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PA Chamber examines Shapiro’s strategy to rebuild workforce

Gov. Josh Shapiro has been touring Pennsylvania speaking of his proposals to restore the state’s flagging workforce. An effort that may not be looking enough at the big picture, according to the PA Chamber of Business and Industry. 

Jon Anzur, vice president of public affairs for the PA Chamber, noted that Pennsylvania businesses of every size and industry are dealing with a workforce shortage that predates the pandemic but was intensified by COVID-19. 

“Even before COVID, businesses were struggling with the worker shortage, but the pandemic really exacerbated this challenge,” said Anzur. “So many workers left Pennsylvania to go to another state to find opportunities or just left the workforce entirely. Employers as a result are struggling to find qualified workers. 

“You’re seeing Pennsylvania largely starting to recover the jobs that were lost during the pandemic. The challenge, though, is that Pennsylvania lagged the rest of the nation by six months to fully recover those jobs and our workforce today is smaller than it was pre-pandemic.” 

In the two-plus weeks following Shapiro’s first budget address, the governor has crisscrossed the state discussing his budget’s “commonsense” proposals to rebuild Pennsylvania’s workforce.  

Shapiro’s tour has taken him to Lancaster City to speak to local firefighters, to the Pennsylvania Police Academy in Hershey, the George Washington Carver High School of Engineering and Science in Philadelphia, Lackawanna College Police Academy in Scranton, Gwynedd Mercy University, Colfax K-8 Elementary School in Pittsburgh, and Mercyhurst Municipal Police Academy in Erie. 

A common thread to all the above is Shapiro’s desire to hear firsthand the challenges facing nurses, police, and teachers, three professions that have been hit particularly hard by a decreased workforce. 

Anzur said that while the PA Chamber appreciates the governor focusing on the workforce issue, he thinks the chamber would encourage lawmakers to focus on policies that would improve workforce development across all sectors. 

“From our perspective, job training and investing in proven job training and career and technical job training programs would help individuals develop the skills they need for the jobs that are available,” Anzur stated. “We talk to employers in manufacturing, in technology and innovation, in health care and they have jobs that are available. They just can’t find the workers who have the skills necessary for those careers.” 

“Investing in different educational programs and job training, and re-training of workers for these available jobs would go a long way,” he added. 

Lack of affordable health care is another challenge the chamber sees as exacerbating the worker shortage. 

“This is really a multi-pronged issue,” said Anzur. “We see younger families struggling to afford childcare and it’s leading to one of the adults in the family to leave the workforce to stay home with the kids. This is something we really think the private sector is responsible for driving solutions.” 

To that point, Anzur said the chamber is seeing Pennsylvania’s employers taking up the task of addressing the crucial childcare issue in various ways. Employers are assessing their employee’s needs to determine what working parents need from their employers, what their flexibility is in the business, and if they can provide hybrid work schedules and work from home. 

“Implementing these sorts of strategies and tracking the impact is something we’re seeing from our members and businesses across Pennsylvania, and I think it’s starting to have a positive impact,” said Anzur. “Figuring out that childcare piece will go a long way to getting adults back into the workforce.” 

Viewing the workforce shortage from a macro-economic perspective, Anzur said that as Pennsylvania’s tax and regulatory environment improves, so will investment into the state. That means more economic growth, which would have a positive impact on wages and bring Pennsylvanians back into the workforce and keep them in state. 

“With the pandemic, we saw tens of thousands of Pennsylvanians leaving the state to go other places for opportunities,” said Anzur. “As businesses are able to save on costs as the result of tax and regulatory reform, they will be able to invest more of that money back into the workforce. That’s going to lift wages and lead to more Pennsylvanians seeking employment here.” 

An additional key factor in rebuilding the state’s workforce focuses on continuing the phase down of the corporate net income tax from its current 8.99% to 8.49% later this year and eventually down to 4.99% by 2031. 

Permitting reform is another issue Shapiro has been speaking to, and Anzur noted that Republicans in the Pennsylvania Senate have introduced legislation to streamline and speed up the permitting process. 

“That’s a process that costs businesses millions of dollars annually here in Pennsylvania,” said Anzur. “As businesses save on those costs and are able to reinvest that money back into their workforce, I think you’ll see a positive impact of people coming back into the labor force here in Pennsylvania.” 

Workforce shortages rank among the biggest challenges facing Pennsylvania residents, and Shapiro has proposed incentivizing the nursing, police, and teaching professions with a three-year tax credit of up to $2,500 per year for new recruits. 

Anzur said the PA Chamber agrees with the governor’s prioritizing the labor shortage, and at the same time is taking a big picture view of the crisis. 

“From our perspective,” said Anzur, “while we share the governor’s concern and focus on strengthening Pennsylvania’s workforce, we’re looking at a more macro approach to addressing this issue that will impact positively Pennsylvania’s workforce across all sectors – job training, childcare, and improving our tax and reg environment.”

Wolf leaves complicated, conflicting legacy for Pa. businesses

Governor Josh Shapiro was just minutes into his inaugural speech on Tuesday, Jan. 17, when he turned to address the outgoing chief executive, Gov. Tom Wolf. 

“Thanks to his leadership,” Shapiro stated, “we now find ourselves in the strongest financial shape in the history of the Commonwealth of Pennsylvania, allowing us to make critical investments for tomorrow.” 

Supporters of Wolf likely found Shapiro’s praise for his predecessor providing a moment of warmth on a day otherwise chilled by wintry wind and leaden skies. The President & CEO of Lehigh Valley Economic Development Corp., Don Cunningham, believed Wolf’s greatest contribution to the state’s businesses and economy to be the reduction of the corporate net income tax from 9.99% to 4.99% by 2031. 

“It’s very significant for those of us to do economic development,” Cunningham said. “He proposed it in his budgets and finally got agreement from Senate Republicans. That’s what leaders do.” 

Not everyone on that gray inaugural day shared Shapiro’s sunny sentiments for Wolf’s impact on Pennsylvania’s businesses. State Senator Scott Martin (R-Berks/Lancaster) said there was “a lot of frustration” the past eight years. The reason being that many of Wolf’s policies were, said Martin, “counterproductive to Pennsylvania tapping into its full economic potential.” 

David N. Taylor, president & CEO of the Pennsylvania Manufacturer’s Association, cites the “deeply disturbing” practices of the Wolf Administration that he says have destroyed an untold number of businesses in Pennsylvania. 

“Governor Wolf, during his tenure, was markedly unhelpful to Pennsylvania’s business competitiveness,” Taylor said. “At every turn, he was pushing for more government, higher spending, and he did a number of specific things that were especially damaging to the economy.” 

One such thing, said Taylor, was the 2017 Tax Cuts and Job Act (TCJA), which changed the depreciation, deductions, tax credits, and tax items that affect business. 

“When the tax policy was changed at the federal level, that was the starting gun for the process of American companies considering where to bring those overseas earnings to reinvest in America,” Taylor said. “Pennsylvania was the only state to say ‘no’.”  

Another point of contention was the additional tax on the production of natural gas in Pennsylvania that Taylor said Wolf called for in his annual budget addresses. 

“Even though he was never going to get that, the fact that you had the sitting governor calling for it rendered our investment environment uncertain,” Taylor said. “If you want to go back and look at when the rigs stopped coming in or when did they start leaving, 2015 was that turning point.” 

Jon Anzur, vice president of public affairs for the PA Chamber, called Wolf’s record on working with the business community “a mixed bag.” 

At the beginning of Wolf’s first term, he had what Anzur said was “a very adversarial” relationship with the business community. The issue at the heart of the impasse were business-related, a tax-and-spend approach not in line with the business community. 

“As Wolf went along,” said Anzur, “rather than treat the business community as an adversary, he treated it as a partner.” 

Supporters of the Wolf Administration point to what they see as life-changing investments in the people of Pennsylvania and the building of a business-friendly climate via the following actions: 

  • Collaborated with 430 companies to create and retain close to 194,000 jobs. 
  • Diversified state contracting so that diverse, small, and veteran businesses comprise 20% of Pennsylvania’s contractors. 
  • Eliminated the Capital Stock and Franchise Tax. 
  • Launched Manufacturing PA to link job training to career pathways. 
  • Partnered with the private sector to address the worker shortage. 
  • Placed Pennsylvania on track to a Corporate Net Income Tax rate of 4.99%. 
  • Reformed Occupational licensure to cut red tape, help workers, and strengthen the workforce. 
  • Distributed grants to help more than 10,000 small businesses and the hospitality industry survive the pandemic. 

“He did some things that were very focused on what we need to do to grow the economy,” Cunningham said. 

At the same time, Wolf’s handling of COVID-19 came under criticism. A state audit called the business waiver program confusing and inconsistent, declaring that it created for Pennsylvania companies an unfair playing field. 

Martin agreed. “Direct competitors, even in my own district, one would get a waiver to stay open and their direct competitor would not,” he said. 

Taylor recalled Wolf’s shutting down of businesses being done without the okay of those whose livelihoods were affected by the decision. 

“There was no outreach to say, ‘How will this play out in the real world?’” Taylor said. “You would think any leader would want to have the most comprehensive overview information as to how will this play out… Governor Wolf didn’t reach out to anyone.” 

Like many politicians, Wolf leaves behind a legacy that is complicated and conflicting. Supporters say it abounds with innovative programs, people-driven policies, and investments aimed at creating a more prosperous Pennsylvania. The Rainy Day Fund, dangerously low when Wolf took office, now stands at an historic $5 billion, and his administration secured a $5.3 billion budget surplus, albeit aided with federal funding. Still, Wolf is the first governor since 1987 to hand his successor a surplus. 

Critics call Wolf’s business policies catastrophic and see the former governor, in Taylor’s words, “hurling down thunderbolts from on high” during the pandemic, preventing citizens and their enterprises from adapting to the circumstances, forcing them to “sit back, do nothing, and watch their business die.” 

Martin likewise believed Wolf’s policies made the pandemic worse, and that Pennsylvania’s businesses have not fully recovered. 

“Businesses continue to struggle and some no longer exist because of the policies he put in place,” said Martin. “It had a lasting impact.” 

Cunningham noted that Wolf was operating in real time and trying to find the balance between keeping people safe and keeping businesses open. 

Good and bad, Wolf’s two terms provided what Anzur termed “an evolution in office,” the former governor finding “common ground to move the ball forward for Pennsylvania.” 

PA Chamber, local leaders tout Corporate Net Income Tax cuts

The PA Chamber of Commerce was joined by local lawmakers and business leaders at the Lehigh Valley Economic Development Corp. headquarters in Bethlehem Thursday to highlight the benefits of business tax reform in the 2022-2023 budget. 

PA Chamber President and CEO Luke Bernstein spoke during a press conference following a roundtable discussion with the group. 

 “For far too long, Pennsylvania has had the second-highest Corporate Net Income tax rate in the country, which has been a giant stop sign for companies considering moving and investing here,” he said. 

In the new budget the Corporate Net Income Tax, which is currently 9.99 % will be reduced to 8.99% on Jan. 1, 2023, with automatic, annual .50 percentage point reductions until the rate reaches 4.99% in 2031. 

The change will make Pennsylvania the eighth lowest CNI tax in the country. 

Bernstein said one of the best parts of the change was its strong bipartisan support. 

Mike Schlossberg, D-Lehigh, said as a progressive Democrat, he was very proud of his yes vote on the measure. 

“Taxes aren’t bad,” he clarified. “We need them to survive. They’re the price we pay for civilization. But there’s nothing positive or progressive about having the second highest Corporate Net Income Tax in the country.” 

He said by making the cuts, he expects to see future gains as companies invest that savings back into their business and more companies are drawn to Pennsylvania because of the more competitive tax rate. 

Christopher Kuhn, CFO of Olympus of the Americas in Center Valley, said the tax reduction will benefit local operations. 

“We will be able to more aggressively grow our business with both organic and inorganic investments in Pennsylvania,” Kuhn said. 

Don Cunningham, president and CEO of the LVEDC said the lowered rate will help his organization in its mission to recruit new business to the Lehigh Valley. 

“The CNI tax has been a disadvantage for our companies here in the Lehigh Valley and certainly on our work to draw businesses into the region,” he said. “This is a huge game changer.” 

Bernstein noted that the higher CNI rate has cost Pennsylvania business in the past. 

He pointed to Intel Corp., which was considering moving to Pennsylvania, but chose to locate in Ohio instead, which is a state with no CNI tax. 

He said he hopes the tax reduction is just the first step in tax reform efforts to help make Pennsylvania more competitive. 

State Rep. Ryan Mackenzie, R-Berks/Lehigh, agreed that more tax reform is needed. 

“This reduction in Corporate Net Income Tax helps both large and small businesses,” he said. “This will bring meaningful changes for small businesses, but it’s just the first step with more steps moving forward.”