Pennsylvania’s Economic Recovery Flounders

Supply Chain Problems, Employee Shortages Major Factors

By Lowman S. Henry

Supply chain disruptions and difficulty in finding qualified employees are hampering Pennsylvania’s economic recovery from the impact of the COVID-19 pandemic. Over 60% of respondents to the Lincoln Institute’s Fall 2021 Keystone Business Climate Survey of business owners and top executives say their business has not recovered at all or are only partially recovered from pandemic-related economic losses and operational disruption.

Fifty-seven percent of the businesses surveyed said they have open positions they are looking to fill. Sixty-one percent indicated they are having difficulty finding enough qualified employees to fill open positions, with 33% reporting having significant difficulty.

In an effort to attract qualified employees, 35% have offered increased wages; 4% have expanded benefits; and 13% have increased both wages and benefits. Due to a lack of employees 19% said they have had to reduce operating hours; 9% have periodically closed; and 11% have had to both periodically close entirely and to reduce the hours they are open.

Forty-five percent indicated they expect it to become easier to find employees now that Federal Pandemic Unemployment Compensation (FPUC) has ended. However, 26% expect the end of those benefits to make it more difficult to fill open positions.

Supply chain disruptions are a real and ongoing problem for many businesses. Seventy percent of the owners/executives participating in the survey said they have experienced supply chain disruptions, 28% said those disruptions have significantly affected their businesses. At the time of the survey 59% said they are currently experiencing supply chain disruptions.

Controversy surrounds the mandating of COVID-19 vaccines. Thirty-two percent of the businesses said they will require their employees to get the vaccine with another 10% saying they will require employees to either the vaccine or submit to weekly testing. Four percent said they will require weekly testing. Fifty percent indicated they would not require either the vaccine or testing.

Business Climate

In general, 48% of respondents to the Lincoln Institute’s Fall 2021 Keystone Business Climate Survey say business conditions are now worse than they were six months ago. That is up from 32% who felt the state’s business climate had gotten worse in the Spring survey, but down from the 63% who had a negative view of the state’s economy in the Fall of 2020 when the nation was still at the height of pandemic-related economic disruptions.

Twenty-two percent say business conditions are better, down from the 28% last spring who viewed the economy as improving. Twenty-Seven percent say business conditions are about the same.

Looking ahead six months 33% are optimistic that the state’s business climate will improve; 31% expect it to get worse; 32% expect it to remain about the same.

Employment levels have dropped at 21% of the businesses participating in the survey, while 13% have increased the size of their workforce. Sixty say employee levels have remained steady over the past six months. Looking ahead six months, 24% expect to add employees with 8% forecasting a shrinking workforce. Sixty-three percent expect employment levels to remain about the same.

Twenty-nine percent of the businesses indicated sales have increased over the past six months, with 22% saying they have experienced a decrease in sale. Thirty-four percent expect sales to increase over the coming six months, with 14% braced for declining sales.

Policy Issues

Governor Tom Wolf is attempting to embroil Pennsylvania in the Regional Greenhouse Gas Initiative (RGGI), a multi-state initiative with the aim of cutting down on regional air pollution by imposing a fee on carbon dioxide emissions form Pennsylvania power plants. The governor is proceeding unilaterally through the Department of Environmental Protection via executive order. Fifty-four percent indicated their opposition to the plan, with 42% being strongly opposed; 40% were supportive.

However, when asked if they supported Governor Wolf taking unilateral action on energy policies that directly impact electric rates and jobs from existing power plants without approval of the General Assembly, support for RGGI dropped to 33% while opposition grew to 63%.

The Pennsylvania legislature is currently considering a proposal to allow parents the option of spending the approximately $6,000 per child K-12 basic education subsidy the state provides to school districts on the private, charter or parochial school of their choice. Fifty-seven percent of the business owners/executives responding to the Fall 2021 Keystone Business Climate Survey indicated their support for that proposal while 38% were opposed.

At the federal level, Democrats in congress are proposing a ten-year $3.5 trillion spending bill to fund a wide range of government initiatives over and above current funding levels. Fifty-three percent of the respondents oppose the plan, while it drew support from 41%. Support for the proposed $1.5 trillion infrastructure spending bill which includes spending on “traditional” infrastructure such as roads and bridges along with “human infrastructure” rose to 62%, with 33% opposed.

Job Approval Ratings

Fifty-five percent of those participating in the survey hold a negative view of the job being done by President Joe Biden, with 36% expressing approval. The business owners/executives also hold a negative view of the job being done by Pennsylvania’s two U.S. Senators. Republican Pat Toomey posted a 47% negative/26% positive rating while Democrat Robert P. Casey, Jr. scored a 43% negative/28% positive rating.

At the state level, with the ebbing of controversies surrounding his handling of the COVID-19 pandemic Governor Tom Wolf’s job approval rating has improved from last Spring, but still 50% have a negative view of his performance in office compared to 40% with a positive view.

Attorney General Josh Shapiro is also upside down in his job approval with 38% holding a negative opinion of him and 31% expressing a positive view. Auditor General Tim DeFoor posted a 25% negative/16% positive job approval rating with 59% offering no opinion. State Treasurer Stacy Garrity has a 23% negative/20% positive rating with 57% having no opinion.

The business owners/executives also hold a negative view of the various legislative bodies. Job approval for the United States Senate is 69% negative/22% positive. For the United States House of Representatives, it stands at 66% negative/22% positive. The Pennsylvania state Senate posted a 51% negative/25% positive rating; the Pennsylvania House of Representatives a 44% negative/28% positive rating.

The negative view of government institutions extended to the judicial branch, with 50% holding a negative opinion of the Supreme Court of the United States and 26% a positive view. Thirty-five percent disapprove of the job being done by the Pennsylvania Supreme Court with 18% approving.

Methodology

The Fall 2021 Keystone Business Climate Survey was conducted by the Lincoln Institute of Public Opinion Research, Inc. during the month of October. A total of 164 business owners or top executives participated in the survey. Fifty percent of the respondents own their business, 14% were the Chief Executive Officer and the balance hold other top line positions.

Geographically, 28% of the responding businesses are located in southeastern Pennsylvania, 16% in southwestern Pennsylvania,14% in northwestern Pennsylvania, 12% in northeastern Pennsylvania, 11% in southcentral Pennsylvania, 10% in northcentral Pennsylvania, 6%% in the Lehigh Valley and 3% in the Altoona/Johnstown area.

Complete numeric results of the poll can be found at www.lincolninstitute.org and www.patownhall.com.

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