Recession Still Haunts Pa. Business Owners

HARRISBURG — With a government shutdown and the cost of Obamacare, uncertainty trumps optimism for Pennsylvania business owners.

More business people see the economy improving than at any time since 2007, according to an annual survey taken by the Pennsylvania Chamber of Business and Industry. A five-year high of 38 percent of those owner expect their sales to increase.

But for every glimmer of hope revealed in the survey, conducted in partnership with The High Center for Family Business, there is foreboding.

One in five business owners polled continued to see the overall economic climate in the country as a problem. This in spite of the fact that one in four say Pennsylvania’s business climate has improved.

Only 20 percent expect to hire more employees in the coming year.

“This is strong evidence that the recession still haunts many employees,” said Jim Lee, president of Susquehanna Polling and Research, which conducted the poll.

Justin McClure, president of DaFlure Heating and Cooling, a Cumberland County mechanical construction contractor, said the tepid housing recovery, rising gas prices and utility costs  have been a challenge.

“The contraction in the economy has created, in my opinion, an overly saturated marketplace,” he said. “It’s hard to keep people employed, and it’s hard to find margins as costs go up. Central Pennsylvania is positioned as well as anyone, but I think the whole state is lagging on the rebound.”

Federal indecision

Gene Barr, president of the Pennsylvania Chamber of Business and Industry, said state business owners are not comforted by decision-makers in Washington, D.C.

“We saw things getting a little better here, people feeling better about Pennsylvania,” Barr said. “Unfortunately, what happens on the national side of things of course clearly impacts us here in Pennsylvania.”

Richard Dennis, owner of Die-Tech, a metal stamping company based in York County, said the government sends mixed signals touting high-tech manufacturing but failing to support it by funding job training programs.

Die-Tech has survived, Dennis said, by branching out from electrical industries to supplying medical and military parts. Manufacturers in the state are “fighting for their lives,” he said.

“It’s one thing to talk, to tout programs,” he said. “It’s another thing to put money into them.”

Ask Dennis the one thing he hopes to see the government do in the next year and the answer is simple: “Just let business do business.”

Health care costs

More than two-thirds of chamber members and six in 10 non- members said the organization’s top legislative priority should be controlling health care costs.

Sixteen percent said health care costs is the number one issue facing their businesses. Approximately 74 percent said they offer health insurance and, of that group, 79 percent saw their premiums increase in the last year.

To offset those increases, businesses will cut costs in other areas or offer less coverage. Some may choose to forgo health care altogether.

“In many cases, it will be cheaper to say to your employees, ‘You go on the exchange and I’ll pay the penalty,’” Barr said. “It may be cheaper for them to that.”

By the start of 2014, businesses with at least 50 employees will be required to offer health care or face government penalties. The formula: the total number of employees minus 30 multiplied by $2,000. The penalty could increase, as it is tied to rates of health insurance premiums.

Businesses that currently offer insurance could face penalties, too. If the employer fails to pick up at least 60 percent of the cost, or if the cost to employees is more than 9.5 percent of their family income, the penalty is $3,000 for each employee who becomes individually insured via health insurance exchanges.

The federal government recently delayed online implementation of a small-business oriented health exchange.

Forecast for the future

Nearly a third of business owners responding to the survey before the recession predicted they would hire more employees in the coming year. Today, one fifth of the owners are that hopeful.

Dennis said it has been tougher to hire the necessary skilled labor. He began doing more internal training to help make up the difference.

“All the demographics, all the data I obtained, there wasn’t going to be enough of the type of people to do the kind of work we’re still doing in this part of the country,” Dennis said. “A lot of those people have just opted out of this industry.”

Transportation

While 15 percent of business owners said funding transportation infrastructure should be a top legislative priority and while the chamber supported the Senate passing a $2.5 billion budget increase earlier this year, the House has so far balked.

Funding public transportation systems is a critical sticking point in the legislative debate. House Republicans, in their proposals, have offered less to support bus and rail services than the Senate package.

Barr said the chamber supports seeing improvement to mass transit.

“Our members, particularly in metro areas, need a way for people to get to work,” Barr said.

Transportation funding is a top legislative priority for the chamber this fall.

“We know we need it. And you will rarely hear us ask for more state spending anywhere,” Barr said. As for how much more, the chamber would take “whatever we can get.”

Susquehanna conducted the poll among 650 Pennsylvania employers from Aug. 6-23, with 350 chamber members and 300 non-members participating. Combined results have a margin of error of plus or minus 3.8 percent.

Contact Melissa Daniels at melissa@paindependent.com