Columnist : Lincoln Institute

HARRISBURG — There is growing optimism among Pennsylvania’s major employers about the direction of our state’s business climate. That optimism, spurred by rising sales, has resulted in increased employment opportunities and fewer firms thinking about moving from the state.
Those are the findings contained in the Lincoln Institute of Public Opinion Research’s semi-annual Keystone Business Climate Survey of major employers (150 or more employees) which was conducted August 15th through September 15th.
The survey, which will be published next week in the Fall 1996 edition of the Lincoln Institute – Sindlinger Economic Report, found 38% of the companies surveyed felt that Pennsylvania’s business climate had improved since last Spring, only 14% felt the state’s business climate had worsened. Another 48% felt Pennsylvania’s business climate was about the same as it was six months ago.
That’s the most optimistic assessment of the state’s overall business climate in two years and is up dramatically from the survey taken last Spring when just 16% felt Pennsylvania’s business climate was improving.
A majority of the Chief Executive Officers surveyed, 60%, expect little or no change in the commonwealth’s business climate during the coming six months. There are more optimists than pessimists, however, as 26% expect the business climate to improve and 14% expect business conditions to worsen. In last Spring’s survey, more employers expected business conditions to worsen (20%)in the months ahead than improve (18%).
“With more major employers viewing the state’s business climate as improving, fewer are contemplating moving all or part of their business operations to other states,” said Lowman S. Henry, Chairman of the Lincoln Institute.
During the past six months, 11% of the companies surveyed report they moved some of their operations to other states while 2% moved operations from other states to Pennsylvania. A total of 6% of the companies say they considered moving all of their operations from Pennsylvania, while 16% considered moving some of their operations from the state. That’s down from the 22% of companies who reported last Spring they were considering moving some of their operations to other states.
The number of firms not considering any moves rose from 55% last Spring to 64% in the August-September survey. 63% of the corporate leaders responding to the survey said they don’t expect to consider making any moves from Pennsylvania during the coming six months. Still, 30% do expect to consider moving some operations. That’s down only slightly from the 31% who forecast such consideration in the Spring survey.
Employment levels at Pennsylvania’s biggest companies edged upward during the past six months. 40% reported employment was up, while 20% said employment at their company was down. Another 40% said employment levels had stayed the same during the past six months. In the Spring survey, only 33% of the CEOs reported higher employment levels and 34% had said employment levels at their company had dropped.
Sales were the bright spot last Spring and the Fall survey found that sales levels continued to improve as 48% said their company’s sales had risen during the past six months and 22% reported decreased sales. Another 30% said sales remained about the same.

The CEOs are optimistic about the sales picture for the coming six months. 56% said they expect sales to increase while only 7% forecast decreasing sales. 37% expect sales levels to remain stable.
Perhaps the most significant development affecting Pennsylvania’s business climate during the past six months was the enactment of Workers’ Compensation Reform legislation in Harrisburg. The high cost of Workers’ Compensation had previously been cited by business leaders as one of the chief reasons for Pennsylvania’s poor business climate.
The most recent Keystone Business Climate Survey found 25% of the CEOs felt Workers’ Compensation Reform was very helpful in improving the competitive position of their business and another 64% felt it was somewhat helpful. Only 11% of the CEOs felt the reforms had no effect on their competitive position.
As a result of the Worker’s Compensation reforms, 39% of the companies surveyed said they are more likely to hire additional employees during the coming six months. 3% said they are less likely to hire employees as a result of the reforms and a majority, 58% said the changes would have no effect on their hiring plans.
Now that Workers’ Compensation is off the legislative agenda, further cuts in the Corporate Net Income (CNI) Tax tops the business community’s wish list. 31% say cutting the CNI is the most important issue facing the business community, 21% cited tort reform as the most significant issue and 19% say cutting government regulations should top the agenda. 16% said adoption of a state Right-To-Work law should be the business community’s highest priority while 6% want product liability reform and 5% want health care reform.