Release Date: 03/ 01/ 2005
CONTACT: Kevin Shivers, (717) 232-8582 or Jim Jennings, (240) 645-4099
Health insurance, taxes contribute to weak report
PENNSYLVANIA -- Pennsylvania's overall small-business conditions lag behind its neighbors and the country according to the inaugural Pennsylvania Small-Business ConditionsSM report. The report's data, released today by the Pennsylvania chapter of the National Federation of Independent Business, noted that Pennsylvania firms are experiencing higher employee benefit cost pressures – due in large part to rising health insurance premiums – than their counterparts across the nation.
"Higher taxes combined with rapidly rising health insurance premiums and higher employee benefit costs are making it increasingly difficult for small businesses to compete – not only for customers, but also for workers," said NFIB State Director Kevin Shivers. "Insurance was the most frequently cited small-business problem. Thirty-six percent of business owners indicated that health insurance premiums were the most rapidly rising. One-in-five reported these insurance cost increases caused them to terminate or postpone planned business investment. Under-investment results in lower productivity and fewer new jobs."
The study found that a net 29 percent of the state's small employers believed business conditions in their market area were good, which lagged behind neighboring states, including Maryland, New Jersey and Ohio. Compared with Pennsylvania, fewer New York small-business owners believed conditions in their state were good. Of the 26 states included in the survey, business owners in 22 states had a more favorable view of business conditions in their respective markets than Pennsylvania businesses. Only a net 15 percent of Pennsylvania business owners believed conditions were improving.
The study found small-business owners are optimistic. A net 63-percent forecast good business conditions for the next three months citing sales prospects as the primary reason for their view. But even these hopeful expectations are below the average of the 26 states surveyed, including Maryland and Ohio.
The Small-Business ConditionsSM reports are developed from surveys of small-business owners in selected states. The surveys are designed to determine the condition of the small-business economy in each particular state. The surveys are conducted every three months and results are released on the first day of the month following completion.
For information about the Small-Business ConditionsSM project, and other small-business research studies conducted by the NFIB Research Foundation, visit www.NFIB.com/research.
| Pennsylvania Small-Business ConditionsSM | ||||||
| This chart shows the results from Pennsylvania and its comparative standing among selected nearby states. | ||||||
| Pa. | Md. | N.J. | N.Y. | Ohio | ||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 2/2005 | 23 | 31 | 15 | 3 | 27 |
| Prior qtr. | - | - | - | - | - | |
| Business conditions in market area | ||||||
| Net % "good" | 2/2005 | 29 | 65 | 36 | 17 | 34 |
| Prior qtr. | - | - | - | - | - | |
| Net % "improving" | 2/2005 | 15 | 25 | 12 | 7 | 17 |
| Prior qtr. | - | - | - | - | - | |
| Outlook for business | ||||||
| Net % "good" in next three months | 2/2005 | 63 | 77 | 54 | 56 | 68 |
| Prior qtr. | - | - | - | - | - | |
| Reason for optimism | ||||||
| % Sales prospects | 2/2005 | 39 | 47 | 40 | 63 | 39 |
| Prior qtr. | - | - | - | - | - | |
| % Lower costs | 2/2005 | 2 | 3 | 7 | 2 | 3 |
| Prior qtr. | - | - | - | - | - | |
| % Price increases | 2/2005 | 3 | 4 | 1 | 4 | 5 |
| Prior qtr. | - | - | - | - | - | |
| % Greater productivity | 2/2005 | 18 | 15 | 18 | 10 | 19 |
| Prior qtr. | - | - | - | - | - | |
| % Government policy | 2/2005 | 4 | 7 | 5 | 2 | 4 |
| Prior qtr. | - | - | - | - | - | |
| Reason for pessimism | ||||||
| % Sales prospects | 2/2005 | 11 | 29 | 24 | 5 | 8 |
| Prior qtr. | - | - | - | - | - | |
| % Cost increases | 2/2005 | 5 | 0 | 8 | 11 | 0 |
| Prior qtr. | - | - | - | - | - | |
| % Pressure on selling prices | 2/2005 | 11 | 0 | 16 | 11 | 8 |
| Prior qtr. | - | - | - | - | - | |
| % Lower productivity | 2/2005 | 0 | 0 | 4 | 5 | 0 |
| Prior qtr. | - | - | - | - | - | |
| % Government policies | 2/2005 | 42 | 14 | 12 | 47 | 25 |
| Prior qtr. | - | - | - | - | - | |
| Pa. | Md. | N.J. | N.Y. | Ohio | ||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 2/2005 | 36 | 58 | 29 | 25 | 36 |
| Prior qtr. | - | - | - | - | - | |
| Profits | ||||||
| Net % profits "good" | 2/2005 | 20 | 46 | 16 | 12 | 20 |
| Prior qtr. | - | - | - | - | - | |
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 2/2005 | 19 | 23 | 23 | 22 | 20 |
| Prior qtr. | - | - | - | - | - | |
| Per employee payroll cost | ||||||
| Net % "risen" | 2/2005 | 16 | 16 | 13 | 29 | 10 |
| Prior qtr. | - | - | - | - | - | |
| Employee cost pressures (greater) | ||||||
| % Wages | 2/2005 | 45 | 54 | 45 | 56 | 52 |
| Prior qtr. | - | - | - | - | - | |
| % Benefits | 2/2005 | 36 | 30 | 35 | 28 | 31 |
| Prior qtr. | - | - | - | - | - | |
| Pa. | Md. | N.J. | N.Y. | Ohio | ||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 2/2005 | 40 | 49 | 41 | 47 | 43 |
| Prior qtr. | - | - | - | - | - | |
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 2/2005 | 41 | 44 | 41 | 45 | 42 |
| Prior qtr. | - | - | - | - | - | |
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 2/2005 | 35 | 44 | 37 | 42 | 37 |
| Prior qtr. | - | - | - | - | - | |
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 2/2005 | 57 | 57 | 53 | 54 | 57 |
| Prior qtr. | - | - | - | - | - | |
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 2/2005 | 37 | 40 | 39 | 34 | 39 |
| Prior qtr. | - | - | - | - | - | |
| % All credit needs not satisfied | 2/2005 | 6 | 5 | 7 | 12 | 7 |
| Prior qtr. | - | - | - | - | - | |
| % No credit needs | 2/2005 | 53 | 51 | 50 | 47 | 50 |
| Prior qtr. | - | - | - | - | - | |
| Pa. | Md. | N.J. | N.Y. | Ohio | ||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 2/2005 | 51 | 48 | 47 | 56 | 46 |
| Prior qtr. | - | - | - | - | - | |
| Selling prices (last three months) | ||||||
| Net % increased | 2/2005 | 20 | 21 | 12 | 16 | 13 |
| Prior qtr. | - | - | - | - | - | |
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 2/2005 | 9 | 15 | 12 | 17 | 8 |
| Prior qtr. | - | - | - | - | - | |
| Single most important business problem | ||||||
| % Weak sales | 2/2005 | 10 | 7 | 10 | 11 | 11 |
| Prior qtr. | - | - | - | - | - | |
| % Taxes | 2/2005 | 12 | 10 | 11 | 16 | 11 |
| Prior qtr. | - | - | - | - | - | |
| % Employee quality/costs | 2/2005 | 11 | 7 | 8 | 9 | 8 |
| Prior qtr. | - | - | - | - | - | |
| % Insurance | 2/2005 | 18 | 15 | 22 | 17 | 14 |
| Prior qtr. | - | - | - | - | - | |
| % Big-business competition | 2/2005 | 15 | 14 | 17 | 14 | 15 |
| Prior qtr. | - | - | - | - | - | |
| % Inflation/Rising prices | 2/2005 | 7 | 14 | 6 | 11 | 13 |
| Prior qtr. | - | - | - | - | - | |
| % Credit availability/Interest rates | 2/2005 | 3 | 4 | 4 | 5 | 2 |
| Prior qtr. | - | - | - | - | - | |
| % Regulations/Red tape | 2/2005 | 10 | 13 | 7 | 7 | 10 |
| Prior qtr. | - | - | - | - | - | |
| Pennsylvania Quarterly Spotlight | |
| Over the last year, which type of business insurance has had the most rapidly rising premiums? | |
| Vehicle collision and liability | 10% |
| Workers' compensation | 14% |
| Product or professional liability | 11% |
| Property and casualty | 8% |
| Employee health | 36% |
| Don't know/Refused | 21% |
| Total | 100% |
| Did those premium increases cause you to terminate or postpone planned business investments? | |
| Yes | 21% |
| No | 65% |
| Don't know/Refused | 14% |
| Total | 100% |
The Poll
NFIB’s Pennsylvania Small-Business ConditionsSM is a telephone survey of a random sample of Pennsylvania small employers regarding business conditions within the state. “Small employer” is defined here as employing between one and 250 people (not including the owner(s)) in a for-profit business. Each edition of the survey has a minimum of 350 respondents. The sampling error is ± 5 percentage points. Data are collected quarterly in the months of February, May, August and November, beginning in February 2005. The MRCGroup of Las Vegas conducts the survey for the NFIB Research Foundation.
The Sponsor
The NFIB Research Foundation is a 501 (c)(3) organization that provides policy-makers, media, educators, small-business owners and other interested parties empirically based information on small business and small-business owners. The Foundation is affiliated with the National Federation of Independent Business, the nation’s largest small- and independent-business advocacy organization, and is located in Washington, D.C.
