The dramatic improvement in Pennsylvania’s business climate since the beginning of the Trump Administration has slowed, but with the state’s unemployment rate dropping to 3.9% – the lowest level on record – employers are having difficulty finding enough qualified workers to fill available positions. Those were the key findings of the Spring 2019 Keystone Business Climate Survey conducted by the Lincoln Institute of Public Opinion Research, Inc.
The semi-annual survey of business owners and Chief Executive Officers in Penn’s Woods found that, in general, 21% found business conditions in the state have improved over the past six months, while 20% said they had gotten worse. Another 56% said business conditions remained the same. A year ago, the survey found 38% reporting improved business conditions and 15% felt conditions had gotten worse.
Put into context, when asked the same question in September of 2016 as the Obama Administration was coming to an end, only 5% felt business conditions had improved over the previous six months and 50% felt business conditions had worsened. Those numbers flipped in the Spring 2017 survey when 27% reported improving business conditions and 20% said conditions had gotten worse.
As the 2020 Presidential election approaches a bit of pessimism is creeping into the mix. Looking ahead six months 16% expect to see business conditions in Pennsylvania improve, while 22% expect the business climate to get worse. Still, 58% expect conditions – currently viewed as relatively favorable – to remain about the same.
Qualified Help Wanted
One factor hindering economic expansion is a lack of qualified workers for open positions. Seventy-one percent of the employers report experiencing difficulty in finding qualified workers to fill open jobs in their business. Of that number, 39% say they have experienced “significant difficulties.”
The factors contributing to those difficulties include applicants lacking essential skills (36%), and – with unemployment hoovering at historic lows – there is a general lack of applicants (28%). Another 5% cited applicants’ failure to pass drug tests as a barrier. Employers cite a lack of work ethic and unrealistic compensation expectations among the pool of available applicants as significant problems.
Governor Tom Wolf and the legislature are considering changes to the state’s workforce development programs, which are not viewed in a favorable light by respondents to the survey. Only 15% report contacting or utilizing the services of any federal or state job training/workforce development program in their effort to find qualified employees. Of those who tried, only 4% actually found a qualified employee from those programs.
Public education is getting part of the blame for the lack of skilled applicants. One employer wrote: “Our education system is not preparing our children for the reality of the work place.” Others urged policymakers to steer more students in to the sciences and trades and fewer into liberal arts programs.
Another factor of concern to employers are persistent proposals for increasing the state’s minimum wage. When asked what steps their business would take if the minimum wage in Pennsylvania is raised significantly toward the $15.00 per hour rate; 20% said they would eliminate jobs, 14% would cut employee hours, 10% would reduce benefits and another 5% said such an increase would force them out of business. Thirty-two percent reported that all of their workers are already paid above the minimum wage level.
Public Policy Issues
By a two-to-one margin the owners/CEOs participating in the Spring 2019 Keystone Business Climate Survey oppose the legalization of marijuana for recreational use. Sixty-two percent are opposed – 44% strongly opposed – while 31% support such legalization. Already experiencing difficulty finding qualified employees who can pass a drug test, 50% of the respondents said legalization of recreational marijuana would have a negative impact on their business, with 34% saying that negative impact would be significant. Only 5% felt legalization would have a positive impact on their business.
Another major issue being debated under the capitol dome are efforts by the nuclear power industry for a taxpayer funded bail-out of its underperforming plants. Seventy-three percent of the business owners oppose the state giving money to the nuclear power industry (46% strongly oppose); 20% support the subsidy. This result is consistent with questions on past surveys where the state’s business community generally opposes state aid to selected businesses favoring instead lower taxes for all.
Tariffs imposed by the Trump Administration have had an impact on Pennsylvania businesses. Overall that impact has been negative. Thirty-four percent say tariffs have had a negative impact on their business, while 16% said tariffs have impacted them in a positive way. Another 47% said tariffs have had no impact at all on their business operations.
When asked about the most significant problem confronting their business today, the availability of qualified workers topped the list at 32%. That was followed by 17% who cited over-regulation, 15% said high taxes, and 5% said energy costs. Less than 4% cited the availability of credit/capital, labor unions or the cost of transportation as their most significant problem.
Employment and Sales Levels
The Spring 2019 Keystone Business Climate Survey found employment levels are higher at 26% of the businesses responding, lower at 16% Looking ahead, 29% expect to add to their employee compliment, 7% expect to employ fewer workers. The remainder of the businesses expects workforce levels to remain about the same.
In terms of sales, 36% reported sales have increased over the past six months, while 22% reported a drop in sales. Over the next six months 45% expect sales to increase while less than ten percent forecast a drop in sales.
Job Approval Ratings
President Donald Trump saw a modest increase in his already high job approval rating, while Governor Tom Wolf and U.S. Senators Pat Toomey and Robert P. Casey, Jr. saw a drop in their job approval ratings. Seventy-three percent of the owners/CEO’s approve of the job being done by President Trump, up from 70% last September. Twenty-three percent view the president negatively.
Governor Tom Wolf has suffered from low job approval ratings in the Keystone Business Climate Survey throughout his time in office. This Spring his approval slid even further, dipping to just 17% positive against a 73% negative rating.
Likewise U.S. Senator Robert P. Casey, Jr. has seen his job approval languish in the basement. It dropped from 22% positive last Fall to 18% positive in the current survey. Sixty-three percent disapprove of the job Senator Casey is doing. Senator Pat Toomey previously enjoyed strong positive ratings, but his numbers flipped from 59% positive/22% negative last Fall to 31% positive/45% negative in the Spring 2019 Keystone Business Climate Survey.
Among the three statewide constitutional or “row” offices, Attorney General Josh Shapiro and State Treasurer Joe Torsella found themselves in negative territory. Thirty-one percent disapprove of the job being done by Attorney General Shapiro, 24% approve. Twenty-two percent disapprove of State Treasurer Joe Torsella, 12% approve. Auditor General Eugene DePasquale scored a 23% positive/20% negative rating with 57% offering no opinion on his performance in office.
The state’s business owners/CEOs continue to disapprove of the job performance of the legislative branch at both the federal and state levels. Seventy-nine percent disapprove of the job being done by the U.S. House of Representatives, 13% approve. The U.S. Senate fared marginally better with a 20% positive/71% negative rating.
At the state level, 60% offered a negative assessment of the job performance of the state senate, 13% hold a positive view. Fifty-nine percent disapprove of the job being done by the Pennsylvania House of Representatives, 16% approve.
The Spring 2019 Keystone Business Climate Survey was conducted from March 15, 2019 through April 15, 2019 with 164 business leaders participating. Of that number 80% are the owner of the business, 12% are the Chief Executive Officer, the remainder are state or local managers.
Twenty-nine percent of the respondents have businesses located in southeastern Pennsylvania, 17% in southwestern Pennsylvania, 16% in the south/central part of the state; 12% in northwestern Pennsylvania, 9% in the north-central part of the state; 6% in the Lehigh Valley and 2% in the Altoona/Johnstown area.
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