As the high-stakes presidential race between Kamala Harris and Donald Trump reaches its crescendo, the eyes of the nation are fixed on Pennsylvania. This crucial swing state could tip the balance of power, and for the small business owners who form the backbone of its economy, the stakes couldn’t be higher. Yet as voters prepare to cast their ballots, a cloud of economic uncertainty hangs over the Keystone State, casting a shadow on the hopes and dreams of entrepreneurs and workers alike.
A Middling Economic Landscape
By most measures, Pennsylvania’s small business economy is treading water. Real GDP growth, adjusted for inflation, hovers around the national average at 2.5%. However, this modest gain is tempered by the stark reality of rising prices. According to a close source, the cost of goods for both consumers and businesses in the Philadelphia area has skyrocketed by 21.7% compared to pre-pandemic levels.
This inflationary pressure is squeezing margins and forcing difficult choices. In September alone, small businesses with fewer than nine employees saw revenues decline by 0.22% after accounting for inflation, as reported by a leading small business software provider. The timing of this slump, coinciding with the final stretch of the campaign, could spell trouble for the incumbent Harris.
Employment Woes Persist
The job market, a key indicator of economic health, paints a mixed picture. On one hand, Pennsylvania’s employment decline of 0.025% in September outperformed the national average. The Philadelphia region even notched a modest 0.04% uptick in hours worked over the past year. However, these glimmers of hope are overshadowed by the 16% drop in job postings and a creeping 4% rise in unemployment compared to a year ago.
More concerning still is the uneven distribution of job gains and losses across industries. Leisure, hospitality, government, and education posted the strongest employment growth, while construction, manufacturing, transportation, utilities, information, and professional services all contracted. This imbalance suggests an economy still grappling with the aftershocks of the pandemic and the challenges of an uncertain future.
The Specter of Stagnant Wages
For the workers who keep Pennsylvania’s small businesses running, the economic picture is even more troubling. The average hourly wage of $31.63 lags the national benchmark by 3.5%, and growth has failed to keep pace with the relentless march of inflation. Weekly earnings rose just 2.47% in the past year, a fraction of the increase in consumer prices.
“Uncertainty” is the main word I keep hearing. Small-business owners tell me they’re concerned about the changing tax environment in 2025 with the expiration of the Tax Cuts and Jobs Act and how that will affect them, both personally and professionally.
– According to a close source
While personal income, which includes non-wage sources, grew 4.4%, it wasn’t enough to shield consumers from the erosion of their purchasing power. Spending dipped from 2.5% in 2022 to 2.2% in 2023 before rebounding slightly to an estimated 1.8% this year. However, projections indicate much of this consumption is being fueled by credit card debt and dwindling savings, an unsustainable formula that could spell trouble ahead.
A Middling Business Climate
For entrepreneurs considering where to set up shop or expand operations, Pennsylvania offers a decidedly mixed bag. The state ranks squarely in the middle of the pack for its overall business environment, according to a comprehensive study that assessed all 50 states across 10 key categories of competitiveness. More concerning, Pennsylvania placed a dismal 36th in terms of economic growth and boasts one of the least favorable tax climates in the nation for both individuals and corporations.
This mediocre performance hardly inspires confidence, especially at a time when businesses are craving stability and support. The expiration of the Tax Cuts and Jobs Act looms large, injecting yet another dose of uncertainty into an already fraught economic landscape. Entrepreneurs are increasingly wary of investing in an environment of elevated interest rates and shifting regulatory sands.
An Election in the Balance
As Pennsylvanians head to the polls, the state of the economy weighs heavily on their minds. The Biden administration’s handling of inflation, employment, and business conditions is sure to be a deciding factor for many voters. Yet it remains to be seen whether a change in leadership would dramatically alter the trajectory of the state’s small business sector.
According to a close source, most small business owners recognize that whoever occupies the White House has less direct impact on their day-to-day operations than many might assume. The challenges they face—rising costs, a tight labor market, the specter of higher taxes—are deeply entrenched and unlikely to vanish overnight, no matter the outcome of the election.
Nevertheless, in a race this tight, even small economic tremors can produce seismic electoral shifts. The discontent simmering among Pennsylvania’s entrepreneurs and workers, buffeted by the winds of an uncertain economy, could well be the deciding factor in this critical swing state. As the nation watches with bated breath, only one thing is certain: the road ahead for Pennsylvania’s small businesses remains shrouded in uncertainty, no matter who emerges victorious on election night.
