The Current

Healthy Dose of Skepticism

Jim? Has anyone seen Jim? He seems to be missing in action. He was last seen running towards Senator Brightbill's office mumbling something about the minumum wage.  If you see him, tell him his blog editor is looking for him.

That's OK though, we have a special guest blogger today.

Meet Kirk Liddell, CEO of Irex Corporation in Lancaster and the PA Chamber's First Vice Chair. He'd like your undivided attention on the results of this year's economic survey,  so listen up...

As a business owner who continues to be concerned about our economy, our ability to create jobs and our ability to keep young people here, I ask the members of the General Assembly to look seriously at the results of this years Economic Survey.

Earlier this year the Chamber unveiled a package of bills, called the Agenda for Jobs. The Agenda is designed to reduce the cost of doing business and strengthen our competitiveness in the Commonwealth. The results of the Economic Survey underscore the critical need to enact job creation measures contained in the Chamber's Agenda for Jobs.

In general, businesses here in Pennsylvania are optimistic about the potential for future growth but retain a heavy dose of skepticism about our current economy. The majority of companies indicated that the economic situation in their community had improved over the past year, and that they expected it will continue to get better over the next 12 months. Additionally, more than half experienced increased sales over the last 12 month and half are expecting sales to improve over the next 12 months.

While the percentage of businesses that did not make investments in Pennsylvania operations in the past 12 months is the highest in five years, 83 percent of respondents indicated that they plan to make either significant or limited investments over the next year.

This is where the optimism ends...

The survey contains several warning signs that Pennsylvania's business climate is still ailing and lagging behind other states.

There was a significant drop in those who perceive Pennsylvania as business friendly, which is the second lowest score in five years.

In fact, only 18.2 percent of respondents perceive Pennsylvania's friendliness toward business as either excellent or good, an almost 10% drop from last year's percentage of 27.7%. 37.6 percent perceive Pennsylvania's friendliness towards business as poor, which is up significantly from 2004 when only 13.7 percent of the respondents indicated was not.

Perhaps one of the most alarming aspects of the survey is that the number of businesses that would consider leaving the state due to the business climate increased to four in ten, virtually tying the highest number in five years. When you compare that to 2001, when only 16 percent said they would consider leaving. Where would they go? To our competitor states in the south. It's obvious Pennsylvania is heading in the wrong direction.

Taxes, the business climate in general and health-care costs top the list on reasons for leaving the state. It's not surprising then that health care costs, and business taxes are the top issues Pennsylvania's job creators want the Chamber to focus on.

So, where do we go from here?

We said it in February and we're saying it again today. Real jobs don't come from government. They come from a free market within an environment of competitive business taxes, limited and efficient regulation, balanced labor laws and freedom from the risk of arbitrary confiscation due to lawsuit abuse. It's time to enact pro-jobs legislation so that next year, the news out of the Economic Survey is nothing but positive.

To review the details of the survey visit: www.pachamber.org

Magic Carpet Ride

So now the big issue in Harrisburg is raising the minimum wage. One has to wonder why it’s so important NOW?? Could it be an attempt to assuage some guilty feelings? Hard to say and who am I to speculate. I’ll let you decide.

What I do know is that raising the minimum wage has been positioned by proponents as the “magic pill” for improving the lives of Pennsylvania’s working families and low-income residents. What they fail to mention is the negative side effect of mandatory wage hikes – that raising the minimum wage hurts the very people it purports to help.

Mandated wages are job killers. Unless business productivity increases sufficiently to generate enough revenue to pay what is essentially a small employer tax, affected businesses will have to spread the same amount of money over fewer workers. The least skilled workers in the labor pool – those that most need to get and keep their feet on the first rung of the job ladder – will be the first to lose their jobs. Because higher mandated wages cause shifts in the profile of those who get hired, as employers favor more highly skilled workers, these low-skilled workers will also be denied opportunities to enter the work force.

Businesses unable to absorb the cost of a mandated wage hike may also be prevented from hiring additional workers, or be forced to decrease the number of hours worked by current employees or reduce health-care benefits (if they are able to offer them to employees in the first place given years of double-digit premium increases.)

Finally, higher minimum wages have a negative ripple effect on other businesses by artificially increasing wages across the board.

Pennsylvania does in fact have an opportunity to help better the lives of working families. Business growth is the real cure. Reducing taxes, providing affordable health care, and improving our legal environment – all ideas being advanced by the PA Chamber’s more than 9,000 members in its Agenda for Jobs – is the source of economic opportunity and advancement. This would do far more good than hiking the minimum wage, which would benefit some to the detriment of those most in need of employment.

If Pennsylvania truly wants to help people, it must reduce the barriers and mandates placed on employers that inhibit job creation. There is no magic pill, no magic carpet ride to creating jobs. It will take some hard work.