South Carolina businesses take a wait-and-see attitude

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South Carolina businesses are waiting.  That’s the explanation by business leaders why this year’s new job recruitment numbers may fall way below those in 2011.

According to figures provided to GreenvilleOnline.com by the state Department of Commerce, the number of jobs recruited to the state as of this week total 11,751, compared with 20,013 for last year. Capital investment numbers also are down, going from $5.1 billion last year to $3.83 billion this year, according to the agency, which is still revising its year-end numbers.

“A lot of our guys are still waiting on the sidelines,” said Otis Rawl, president and CEO of the state Chamber of Commerce. “I think they are wanting to hire but the uncertainty on the national level is driving some of the reluctance to invest right now. And uncertainty is the worst thing that businesses can have.”

The uncertainty involves what will happen with negotiations over the nation’s “fiscal cliff,” the impact of the federal Affordable Care Act and overseas markets and fiscal problems, Rawl and other business leaders say.

That uncertainty is thought to be behind last month’s small business index rating by members across the country of the National Federation of Independent Business, the fifth lowest since the index began in the 1980s, said Ben Homeyer, state director for the NFIB.  “There’s is just no confidence in the marketplace,” he said. “For us, jobs are holding steady but there is certainly no growth.”

Bruce Yandle, dean emeritus of Clemson University’s College of Business & Behavioral Science, said he is optimistic about the state’s employment growth. He said the decline in recruited jobs may only reflect a higher-than-normal figure for 2011.

He said in employment growth for business and professional services, health and education, construction and manufacturing, South Carolina is the second-strongest state in the Southeast.  “South Carolinais showing some economic muscle in terms of growth in those important sectors,” he said.  Construction job growth has finally reached zero, he said, which is better than many states which report negative numbers.

“We, because of a complex set of forces, are well positioned,” he said, adding that the state’s housing activity is expected to be within 70 percent of normal within a year, one of five states to be in that position.

“We’ve got some good things going on,” he said. “We are turning some corners.”

Gov. Nikki Haley says she’s bullish on the state’s job numbers even if the number of recruited jobs appears to be lower than those from last year.  Asked by GreenvilleOnline.com about her take on the decline in recruited jobs in the state, Haley pointed out that there were 29,972 new jobs from all sources in the state this year.

“What is your answer to the fact that we’ve announced almost 30,000 jobs?” she asked. “What is your answer on the fact that when every other state is struggling, we have seen unemployment go down from 10.6 percent to 8.6 percent? What is your answer to the fact that they said South Carolina was in the top three on recruiting jobs and manufacturing?”

In her letter introducing her executive budget for next year, Haley says manufacturing is growing again in the state, housing prices are rising and there is a dramatic increase in building prices.  “We’re back on track,” she said. Haley added that she is never satisfied with the number of jobs recruited or the unemployment level and is working to change both.   The 2011 capital investment numbers were a record, officials said then, and the job numbers were at a near record level.

Business leaders say the 2012 numbers are indicative of a reluctance by many companies in the state to invest much in new hiring until more uncertainty is removed on the national level with issues such as the fiscal cliff negotiations.

Earlier this month, two research economists at the University of South Carolina’s Moore School of Business forecast a job growth rate of 1.2 percent in South Carolina for next year but warned that the outcome of the fiscal cliff talks could change those numbers.

John Knight, vice president of HTI, a Greenville temporary staffing company, said companies normally hire temporary workers if they want to avoid hiring full-time employees.  “Right now the atmosphere we are seeing is they are not hiring temporary associates,” he said. “And they are not hiring a full-time work force. We have kind of been in a wait-and-see mindset for probably the last three or four months and we really see that continuing through the first quarter.” After then, he said he hopes to see the “high tide coming in” as far as job creation, depending on what happens with the fiscal cliff talks and also the Affordable Care Act.

“There is so much unknown about the health-care program right now,” he said. “There are still changes that may take place that may cause companies to say, ‘We’re not going to hire anybody right now until we understand exactly what our exposure is on this.”  Rawl said companies are looking 20 to 30 years in the future and what their capital investment returns are going to be.

“Six months going into the election, they were sitting on the sideline,” he said. “I still think they are sitting on the sideline right now waiting to see howWashingtonaddresses the fiscal cliff. Until that gets resolved, I still think you will see a lot sit on the sideline.”  He said environmental regulations, tax deductions and exemptions also are considered by companies deciding whether to locate in theUnited States.  “It becomes a competition issue,” he said.

Rawl said the state’s effort at deepening and expanding the port at Charleston could be a “game changer” for jobs. But if the port is improved and the state’s infrastructure remains a crumbling network of roads and bridges, that could negate what happens at the port.   “Infrastructure has to be improved for us to be able to get our stuff out of the ports to our plants,” he said. “If we don’t get that right and our guys experience delays in getting services in and out, that could be a game-changer too.”

Haley agrees and is proposing that most of what she expects to be at least a $100 million revenue surplus next year be dedicated to infrastructure improvements. She also wants to spend $10 million from the state’s capital reserves on roads and take $3.8 million in gas tax money now sent to other agencies and instead send it to DOT, letting the General Fund pay for the programs paid for previously by the $3.8 million.  She said she will not agree to any increase in the gas tax.  Read More.