No Turn-around Yet for PA Businesses

Weighed down by concerns over a possible increase in the minimum wage, uncertainty over health care; and excessive regulations, Pennsylvania’s business climate continued to get worse over the past six months. That is the key finding of the Spring 2014 Keystone Business Climate Survey, conducted by the Lincoln Institute of Public Opinion Research semi-annually for the past 20 years. The survey asks the owners and chief executive officers of business in the state – the people who actually make our economy run – their opinion on the condition of the state’s business climate and key issues confronting the commonwealth.

On the issue of raising the state’s minimum wage, 78% stood in opposition with 17% favoring a minimum wage increase; 5% offered no opinion. Sixty-three percent said the minimum wage has no impact on their business, largely because their employees already earn above that standard. Of those who would be affected, 21% said they would cut employee hours if a minimum wage increase were enacted; 18% indicated they would reduce the number of people they employ, 3% said an increase in the minimum wage would cause them to go out of business. Less than one percent said they would expand their business if the minimum wage is raised while one percent said they would hire more employees.

Business Climate

Twenty-six percent of the business leaders responding to the Lincoln Institute survey said business conditions in Pennsylvania have gotten worse over the past six months, while 14% said business conditions have improved; 59% said they remain about the same. To the degree there is any good news, the number of respondents indicating business conditions have gotten worse has decreased over a year ago when 35% said business conditions had worsened.

Looking ahead, 24% expect the state’s economy to continue to decline, while 19% predict an improvement and 55% say they expect the state’s business climate to remain about the same. That is a slightly more optimistic outlook than six months ago when the Fall 2013 Keystone Business Climate Survey found 30% predicting worsening business conditions.

Employment levels are down at 18% of those businesses polled, and up at 15%. That is a substantial improvement from one year ago when 27% reported lower employee rosters and only 8% had increased their number of employees. Looking ahead, 18% project increasing their workforce, while 10% plan to cut the number of people employed.

Sales are up at 24% of the companies responding and down at 36%. A year ago only 17% reported increasing sales while 46% posted a drop in sales. Over the coming six months, 36% say they expect sales to increase; 12% expect sales to decline.

Job Performance

President Barack Obama continues to post the worst job approval ratings in the 20-year history of the Keystone Business Climate Survey. Eighty-nine percent of the CEOs and business owners responding have a negative view of the president’s job performance, 8% offered a positive view. U.S. Senator Patrick J. Toomey scored the highest job approval rating from the business leaders with 51% offering a positive assessment of his performance in office and 25% with a negative view. Conversely, Sixty percent disapprove of the job performance of U.S. Senator Robert P. Casey, Jr., while 15% approve. Federal Reserve Chairperson Janet Yellen is relatively new to the post, so about half the respondents have yet to form an opinion on her job performance. Of those who have, 15% offered a positive assessment, 37% negative. U.S. Secretary of the Treasury Jack Lew has a 7% job approval rating against a 43% negative view.

Governor Tom Corbett’s job approval rating improved six percent from last fall as 49% now give him a positive rating and 35% disapprove of his performance in office. Attorney General Kathleen Kane is viewed negatively by 47% of the business leaders surveyed with 12% offering a positive view. Sixty-six percent offered no opinion on the job performance of State Treasurer Rob McCord, 14% held a positive view and 20% view him negatively. Likewise a majority, 72% have no opinion on state Auditor General Eugene DePasquale. Ten percent have a positive view of his performance in office; 18% a negative view.

Legislative bodies fared poorly in the view of the business executives participating in the Spring 2014 Keystone Business Climate Survey. Ninety-two percent hold a negative view of the U.S. Senate with just 2% approving of the senate’s job performance. The U.S. House of Representatives garnered a 19% positive rating against a 74% negative rating. Closer to home, 56% disapprove of the job being done by the Senate of Pennsylvania, 23% approve. The Pennsylvania House of Representatives posted the relatively best number of 27% approving and 54% disapproving of the job they are doing.

Issues

Current state law allows governmental entities such as the state, counties, school districts and municipalities to deduct labor union dues and PAC (Political Action Committee) donations form employee paychecks and turn the proceeds over to labor unions. A "paycheck protection" bill currently before the General Assembly would end that practice. Eighty-nine percent of the CEOs and business owners participating in the survey said they support such a bill and that unions should collect their own dues. Five percent think the practice should continue.

There is a carve out in current state law that permits labor unions and business to stalk, harass, or threaten to use a weapon of mass destruction during a labor dispute. Eighty-nine percent disapprove of those carve outs, 85% strongly disapprove. Two percent voiced their approval.

Seventy percent of the businesses participating in the spring survey say they currently provide health insurance to their employees. Four percent said they provided health insurance in the past but have discontinued the benefit. Forty-six percent say the cost of employee health insurance is split between the employer and the employee with the employer paying the major portion; another 2% split the cost with the employee paying the larger share. At 27% of the businesses the employer pays the full premium. Fifteen percent said they did not and will not offer employee health insurance.

Looking ahead, 46% of the business owners and CEOs taking part in the survey said they will continue providing health care coverage to their employees, six percent said they plan to discontinue the benefit, another 32% were uncertain.

Legalization of marijuana for medical purposes has become a major issue in the 2014 Democratic primary for governor. Fifty-seven percent of the business leaders say the drug should be legalized for medical purposes. An additional 24% support legalization also for recreational use. Thirty-seven percent want marijuana to continue remaining totally illegal.

In that Democratic primary, 42% of the CEOs and owners polled by the Lincoln Institute say they expect Tom Wolf to emerge as the party’s nominee for governor. Eight percent predict a win for Rob McCord; while three percent say Allyson Schwartz will prevail and 3% expect a Katy McGinty victory. A majority, 51% say they believe Governor Tom Corbett should be re-elected in November, while 34% suggest it is time for a new person to hold that office.

Methodology

The Lincoln Institute’s Spring 2014 Keystone Business Climate Survey was conducted electronically from March 21, 2014 through April 7, 2014. A total of 378 business leaders responded. Of those 80% are the owner of their business; 13% are the CEO/COO or CFO; 3% are a local manager and 1% a state manager. Complete numeric results are posted [L=https://www.lincolninstitute.org/article.php?id=8223]here[EL].