Lincoln * Institute

Lowman S. Henry

Lowman S. Henry

Chairman & CEO
Lincoln Institute
of Public Opinion Research

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Town Hall Commentary

Economic Outlook Turns Gloomy

Brief burst of optimism fades as recession lingers


by Lowman S. Henry
 

Business confidence in the Pennsylvania economy has again turned negative after a brief period of optimism earlier this year. The Fall 2011 Keystone Business Climate Survey conducted by the Lincoln Institute of Public Opinion Research also found nearly half the employers surveyed think the economy is headed into another recession.

Just 12% say business conditions in Penn's Woods have improved over the past six months, down from the 25% who saw an improving economy in the March survey. That response remains above the record low of 4% who reported improving economic conditions in the Spring 2009 poll. Thirty-six percent said the state's business climate has gotten worse over the past six months, that's up from 28% who saw a worsening economy in the last Spring.

Optimism for the near-term future also has faded. Twenty-two percent of the business leaders polled said they see the state's economy improving over the coming six months, down from 38% in March. Twenty-nine percent in both the Spring and Fall surveys forecast a declining economy over the next six months. Forty-six percent in the current poll, up from 31% last Spring, expect business conditions to remain about the same.

Employers remain reluctant to add employees to their workforce. Twenty-one percent said they added employees over the past six months, down from the 29% who reported having created jobs last Spring. Sixty percent said the number of people they employ has remained about the same, while 15% said they employ fewer people. Looking ahead 29% forecast hiring more employees over the coming six months, an identical number say they expect to employ fewer people.

Pennsylvania employers don't expect President Barack Obama's proposed $447 billion jobs program to significantly lower the nation's unemployment rate. Seventy-three percent of the employers surveyed by the Lincoln Institute said the program won't have the intended effect, while 15% think it will.

A proposed $4,000.00 per job created tax credit is not prompting Keystone State employers to hire. Seventy-six percent said it is not enough of an incentive to create new jobs, 14% said it is a strong incentive. Likewise, cutting the rate of the employer's share of FICA (Social Security) taxes by 50% also is not viewed by 71% as enough of an incentive to create new jobs. Fourteen percent said it is incentive enough. Combining a $4,000 per employee tax credit with a 50% cut in FICA produced slightly better results with 26% saying that would incent them to create new jobs, and 64% saying it would not.

In terms of federal policy, Pennsylvania employers cited uncertainty, regulation, high taxes, and labor unions as reasons for their general unwillingness to create new jobs. Federal spending is also an issue, with 53% saying the federal government is spending too much money on economic stimulus programs, 32% saying it is not spending enough and 10% who think it is spending about the right amount of money to stimulate the economy.

The Fall 2011 Keystone Business Climate Survey also found that sales by Pennsylvania businesses are stagnant. Twenty-nine percent reported sales at their business have increased over the past six months, while another 29% said sales have decreased; 36% reported sales remained about the same. Those numbers are virtually unchanged from the Spring survey. Looking ahead 32% expect sales to increase — down from 47% who voiced optimism in the Spring poll — while 14% expect sales to go down.

Job Approval Ratings

President Barack Obama's job approval rating - already low at 27% in the Spring poll - dropped further to 24% in the current survey. Sixty-eight percent disapproved of the president's job performance. Similar low approval numbers were given to the president's economic team: 20% approve of the job being down by Federal Reserve Chairman Ben Bernanke; just 15% give positive marks to Treasury Secretary Timothy Geithner.

Pennsylvania's senior U.S. Senator, Robert P. Casey, Jr, saw a significant decline in his job approval rating since last Spring's poll. In the March survey 26% approved of the job Casey is doing, with 46% giving him negative marks. His approval rating dropped to 17% in the current poll, his negative rating rose to 54%. U.S. Senator Pat Toomey's positive rating dropped from 31% in March to 28% in the Fall poll. His negative rating went from 23% to 38%.

Governor Tom Corbett's job approval rating has remained relatively stable — rising to 47% in the October poll from 44% last Spring. His negative rating remained constant at 30%. Auditor General Jack Wagner holds a 26% positive job approval rating against a 15% negative rating. State Treasurer Rob McCord holds a 17% positive rating and a 16% negative rating.

Employers participating in the Lincoln Institute poll continue to hold a very dim view of congress. Eight-seven percent disapprove of the job being done by the U.S. Senate, 75% are disappointed in the work being done by the House of Representatives. At the state level, the Pennsylvania Senate receives a 13% positive/60% negative rating; the Pennsylvania House of Representatives gets a 13% positive/51% negative rating.

State Policy

Privatization of the state's liquor store monopoly is popular among the employers participating in the Lincoln Institute's Fall 2011 Keystone Business Climate Survey. Seventy-nine percent said they approve of the plan to place distribution and the retail sales of wine and spirits into private hands, 61% of them strongly so. Fourteen percent expressed their disapproval.

Support was also voiced for allocating more money to the state's Education Improvement Tax Credit (EITC) program that allows businesses to deduct a portion of money donated to K-12 education institutions. Fifty-five percent say more money should be dedicated to the program, while 16% oppose increasing funding. Twenty-one percent had not heard of the program.

School choice also received a positive nod from the state's employers. Seventy-two percent favor (42% strongly favor) giving parents of students in failing public schools the option of enrolling their child in another school; 21% oppose. Sixty-one percent support giving parents of public school children a voucher to send their child to a public school in district other than their district of residence; 34% disagree. Fifty-eight percent agree that school choice should extend to private, non-religious schools; 35% disagree. And, fifty-six percent would extend school choice to parochial school or schools with a religious affiliation, 36% disagree.

On a related issue, employers expressed strong opposition — 75% — to continuing the practice of allowing school districts, counties and municipalities to collect union dues via payroll deduction, preferring instead to have unions independently bill their members. Eleven percent approve of the practice.

Employers continue to support added taxes on those drilling for gas in the Marcellus Shale region of Pennsylvania. Fifty-nine percent say they disagree with Governor Tom Corbett's opposition to taxing Marcellus Shale while 33% agree with the governor's position. Another area where employers support the state securing more revenue is in funding to deal with the growing maintenance problems relative to roads and bridges. Sixty-six percent say they would favor the state increasing vehicle registration and license renewal fees to pay for road and bridge repairs, 33% oppose raising such fees. There is more opposition to higher gasoline taxes: 49% oppose raising the gas tax while 50% favor increasing the levy.

Methodology

The Lincoln Institute's Fall 2011 Keystone Business Climate Survey was conducted from mid-September thru mid-October with 94 employers participating in the poll. Of that number, 4% identified themselves as the owner of the business; 3% as the CEO/COO/CFO; 10% as the local manager, and 3% as the state manager. Complete numeric results of the survey are available on-line at www.lincolninstitute.org.