Inflation tops the list of employer concerns as confidence in the state’s business climate dips with nearly 60% of business owners and top line executives saying the Pennsylvania’s economy is on the wrong track. Those are the key findings of the Spring 2023 Keystone Business Climate Survey conducted by the Lincoln Institute of Public Opinion Research in late April.
By a two-to-one margin (30%-59%) poll respondents say Pennsylvania’s economy is on the wrong track. That is reflected in the fact only 15% think business conditions in the commonwealth have improved over the past six months while 44% say business conditions have gotten worse. There has been considerable fluctuation in that assessment as one year ago 49% reported worsening business conditions, but that number had dropped to 35% by October before again trending upward in the current survey.
Inflation, current economic conditions, and keeping qualified employees top the list of business concerns. Supply chain disruptions appear to be diminishing as only 18% cited that as a problem, down from 23% in last Fall’s survey. Forty-three percent cited inflation as their top concern with 36% voicing concern over current economic conditions and 27% saying they are concerned over future economic conditions. Thirty percent reported difficulty in keeping qualified employees and 25% said they are having difficulty finding qualified employees.
In the current economic environment taxes, which for many years had been the biggest concern of business owners and top line executives, have been eclipsed by other factors as 18% list state taxes on business and 17% list federal taxes on business as a top concern. Likewise, government regulation which historically had been a top concern has been displaced by inflation and difficulty in finding employees.
When asked if over the past six months their business has had more or less difficulty in finding and hiring qualified employees 30% said they have experienced more difficulty, 27% said about the same amount of difficulty – which is significant as the October poll found finding and hiring qualified employees to be a major problem. Six percent said they have experienced less difficulty in finding qualified employees while 16% have never had any difficulty in finding and hiring qualified workers.
State Issues
Raising the state minimum wage has been a political issue for many years, but only 7% of the employers participating the Spring 2023 Keystone Business Climate Survey are paying 76-100% of their employees minimum wage while 41% say they are already paying all of their employees over minimum wage.
Pennsylvania’s Corporate Net Income Tax (CNI) has been reduced from 9.99% to 8.99% with continued reductions planned each year until it reaches 4.99% in 2031. Thirty-one percent of poll respondents said this phase down is too slow, 43% say it is about right and 11% say the phase down is too fast.
A recent Commonwealth Court decision found Pennsylvania funding of K-12 public education to be unconstitutional. To address the issue 30% of respondents say funding to local school districts should be increased, but 24% think funding should remain level and changes made to the distribution formula. Twenty-seven percent favor expanded school choice options. Nine percent think no action should be taken.
On the topic of vocational and technical education, 60% of the business owners/top line executives think Pennsylvania public schools do not place enough emphasis on such education; 25% think schools place about the right amount of emphasis on technical education. Six percent think there is too much emphasis on such education.
Pennsylvania voters will be electing a Justice of the state Supreme Court and judges to the state’s Commonwealth and Superior courts this year. Thirty-seven percent said the current system of statewide elections to fill those seats should continue; 36% say appellate court jurists should be elected by district; 14% support appointment by merit selection.
The businesses were asked whether they think their community is safer or more dangerous that it was two years ago, 41% say their community is more dangerous; 46% say public safety is about the same; 7% say their communities are more safe.
A coal-fired power plant in Indiana County is being forced to close due to environmental pressures. Forty-two percent said they have not much or no confidence that Pennsylvania’s electric grid will be able to continue supplying the state’s electricity needs; 30% have some confidence; 16% have a lot of confidence.
Business Climate
Looking ahead six months, 37% of respondents to the Spring Keystone Business Climate Survey expect business conditions in Pennsylvania to get worse; 19% expect business conditions will get better. Thirty-nine percent expect business conditions to remain about the same.
Overall employment levels have dropped over the past six months. Twenty-six percent reports having a smaller workforce, 10% have a higher employment level. Employment levels have remained about the same at 52% of the businesses. Looking ahead the trend tends to be more even with 20% saying they expect to employer fewer people and 17% forecasting a larger workforce.
Businesses reporting decreased sales (27%) outpaced those with increased sales (22%) over the past six months. Looking ahead 29% say they expect sales to increase in the coming six months while 17% are braced for decreased sales.
Job Approval
The Spring 2023 Keystone Business Climate Survey is the first to test the job approval rating of new Pennsylvania Governor Josh Shaprio. At this point the business owners/top line executives surveyed are taking a bit of a wait and see attitude. Forty-one percent have a positive view of the governor’s job performance his first few months in office, 34% hold a negative view; 25% have yet to form an opinion. Despite that, Governor Shapiro is the only public official in the survey to have a net positive job approval rating.
This is also the first test of approval for newly-elected U.S. Senator John Fetterman. Thirty-three percent of the respondents hold a positive view of his job performance to date while 44% disapprove. Twenty-four percent have yet to form an opinion. U.S. Senator Robert P. Casey, Jr. is also upside down in his job approval with a 29% positive/38% negative rating.
The highest negative rating among those included in the poll was scored by President Joe Biden as 60% disapprove of his job performance with 33% offering a positive view. Federal Reserve Chairman Jerome H. Powell also earned negative review for his performance in office with a 16% positive/41% negative rating.
Among Pennsylvania’s constitutional or “row” offices, which tend to be low profile, over half of the respondents offered no opinion on the job performance of the office holders. State Treasurer Stacy Garrity holds a 17%positive/30% negative rating; Auditor General Tim DeFoor has a 15% positive/29% negative rating. Michelle Henry was appointed state Attorney General to fill the reminder of now-Governor Josh Shapiro’s term in that office. She posted a14% positive/34% negative rating.
The business owners/top line executives survey also hold an across-the-board negative opinion of federal and state legislative chambers and the federal and state judiciary. The U.S. Senate posted a 25% positive/ 50% negative job performance rating while the U.S. House of Representatives earned a 21% positive/52% negative rating. The U.S. Supreme Court was also upside down in its rating: 28% positive/40% negative. The Pennsylvania state Senate received a 28% positive/43% negative response while the Pennsylvania House of Representatives posted a 26% positive/46% negative rating. The Pennsylvania Supreme Court received a 28% positive/40% negative review.
Methodology
The Spring 2023 Keystone Business Climate Survey was conducted the last week of April by the Lincoln Institute of Public Opinion Research, Inc. A total of 211 responses were collected of which 39% were the owner of the business; 11% the CEO/COO/CFO, 15% a local manager and 6% a state manager. Twenty-four percent of respondents were located in Northwestern Pennsylvania; 20% in Northeastern Pennsylvania; 15% in Southeastern Pennsylvania; 13% in Southwest Pennsylvania; 9% in Northcentral Pennsylvania; 7% in the Altoona/Johnstown area; 6% in Southcentral Pennsylvania; and 5% in the Lehigh Valley.
Complete numeric results of the Lincoln Institute’s Spring 2023 Keystone Business Climate Survey are available at www.lincolninstitute.org.
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