is email@example.com)
Permission to reprint is granted provide author and affiliation are cited.
Radio Program Schedule for the week of October 25, 2014 – October 31, 2014
This week on American Radio Journal:
- Lowman Henry talks with former Virginia Governor James Gilmore of the Free Congress Foundation about the federal response to Ebola
- Andy Roth of the Club for Growth has the Real Story on what to expect from a U.S. Senate under Republican control
- Eric Boehm and Katie Watson have a Watchdog Radio look at examples of government waste found in Senator Tom Coburn’s new “waste book”
- Col. Frank Ryan, USMC (Ret.) has an American Radio Journal commentary on what will happen if the dollar ceases to be the world currency
This week on Lincoln Radio Journal:
- Eric Boehm has news headlines from paindependent.com
- Kevin Shivers from the PA Chapter of the National Federation of Independent Business hosts a Capitol Watch look at results of the Fall 2014 Keystone Business Climate Survey with Nathan Benefield of the Commonwealth Foundation and Neal Lesher from NFIB
- Lowman Henry has a Town Hall Commentary on the GOP’s new war on poverty
Visit the program web sites for more information about air times. There, you can also stream live or listen to past programs!
For the first time in a decade, by a narrow margin, more Pennsylvania employers say business conditions in the commonwealth are improving than say the state’s economy is getting worse. But, that optimism is tempered by a lack of job creation and lower wage hikes due to the implementation of the Affordable Care Act, better known as Obamacare.
George W. Bush was president and on the verge of re-election in 2004, the last time respondents to the Lincoln Institute’s Keystone Business Climate Survey thought the business climate was getting better rather than worse. Since then the nation has experienced the Great Recession and subsequent slow recovery.
But, the current survey finds 20% of the business owners and CEOs responding say over the past six months business conditions in Pennsylvania have gotten better, while 19% say the state’s economy has gotten worse. By comparison, one year ago 31% felt business conditions had gotten worse and just 14% saw an improvement.
There is not, however, optimism for the immediate future. Looking ahead six months, 27% expect business conditions in Pennsylvania to get worse, while 16% expect conditions to get better.
Driving the current burst of optimism are increasing sales. Thirty-six percent of the companies said sales have increased over the past six months as 24% reported decreased sales. Looking ahead, 32% project sales will increase, 13% expect sales to drop.
Employment levels dropped over the past six months, with 20% reporting higher employment and 24% saying employment at their business has decreased. Looking ahead six months, 21% project adding employees, while 9% plan to employ fewer workers.
Impact of the Affordable Care Act
It is clear the Affordable Care Act (ACA), or Obamacare, is having a negative impact on both the number of jobs that are being created, and on wages and pay hikes. Twenty-five percent of the business leaders participating in the survey said they have decided not to hire additional employees due to the requirements of Obamacare. Ten percent said they have actually reduced the number of employees because of ACA; while another 3% said they hired, but did so later than they had planned. Less than 1% said they hired sooner than planned because of Obamacare. Fifty-eight percent said ACA has had no impact on their hiring plans.
In terms of wages/salaries, 33% said they have delayed giving pay raises due to the costs of Obamacare. Twenty-eight percent indicated they reduced the amounts of pay raises, while 26% said they paid new hires less to compensate for the costs associated with compliance of the Affordable Care Act. Five percent reduced the pay of current employees, while 2% said they increased employee pay in response to ACA requirements. A total of 42% said Obamacare has no impact on their wages/salaries.
Education spending has been a major issue in the gubernatorial campaign. But, unlike the electorate at-large, business owners and CEOs participating in the Fall 2014 Keystone Business Climate Surveysay the state spends too much money on public education. Forty percent think state government spend too much on public education, 29% say the state spends too little, while 27% say state spending on public education is about the right amount.
By a large margin, 78% to 19%, the employers say they are not willing to pay higher taxes to provide additional funding to public education. There is, however, strong support for the Educational Improvement Tax Credit (EITC) which businesses can claim for donating money to K-12 educational institutions. Forty-seven percent think the General Assembly should allocate more month to the tax credit fund so more businesses can participate; 36% say the fund should be kept at current levels.
Taxes have also been a major campaign issue in 2014. When asked whether Pennsylvania should retain the current “flat” income tax or move to a “graduated” income tax where low income earners are exempt and higher income earners pay a higher rate 84% said they support the current “flat” income tax, 14% would like to see a “graduated” rate.
A proposal to exempt the first $30,000 from state income taxes and raise the rate for money earned above that level from 3.07% to 5% drew strong opposition from the business leaders. Seventy-three percent oppose such a system with 60% saying they are strongly opposed. Twenty-three percent said they would support such a change.
Mandating paid sick leave for employees was opposed by three-quarters of the business owners and CEOs who participated in the Lincoln Institute survey. Seventeen percent said they would support mandating paid sick leave for businesses with over 50 employees. Another 6% support mandating paid sick leave for all businesses regardless of size.
Job Approval Ratings
Mirroring the national trend, President Obama received a highly negative job approval rating from the business owners and CEOs. Eighty-five percent voiced a negative view of the president, while 13% offered a positive assessment.
U.S. Senator Pat Toomey is viewed favorably by 51% of the survey participants while 24% have a negative view. The numbers reverse for U.S. Senator Robert P. Casey, Jr. as 60% offered a negative view of his job performance against a 21% positive rating. Fed Chairman Janet Yellen received a 38% negative / 28% positive rating; and, U.S. Treasury Secretary Jack Lew scored a 42% negative / 8% positive.
At the state level Governor Tom Corbett sports a 52% positive rating while 35% disapprove of the job being done by the Republican governor. The CEOs and business owners turned thumbs down on Attorney General Kathleen Kane, who received a 49% negative rating against just 16% positive. Most offered no opinion on the job performance of Auditor General Eugene Depasquale and State Treasurer Rob McCord. Of those who did, Depasquale had a 20% negative / 11% positive rating and McCord scored 21% negative / 17% positive.
Participants in the Fall 2014 Keystone Business Climate Survey took a dim view of the job being done by both Congress and by the Pennsylvania General Assembly. Eighty-nine percent offered a negative assessment of the U.S. Senate, with 7% having a positive view. The U.S. House of Representatives fared slightly better scoring a 72% negative / 22% positive rating. Sixty-three percent have a negative view of the job being done by the Pennsylvania Senate, 19% approve. The Pennsylvania House of Representatives turned in a marginally higher score, with a 62% negative / 23% positive rating.
And, Governor Tom Corbett finally came out ahead in one poll. Sixty-five percent of the business owners and CEOs said they plan to vote for the incumbent governor in the November 4th General Election, 20% say they will cast their ballot for Democratic challenger Tom Wolf. However, 53% expect Wolf to win the election, while 29% predict a Corbett victory.
The Lincoln Institute’s 2014 Keystone Business Climate Survey was conducted electronically from September 26, 2014 through October 17, 2014. A total of 316 responses were received. Of those, 69% are the owner of their business, 24% are the CEO/COO or CFO, another 4% are a state or local manager. Twenty-seven percent of the respondents are located in southeastern Pennsylvania, 18% in southwestern Pennsylvania, 14% in the northwest section of the state, 17% in south-central Pennsylvania, 11% in northeastern Pennsylvania, 6% in the Lehigh Valley, six percent in north-central Pennsylvania and 1% in the Altoona/Johnstown area. Complete numeric results are available at www.lincolninstitute.org.