2017-02-18 / Viewpoints

Pa. business-unfriendly

BY KEVIN SHIVERS

(Kevin Shivers is the Pennsylvania executive state director of the National Federation of Independent Business, which has 14,000 member businesses in the state and 325,000 nationwide.)

Bob Esch couldn’t have put it better in his editorial last week, titled, “Jobs unfilled due to skills gap.”

But it’s not just a lack of training and education that is causing Pennsylvania’s employers to struggle. An unfriendly business climate in the Keystone State is also to blame.

Our state economy is in a funk. Over the past two years, the state unemployment rate increased to 5.7 percent, while the U.S. average fell to 4.6 percent. Over the same period, employment in Pennsylvania grew by only 1.35 percent while national job growth rose at twice that rate.

Over the next decade, our working-age population (20-64) will decrease by 181,000, while the 65 and older age group will increase by 678,000.

Yes, Mr. Esch, we have a jobs problem. As Pennsylvania’s older population explodes, lawmakers must do more to boost business growth and attract and prepare workers.

Here are some reforms that lawmakers should immediately address:

• Control spending. Budget battles combined with threats of tax increases reduce business confidence and hamper hiring. It’s encouraging to hear legislative leaders talk about restructuring government. The Taxpayer Protection Act would limit spending growth. Thirty states do this. Government pension costs are the largest cost driver. Lawmakers should once and for all resolve to fix this broken system.

• Take stock. We need a review process that will assist our state to repeal outdated regulations that provide little value. Employers are buried in bureaucratic paperwork, much of which offers few environmental or consumer protections.

• Streamline the permitting process. Countless business owners have waited years to get permits from the Pa. Dept. of Environmental Protection (DEP) and local governments. Many frustrated business owners simply give up or divert business capital to projects in other states. Government agencies must be held to strict timelines to review applications.

• Tax reform. The state tax code is so far out of sync with the IRS code that small business owners need to keep separate sets of books. A fair tax code should be consistent and encourage growth through entrepreneurship and private-sector investment. Economic development schemes, like the failed Keystone Opportunity Zone (KOZ) program, put the government in charge of picking winners. Every other business winds up paying a higher tax bill.

• Sensible deductions. Pennsylvania should allow small businesses to deduct expenses for new equipment purchases, thus incentivizing small businesses to grow. The federal tax code allows businesses to expense $500,000 per year. At least 33 states allow the same.

• Workforce development. Mr. Esch is right. Despite rising unemployment, many business owners struggle to find qualified workers because of a skills gap. Meanwhile, the government earmarks workforce investment dollars only to specific training for certain jobs in certain industries. Let’s simplify things. Let small employers deduct their employee training expenses.

With these changes and others, we can put Pennsylvania back on a path to prosperity.

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