Release Date: 06/ 01/ 2005
CONTACT: Kevin Shivers, (717) 232-8582 or Jim Jennings, (240) 645-4099
HARRISBURG, June 1, 2005—Only one in five (22 percent) Pennsylvania small-business owners believe the state's business environment is supportive of small business, according to the second quarter Pennsylvania Small Business ConditionsSM economic survey by the National Federation of Independent Business. Insurance costs continue to be the single most pressing business problem and more than half of the businesses reported employee wages as their greatest employee cost pressure. As a result, over four out of five business owners say they have no current job openings.
The report’s data, released today by NFIB, provides an overview of small-business conditions within Pennsylvania and compares them with neighboring states.
A net 30 percent of business owners reported that business conditions in their market area were “good,” up from 29 percent in the survey last February. However, only slightly more than half of the business owners surveyed offered a positive outlook for business in the next three months. Most of those reported sales prospects, greater productivity and seasonal weather as a reason for their optimism.
“Small-business owners feel good about business conditions in their own markets, but the high cost of doing business in Pennsylvania clearly is deflating their optimism,” said Kevin Shivers, NFIB state director. “As a consequence, four-out-of-five business owners say they have no current job openings.”
Fifty-nine percent of those surveyed said their costs for goods and services increased over the past three months, but only a net 18 percent were able to pass at least some of those costs on to their customers. More than half reported that wages are their greatest employee-cost pressure. Nearly 20 percent cited insurance as their single biggest business problem.
“These sobering statistics should give lawmakers and policymakers ample pause as they debate legislative proposals that could add to these burdens,” said Shivers.
He noted that in neighboring states, only Maryland small-business owners felt better about the business environment, with New Jersey and New York employers taking a much dimmer view.
Small-business hiring continues to be slow, with a net 19 percent reporting they had “one or more” current job openings.
Of those surveyed in Pennsylvania, a net 21 percent indicated that profits were “good,” and a net 35 percent of those same respondents characterized sales as “good,” down from 36 percent in February. Overall, a net 59 percent of small employers reported that over the last three months their purchasing prices rose, down 51 percent from last quarter.
According to the state Labor Department, 98 percent of all Pennsylvania businesses employ fewer than 100 workers. These businesses account for 52 percent of all jobs in the state.
The Small Business Conditions 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. The text of the questions and the complete response set to the survey can be found at 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 | 5/2005 | 22 | 26 | 11 | 0 | 8 |
| Prior qtr. | 23 | 31 | 15 | 3 | 27 | |
| Business conditions in market area | ||||||
| Net % "good" | 5/2005 | 30 | 53 | 38 | 22 | 23 |
| Prior qtr. | 29 | 65 | 36 | 17 | 34 | |
| Net % "improving" | 5/2005 | 0 | 18 | 13 | 0 | 4 |
| Prior qtr. | 15 | 25 | 12 | 7 | 17 | |
| Outlook for business | ||||||
| Net % "good" in next three months | 5/2005 | 43 | 67 | 57 | 47 | 51 |
| Prior qtr. | 63 | 77 | 54 | 56 | 68 | |
| Reason for optimism | ||||||
| % Sales prospects | 5/2005 | 37 | 40 | 39 | 48 | 40 |
| Prior qtr. | 39 | 47 | 40 | 63 | 39 | |
| % Lower costs | 5/2005 | 1 | 4 | 2 | 4 | 2 |
| Prior qtr. | 2 | 3 | 7 | 2 | 3 | |
| % Price increases | 5/2005 | 4 | 5 | 3 | 3 | 6 |
| Prior qtr. | 3 | 4 | 1 | 4 | 5 | |
| % Greater productivity | 5/2005 | 18 | 16 | 11 | 13 | 17 |
| Prior qtr. | 18 | 15 | 18 | 10 | 19 | |
| % Government policy | 5/2005 | 4 | 5 | 6 | 4 | 6 |
| Prior qtr. | 4 | 7 | 5 | 2 | 4 | |
| % Government policy | 5/2005 | 12 | 12 | 14 | 8 | 13 |
| Prior qtr. | - | - | - | - | - | |
| Reason for pessimism | ||||||
| % Sales prospects | 5/2005 | IC* | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Cost increases | 5/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Pressure on selling prices | 5/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Lower productivity | 5/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Government policies | 5/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| Pa. | Md. | N.J. | N.Y. | Ohio | ||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 5/2005 | 35 | 44 | 34 | 31 | 33 |
| Prior qtr. | 36 | 58 | 29 | 25 | 36 | |
| Profits | ||||||
| Net % profits "good" | 5/2005 | 21 | 27 | 21 | 10 | 17 |
| Prior qtr. | 20 | 46 | 16 | 12 | 20 | |
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 5/2005 | 19 | 23 | 22 | 21 | 17 |
| Prior qtr. | 19 | 23 | 23 | 22 | 20 | |
| Per employee payroll cost | ||||||
| Net % "risen" | 5/2005 | 15 | 12 | 16 | 16 | 9 |
| Prior qtr. | 16 | 16 | 13 | 29 | 10 | |
| Employee cost pressures (greater) | ||||||
| % Wages | 5/2005 | 51 | 59 | 49 | 45 | 52 |
| Prior qtr. | 45 | 54 | 45 | 56 | 52 | |
| % Benefits | 5/2005 | 31 | 25 | 32 | 31 | 30 |
| Prior qtr. | 36 | 30 | 35 | 28 | 31 | |
| Pa. | Md. | N.J. | N.Y. | Ohio | ||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 5/2005 | 43 | 43 | 38 | 41 | 40 |
| Prior qtr. | 40 | 49 | 41 | 47 | 43 | |
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 5/2005 | 42 | 36 | 37 | 40 | 39 |
| Prior qtr. | 41 | 44 | 41 | 45 | 42 | |
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 5/2005 | 40 | 42 | 34 | 35 | 35 |
| Prior qtr. | 35 | 44 | 37 | 42 | 37 | |
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 5/2005 | 52 | 49 | 51 | 45 | 50 |
| Prior qtr. | 57 | 57 | 53 | 54 | 57 | |
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 5/2005 | 43 | 45 | 40 | 35 | 36 |
| Prior qtr. | 37 | 40 | 39 | 34 | 39 | |
| % All credit needs not satisfied | 5/2005 | 4 | 5 | 5 | 6 | 7 |
| Prior qtr. | 6 | 5 | 7 | 12 | 7 | |
| % No credit needs | 5/2005 | 45 | 40 | 46 | 50 | 51 |
| Prior qtr. | 53 | 51 | 50 | 47 | 50 | |
| Pa. | Md. | N.J. | N.Y. | Ohio | ||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 5/2005 | 59 | 47 | 50 | 54 | 51 |
| Prior qtr. | 51 | 48 | 47 | 56 | 46 | |
| Selling prices (last three months) | ||||||
| Net % increased | 5/2005 | 18 | 21 | 18 | 14 | 17 |
| Prior qtr. | 20 | 21 | 12 | 16 | 13 | |
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 5/2005 | 11 | 11 | 13 | 11 | 12 |
| Prior qtr. | 9 | 15 | 12 | 17 | 8 | |
| Single most important business problem | ||||||
| % Weak sales | 5/2005 | 13 | 11 | 12 | 11 | 12 |
| Prior qtr. | 10 | 7 | 10 | 11 | 11 | |
| % Taxes | 5/2005 | 11 | 9 | 9 | 11 | 11 |
| Prior qtr. | 12 | 10 | 11 | 16 | 11 | |
| % Employee quality/costs | 5/2005 | 10 | 11 | 8 | 8 | 8 |
| Prior qtr. | 11 | 7 | 8 | 9 | 8 | |
| % Insurance | 5/2005 | 19 | 13 | 20 | 16 | 18 |
| Prior qtr. | 18 | 15 | 22 | 17 | 14 | |
| % Big-business competition | 5/2005 | 13 | 14 | 13 | 14 | 13 |
| Prior qtr. | 15 | 14 | 17 | 14 | 15 | |
| % Inflation/Rising prices | 5/2005 | 13 | 11 | 10 | 10 | 15 |
| Prior qtr. | 7 | 14 | 6 | 11 | 13 | |
| % Credit availability/Interest rates | 5/2005 | 3 | 4 | 3 | 1 | 3 |
| Prior qtr. | 3 | 4 | 4 | 5 | 2 | |
| % Regulations/Red tape | 5/2005 | 7 | 11 | 8 | 7 | 7 |
| Prior qtr. | 10 | 13 | 7 | 7 | 10 | |
* Insufficient cases
| Pennsylvania Quarterly Spotlight | |
| In general, how satisfied are you with the direction that Pennsylvania is headed? | |
| Very satisfied | 8% |
| Somewhat satisfied | 52% |
| Not too satisfied | 20% |
| Not at all satisfied | 11% |
| Don't know/Refused | 9% |
| Total | 100% |
| What do you value most in the area where you do business? | |
| Quality of life | 24% |
| Physical environment | 6% |
| Opportunity | 15% |
| Vibrance and vitality | 3% |
| My roots are here | 42% |
| Other | 1% |
| Don't know/Refused | 10% |
| 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.
