You Need a Friend in Pennsylvania

By Gina Pope

As a kid, I often heard that if I wanted friends, I needed to be friendly.

It was good advice. For while I certainly can’t control others’ actions, kindness has a greater likelihood of attracting folks than its opposite.

Pennsylvania state government could use this advice when it comes to how it treats businesses.

Recently, news came out that the Pennsylvania Liquor Control Board (PLCB) is “still pursuing sanctions” against businesses who rejected former Gov. Tom Wolf’s draconian COVID rules.

You’ll recall that Wolf ordered bars and restaurants to close during Covid despite no evidence to back him up. Pennsylvania’s closures were among the worst in the country, and the state didn’t recover lost jobs from the pandemic until January 2023 — six months after the rest of the country.

It took one determined reporter weeks to get the Department of Health to release the data behind Wolf’s closures. And when that data came out, it contradicted Wolf’s claims.

Now, more than two years after Wolf’s mandates ended, the PLCB believes bars and restaurant owners who defied Wolf’s orders should be “forced to pay” for “violations related to masking requirements, capacity limits or closure orders.”

As one tavern operator put it, “At a time when the government could have been helping us, it looks like we became their enemy.” He added, “We weren’t trying to be rebels. We were just trying to work with what’s allowed and what’s not. Quite frankly, if we were going to come up with a way to do it, we were going to do it. We were in survival mode.”

It’s small consolation that bars and restaurants owners weren’t the only ones on the receiving end of government’s unfriendliness.

A new report from the U.S. Bureau of Labor Statistics (BLS) shows Pa.’s unfriendliness—specifically related to Covid — also drove away small businesses, especially in the “professional, scientific, and technical services industry sector.”

According to the BLS, “The number of migrant firms fell during the 2001 and 2007–09 recessions. These decreases were similar to patterns seen in previous recessions, as economic slowdowns lower most business activities, including migration. However, in the Covid-19 pandemic-induced recession of 2020, the number of firm migrations rose sharply.”

Editorializing on the report, the Wall Street Journal noted, “BLS counted 6,384 businesses in 2021 that had moved across state lines during the prior year…. Net migration to the South and from the Northeast doubled between 2020 and 2021…. New York led in net business out-migration (487), followed by California (456), Illinois (208), Maryland (50) and Pennsylvania (33).”

Further, “These figures probably underestimate the business migration that occurred early in the pandemic since they don’t capture larger firms shifting headquarters or workforces to other states.”

Which states drew the most businesses? “Florida (399), North Carolina (148), Nevada (103), Texas (103) and Tennessee (92).”

Who can blame Pennsylvania’s business owners for fleeing to friendlier climates?

After all, if you attract more flies with honey than with vinegar, you definitely attract more entrepreneurs with business-friendly policies than with arbitrary business shutdowns.

Unfortunately, while Covid brought about the worst of state government’s anti-business disposition, the commonwealth has long lagged in business friendliness.

According to the 2023 State Business Tax Climate Index, published by the non-partisan Tax Foundation, Pennsylvania ranks 33rd in how well our tax system is structured. This overall ranking factors in corporate tax rank, individual income tax rank, sales tax rank, property tax rank, and unemployment insurance tax rank. Our ranking was consistently abysmal in past reports, too.

You could argue that we are making headway toward improvement. Last year, lawmakers and then-Gov. Wolf implemented a phased reduction of our corporate net income tax rate. Notably, this rate was the one component of the business tax climate index that was far worse than the others.

This is a great start. But it will take additional reforms to demonstrate true friendliness.

These include regulatory reform such as that included in the proposed constitutional amendment the Pa. Senate passed earlier this year. The amendment would have been on the May 16 primary ballot for voter approval, but the Democrat-controlled House refused to vote on it.

It’s one thing to say, “You’ve got a friend in Pennsylvania,” as our state’s tagline once congenially promised. But it’s another thing to prove it. Because to attract and retain businesses, Pennsylvania needs to exchange words for actions and be friendly.

Gina Pope is the Public Affairs Director at Commonwealth Partners Chamber of Entrepreneurs, an independent, non-partisan, 501(c)(6) membership organization dedicated to improving the economic environment and educational opportunities in Pennsylvania.