PA Economy Trying to Gain Steam

Member Group : Lincoln Institute

Pennsylvania employers are expressing greater optimism about the direction of the state’s economy, but underlying factors such as the difficulty in obtaining needed capital continue to hinder the economic recovery. The Fall 2012 Keystone Business Climate Survey conducted by the Lincoln Institute of Public Opinion Research, Inc. also found the number of employers adding to their workforce has almost doubled over the past six months, however, the number of employers cutting employees has also significantly increased.

The good news in the survey is that the number of businesses saying they have increased their workforce has jumped from 13% in the Spring 2012 Keystone Business Climate Survey to 24% in the current poll. But, the number of companies reporting fewer employees also increased from 20% last spring to 27% in October. The number reporting employing about the same number of workers dropped from 66% to 48%. These numbers reflect national trend which find employment levels rising, but not at a sufficiently fast pace to turn around the faltering economy. Looking ahead, 28% of the business leaders surveyed say they plan to hire more employees, 14% expect to further cut their workforce and 53% say the number of people employed by their business will remain about the same.

Overall perceptions of the state’s business climate remain consistent with the mood reported by employers in last spring’s survey. Twenty percent say, in general, business conditions in Pennsylvania have improved over the past six months. That is up from the 17% who reported improved business conditions in the March poll. But, the number of employers saying business conditions have gotten worse over the past six months also rose from 30% last spring to 35% in the current survey. Forty-four percent said business conditions remain "about the same," which is not good considering confidence has been at a low ebb for the past four years. Looking ahead, employers are not expecting business conditions to improve significantly. Twenty-five percent expect the economy to get better, 27% say it will get worse and 44% expect business conditions to remain about the same.

A relative bright spot in the survey are sales numbers. Thirty-one percent of the business leaders polled said sales at their company have increased over the past six months, while 32% said sales have decreased. That is an improvement from six months ago when 35% reported decreasing sales and 28% reported sales increases. Looking ahead, 37% forecast rising sales over the coming six months and 16% expect sales to drop.

Job Performance Ratings

Pennsylvania’s business leaders continue to give low marks for the performance of our national and statewide leaders. Seventy-two percent give a negative performance rating to President Back Obama; 59% hold Treasury Secretary Timothy Geithner in a negative light and 43% say Federal Reserve Chairman Ben Bernanke is doing a poor job.

Statewide elected officials don’t fare much better. U.S. Senator Pat Toomey gets the highest job performance rating – 45% positive, 28% negative – with Governor Tom Corbett narrowly in positive territory with a 40% positive compared to a 39% negative rating. U.S. Senator Robert P. Casey, Jr. is given a 61% negative rating by the business community against a 23% positive grade.

As for legislative bodies, 72% hold a negative view of the U.S. House of Representatives with 23% giving that chamber a positive rating. Eighty-seven percent gave failing marks to the U.S. Senate with 8% holding a positive view of the upper chamber. At the state level, 59% hold a negative opinion of the job being done by the state senate, with 22% holding a positive view. Fifty-eight percent say the state House is doing a poor job, compared with 21% who give that chamber a positive rating.

Federal Monetary Policy

The economy is showing some signs of trying to break free of what has been a historically slow recovery. One of the factors inhibiting economic growth continues to be business’ ability to borrow funds or access capital. Forty-one percent reported in has become more difficult over the past year to access capital, 21% of those reporting it has been much more difficult to do so. Conversely, 14% said they have found it easier to borrow capital. Twenty-six percent said their access to capital remained about the same, however past surveys have shown access to be problematic. Another 15% reported no need to borrow funds.

The Federal Reserve’s policy of Quantative Easing, or increasing the nation’s money supply to spur the economy is viewed largely in a negative light by the business leaders responding to the 2012 Keystone Business Climate Survey. Fifty-five percent said they disagree with the Fed’s policy of printing money, while 38% agreed.

State Issues

Among the major problems facing the next session of Pennsylvania’s General Assembly are the growing financial difficulties of various government pension programs including those for state employees, teachers, and various municipal pension program projected to develop significant shortfalls. To deal with those shortfalls, business leaders suggest requiring higher employee contributions (79%), cutting benefits to retirees (45%) and diverting spending from other areas to cover the shortfall (26%). Another 10% said taxes should be raised to cover the shortfall.

Currently, Commonwealth of Pennsylvania employees participate in a defined benefits pension system. Eighty percent of the business leaders polled support moving state employees into a defined contribution system, just 5% support keeping state employees in the current defined benefits system while 9% favor giving state employees the option of choosing either.

Another significant problem awaiting action by Governor Tom Corbett and the General Assembly is the state’s growing transportation funding crisis. The Pennsylvania Department of Transportation, the Pennsylvania Turnpike Commission, and various mass transit agencies all say they are experiencing a lack of funding to maintain and to improve the state’s transportation infrastructure. To deal with that problem, 84% of those responding to the Lincoln Institute’s survey said the agencies should cut administrative overhead. Thirty-nine percent would support an increase in vehicle registration fees to inject more funding into transportation; 35% would support an increase in the gasoline tax. Thirty-two percent said spending in other areas of the state budget should be cut and diverted to transportation. Seven percent would support an increase in general fund taxes. Another 14% suggest the funding crisis is overblown and no additional funds are needed.

The General Assembly is considering a plan to end the state’s liquor store monopoly and place distribution and retail sales of wine and spirits into private hands. Eighty-three percent of the business leaders surveyed said they support liquor store privatization – 71% said they strongly approve. Thirteen percent disapprove of the proposed change.

For two years in a row Governor Tom Corbett has proposed and the General Assembly has approved state general fund budgets that held spending at a rate where no additional taxes were required. Forty-five percent of the survey’s participants said state spending should be cut still further, while 39% believe state spending is currently at an appropriate level. Ten percent think taxes and spending should be increased.

The Pennsylvania House of Representatives is planning a post-election or "lame duck" session to pass legislation. Fifty-two percent of the business leaders polled said such sessions should not be held, 41% think they should.


The Fall 2012 Keystone Business Climate Survey was conducted electronically by the Lincoln Institute of Public Opinion Research, Inc. from October 10, 2012 thru October 31, 2012. A total of 182 business leaders participated in the poll. Of that number, 70% are the owner of their business; 25% are the CEO/COO/CFO; the balance are a local or state manager. Thirty-nine percent of the respondents are based in southeastern Pennsylvania; 20% in the southwestern part of the state; 18% in Southcentral Pennsylvania; 7% in the Northwest and 7% in the Northeast; 4% in the Lehigh Valley and 3% each in Northcentral Pennsylvania and the Altoona/Johnstown area. Complete numeric results are available on-line at

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