Worsening Business Climate Prompts Businesses to Consider Leaving PA

Pennsylvania’s business climate continues to get worse with attracting and keeping qualified employees, continued inflation, and high interest rates being the top challenges facing business owners, CEOs and top managers.

The state’s poor business climate has prompted 43% of businesses surveyed to consider moving all or part of their operations out of the commonwealth. Those are the key findings in the Fall 2025 Keystone Business Climate Survey conducted by the Lincoln Institute of Public Opinion Research,

Continuing the trend of the past few years, finding and keeping qualified employees remains the top business challenge. The survey found 27% of respondents saying that is their top challenge. Close behind is inflation and rising costs. Thirty-seven percent said inflation has had a significant impact on their business with an additional 44% saying the impact of inflation has been moderate. Only 12% say inflation has had no impact on their operations.

There is growing concern over current economic conditions. That was cited by 19% of the businesses as their top concern with an additional eight percent saying future economic conditions are a top concern. Health care costs, government regulations along with federal and state taxes all were listed by less than five percent as a top concern.

Another factor impact Pennsylvania businesses are relatively high interest rates. The Federal Reserve did recently cut its target rate by 25 basis points, but rates remain elevated. Twenty-three percent of participants in the survey said the current level of interest rates is affecting their ability to acquire and/or afford financing needed for ongoing operations or has impacted their expansion plans. Another 44% said the level of interest rates has had a moderate impact on their business. Twenty-three percent said interest rates have had no impact on their operations.

State Issues

Given the current business climate in Pennsylvania 43% of the businesses participating in the Fall 2025 Keystone Business Climate Survey said over the past six months they have considered moving all or part of their operations out of the commonwealth. Twenty-four percent said they have considered moving all of their operations; 18% said they considered moving part of their operations. Forty-one percent reported not having considered moving any operations.

At the time the survey was conducted the Pennsylvania’s state budget stalemate had entered its third month. When asked if in the current fiscal year the Commonwealth of Pennsylvania should tap into the “rainy day fund” to spend $3-5 billion more than projected revenue, or if spending should be aligned with revenue projections 52% said spending should be aligned with revenue projections; 28% favored tapping into the rainy day fund.

There has been a lot of discussion on the ability of suppliers to the PJM power grid to provide for Pennsylvania’s growing energy needs. Twenty percent said they are very confident in the ability of the grid to supply energy needs while 47% were somewhat confident. Eighteen percent said they are not confident that the grid can meet growing demand.

The state legislature is considering placing a tax on revenue from skill video games. Thirty-six percent of the business leaders think skill games should be taxed at the same rate as casino revenue. Twenty-seven percent say the games should be subjected to an additional tax. Eleven percent say that additional tax rate should be 50%. Thirteen percent think nonprofits should be exempt from paying additional tax.

Tariffs

President Donald Trump’s use of tariffs has been highly controversial with so-called experts divided on their impact. The Fall 2026 Keystone Business Climate Survey found 20% of respondents opposed all use of tariffs. Another 20% say tariffs should be used as a bargaining tool in trade negotiations with an additional 20% saying tariffs should be imposed on targeted industries. Fifteen percent said tariffs should be targeted toward specific nations while 13% supported broad-based tariffs.

God-Given Rights

The 250th anniversary of the signing of the Declaration of Independence will be celebrated in 2026. That document says that we are “endowed by their Creator with certain unalienable rights.” Fifty percent of respondents to the survey said they agree that our rights are God-given. Thirty-six percent say our rights are granted by government. Another 14% offered no opinion.

Business Climate

Thirty-five percent of the business owners, CEOs & top managers participating in the Fall 2025 Keystone Business Climate Survey said business conditions in the commonwealth have gotten worse over the past six months. That is a drop from the Spring 2025 survey (41%) and the Fall 2024 survey (45%). Seventeen percent said business conditions have gotten better; 41% said business conditions have remained about the same. Looking ahead six months, 25% expect business conditions to continue to worsen, 25% expect conditions to improve.

Employment levels remain steady. Twenty-six percent say they have fewer employees than they had six months ago, 24% say they have more employees while 38% report employment has remained the same. Looking ahead six months, 42% expect their employee compliment to remain the same, 20% expect to have fewer employees; 21% expect to hire more employees.

Sales are also remaining static. Forty-two percent said sales at their business have remained the same over the past six months; 23% said sales have increased while 22% said sales have decreased. Looking ahead six months 37% said sales will remain the same. Twenty-seven percent expect an increase in sales while 22% expect sales to decrease.

Job Performance

President Donald Trump and Governor Josh Shapiro continue to enjoy the highest job performance ratings – although both clock in at less than 50%. President Trump scored a 47% positive/42% negative job approval rating while Governor Josh Shapiro received a 47% positive/29% negative rating.

Pennsylvania’s business owners, CEOs and top line managers give U.S. Senator John Fetterman a 37% positive/35% negative job approval with U.S. Senator Dave McCormick earning a 35% positive 31% negative rating.

Vice President J.D. Vance was underwater in his job approval with a 38% positive/42% negative rating. Also in negative territory were Federal Reserve Chairman Jerome Powell with a 28% positive/30% negative rating and U.S. Secretary of the Treasury Scott Bessent with a 27% positive/34% negative rating.

Among the three statewide constitutional or “row” offices, Pennsylvania Attorney General Dave Sunday scored a 28% position/25% negative rating; Auditor General Tim DeFoor has a 26% positive/24% negative rating while state Treasurer Stacy Garrity earned a 33% positive/25% negative rating.

Among legislative bodies the United State Senate was given a 40% positive/39% negative rating; the U.S. House of Representatives received a 35% positive/42% negative rating. The Pennsylvania state senate got a 36% positive/36% negative rating while the Pennsylvania House of Representatives received a 31% positive/36% negative rating.

The Supreme Court of the United States had a 40% positive/40% negative rating while Pennsylvania Supreme Court earned a 36% positive/34% negative rating.

Methodology

The Lincoln Institute’s Fall 2025 Keystone Business Climate Survey was conducted electronically from October 14 – October 17, 2025 with a total of 215 respondents. Of those 39% are the owner of their business; 8% are the CEO/COO/CFO; 11% a state manager; and are a18% a local manager. Complete numeric results are available on line at www.lincolninstitute.org and www.patownhall.com.

(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly American Radio Journal and Lincoln Radio Journal. His e-mail is lhenry@lincolninstitute.org.)

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