Help Wanted: Where Have All The Workers Gone?

The most recent jobs report from the Bureau of Labor Statistics (BLS) noted the U.S. economy added 336,000 jobs in September – an acceleration in the rate of hiring. Despite that, results of the Fall 2023 Keystone Business Climate Survey found that finding qualified employees remains one of the biggest challenges for employers in the commonwealth.

The survey of business owners and top line executives found the impact of the nation’s continued high rate of inflation and rising costs (47%) along with concern over current (46%) and future (41%) economic conditions topped their list of concerns; the ability to located qualified employees quickly followed with over a third of the businesses saying that is one of their top challenges along with keeping qualified employees (26%).

Third-four percent said they have had more difficulty over the past six months in finding and hiring qualified employees while 36% said they have experienced about the same level of difficulty. But, based on past surveys employers were already experiencing difficulty in finding and keeping qualified employees, thus same level of difficulty is problematic.

A majority – 53% — of the businesses reported that they have open positions they are currently looking to fill. Twenty-eight percent added they have open positions they are not looking to fill. Of those, 25% said improved efficiency made the positions unnecessary, 23% cited a decline in business, 19% gave up because they could not find qualified employees, and 13% changed their business’ focus.

In an effort to attract qualified employees 34% reported that they have increased salary/pay, 11% have expanded existing benefits, 9% have increased the amount of paid time off, 6% have added new benefits and 6% have reduced work hours. Twenty-eight percent have not made any changes to their compensation packages.

The strong jobs report coupled with data from the Fall 2023 Keystone Business Climate Survey would indicate that efforts by the Federal Reserve to tame the rate of inflation – which ticked up more than expected in September – are not having the desire effect of cooling the economy. What the interest rate hikes have done, however, is making it more difficult for businesses to access credit. Forty-three percent of those responding to the survey indicated they have had more difficulty in securing business loans of access to capital; 38% said they have experienced the same amount of difficulty (which again based on past surveys was significant); and ten percent said they have had less difficulty.

Business Conditions

In general, 45% of the business owners/executives said business conditions in Pennsylvania have gotten worse over the past six months; 16% said business conditions have improved. Thirty-six percent said business conditions are about the same, but about the same is not good considering 36% of respondents to the Fall 2022 Keystone Business Climate Survey had indicated business conditions had gotten worse over the preceding six months.

There is also pessimism over the future: 47% expect business conditions to get worse over the coming six months while 18% expect the business climate to improve and 33% expect it to stay about the same.

Overall respondents to the 2023 Keystone Business Climate Survey report employment levels have remained essentially steady. Fifty-five percent reported employment levels over the past six months are the same; 22% reported having fewer employees; 17% have increased their number of employees.  Looking ahead six months, 57% expect employment levels to remain about the same; 20% forecast an increase in employment while 15% expect employment to decrease.

Sales have also been stagnant over the past six months. Forty-five percent of the businesses reported sales have remained about the same; 27% report a decrease in sales while 24% say sales have increased. Looking ahead six months, 31% expect sales to increase; 21% anticipate decreasing sales; 45% expect sales to remain about the same.

Policy Issues

Ongoing pressure to increase the state’s minimum wage would have a negative impact on 45% of the businesses surveyed; no impact on 36% with 14% saying a minimum wage increase would have a net positive effect on their business.

When asked if they have confidence that the electric power grid will continue to supply Pennsylvania’s electricity needs, 59% are somewhat or very confident, however 36% said they are not confident that the power grid will be able to continue supplying demand.

The Biden Administration continues to restrict oil drilling both on land and off-shore. Fifty-three percent of those participating in the survey oppose the administration’s policy – 37% are strongly opposed. But 47% support the President’s policies with 23% strongly supporting.

Job Approval Ratings

The only elected official to receive a net positive job approval rating in the Fall 2023 Keystone Business Climate Survey is Governor Josh Shapiro, but his approval rating of 41% fell below the 50% threshold generally experienced by incumbents in their first year in office. Thirty-seven percent have a negative view of the governor’s job performance.

Everyone else is in negative territory. President Joe Biden scored a 57% negative/33% positive rating. U.S. Senator Robert P. Casey, Jr. posted a 29% positive/40% negative rating while U.S. Senator John Fetterman scored a 32% positive/ 54% negative rating. Federal Reserve Chairman Jerome H. Powell was upside down with a 38% negative/20% positive rating. Likewise, U.S. Treasury Secretary Janet Yellen is in negative territory posing a 25% positive/45% negative rating.

Pennsylvania’s constitutional or “row” officers were also in negative territory, although each posted a high no opinion response. Pennsylvania Attorney General Michelle Henry scored a 32% negative/13% positive rating with 55% offering no opinion. State Treasurer Stacy Garrity’s rating stood at 24% negative/22% positive with 54% offering no opinion. Auditor General Tim Defoor’s rating was 26% negative/19% positive with 55% offering no opinion.

Among institutions both the U.S. Senate and U.S. House of Representatives were deep into negative territory. The United States Senate has a 61% negative/28% positive rating while the House of Representatives earned a 62% negative/25% positive rating. The Pennsylvania state Senate was upside down with a 42% negative/30% positive rating while the Pennsylvania House of Representatives scored a 44% negative/25% positive rating.

The job approval rating for the Supreme Court of the United States stood at 46% negative/38% positive and the Justices of the Pennsylvania Supreme Court hold a 39% negative/28% positive rating.

Methodology

The Fall 2023 Keystone Business Climate Survey was conducted electronically between October 2 and October 11, 2023 with a total of 209 completed responses. Of those participating 67% were the owner of the business; 16% serve as the CEO/COO/CFO; 9% were a state manager and 5% a local manager of the business.

Complete numeric results of the Fall 2023 Keystone Business Climate Survey are available at www.lincolninstitute.org.

(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal and American Radio Journal. His e-mail address is [email protected].)

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