BOOMING BUSINESS
Rothfus says GOP tax cuts are reviving Beaver County’s economy. Are they?
For a few hours last week, the Salvation Army on Franklin Avenue in Aliquippa seemed more like a wonderland of economic opportunity — where aspiring employees scanned the booths at the community job fair and found, much to their surprise, actual job openings.
At one booth, Shasta looked to hire at least 10 people for its metal grinding and machining facility in town. At another, Precision Kidd Steel looked to boost staff by 20 percent thanks to customer orders at record levels.
“2018 has really seen the uptick,” said manufacturing manager Jeffrey Graeber. “It’s off the charts.”
In that moment, Mr. Graeber sounded more like his congressman. Rep. Keith Rothfus, R-Sewickley, has said over and over — on Twitter, on Fox News and on the floor of the House — that the economy is surging because of the administration’s regulation rollbacks and the Republican tax plan that took effect this year.
He has staked most of his campaign for the 17th District against Democratic Rep. Conor Lamb on the success of the tax cuts in his district. And while he’s right that small businesses are experiencing a confidence boost, his success in November — like that of many other Republicans across the country — will depend heavily on how much constituents feel they’re
benefiting and whether they believe it’s because of Republican efforts.
Republicans like Mr. Rothfus have tried to distinguish their party as progrowth by pointing to the declining unemployment rate and business growth across the country, which they claim is because of their Tax Cuts and Jobs Act that cut the corporate income tax rate to 21 percent and modified tax brackets and income tax rates for individuals. That’s why Mr. Rothfus could be seen donning a Home Depot apron in a Facebook live video earlier this year, touting the Hampton location’s Success Sharing Program that allows its more than 100 hourly associates to split $30,000 to $40,000 every six months. That’s also why the congressman’s office pointed a reporter to four news releases in which corporations like McDonald’s and PNC Bank announced plans to invest in their employees through education programs, one-time bonuses and wage hikes.
“There’s a model we had under the Obama administration of increasing regulation, increasing taxes and micromanaging things from Washington,” Mr. Rothfus said in an interview, “versus letting the American people have more of their money back.”
Indeed, the national economy continued an upward swing in July, as the unemployment rate fell to 3.9 percent and employers added a modest 157,000 jobs, according to statistics released Friday by the Department of Labor. Analysts anticipated that the $1.5 trillion tax cuts — as well as President Donald Trump’s order to eliminate two regulations for every one added — would stimulate the economy in the near term while increasing the deficit.
The tax cuts have been felt most by small businesses in Beaver County, which make up about threequarters of the Chamber of Commerce’s 565 members, said chamber president Jack Manning. In some cases, he said, businesses have been able to expand their operations or pay employees more. The chamber’s government affairs committee, made up of members from all political leanings, are confident about the economic opportunities that have opened up, he said.
“I will tell you that the quarterly payments for their taxes that our small business owners make are substantially less, and they have mentioned that,” Mr. Manning said. “It is impacting them. They feel like they’re doing better.”
In construction, more customers have the money to spruce up their homes, said Randy Lyons, a contractor working on restoring a hotel in Rochester. Mr. Lyons, 52, of Monaca, said the president has improved the economy and, as a result, his construction business is “just booming.”
But wages aren’t growing as much as economists expected. Average hourly pay gains nationwide increased 2.7 percent from a year earlier, but adjusting for inflation, pay has actually decreased in the past year. Because of the rising costs of things like gasoline and prescription drugs, “a lot of people feel like we’re treading water,” said Mr. Lamb, who represents the current 18th District.
And evidence suggests that the county is still struggling to restore and fill jobs. According to an analysis by The Associated Press, Beaver County has lost 191 jobs since May 2017, as most of the job gains have gone to counties that backed Democrat Hillary Clinton in 2016. The county has also lost 1,000 workers in the past 12 months, according to the AP, because of decades of population loss. As a result, there are fewer qualified applicants.
“You can’t find blue-collar workers in this business who want to work,” said Harry Gilarno, owner of Gilarno’s Auto Repair in Freedom.
Miko Bailey, staffing consultant at Express Employment Professionals, said businesses in Beaver are rushing to her agency because they need help filling positions — and that construction of the Shell cracker plant in Potter, which has employed about 6,000 workers during construction, has opened up many job opportunities. “There are more jobs than people looking to work,”Ms. Bailey said.
Businesses are having a hard time finding workers, Mr. Lamb said, “because we haven’t done a great job giving the skills to workers around here so local people can fill all these jobs.”
The chair of the Beaver County Republican Party, Chip Kohser, said the tax cuts have triggered an influx of manufacturing jobs, which is part of why he believes the cuts will resonate with voters — particularly Blue Dog Democrats in the county who are fiscally conservative. Families are seeing “much more than crumbs,” Mr. Kohser said, because companies are reinvestingin their employees.
Mr. Manning said he, personally, is paying “a lot less” to the government every quarter based on his estimated total income for the year, but that for employees of big corporations, the effects of the tax cuts likely won’t be felt until they file their taxes at the end of the year. And the psychological impact of a one-time bonus, he said, doesn’t last long.
Some Democrats are taking that a step further, arguing that the tax cuts benefit the wealthy at the expense of the middle class. Stephen Dupree, chair of the Beaver County Democrats, called the benefits of the bill “barely noticeable” and said companies aren’t passing their gains from the tax cuts down to employees.
“It is not tax relief,” Mr. Dupree said. “It is trying to put a Band-Aid on a bleeding chest wound.”
Mr. Lamb said constituents seem to be “mildly optimistic” about the jobs numbers, but he is happy for any increase in take-home pay they have gotten. He said he wants to lock in those gains, if real, because the bill that was “written for large companies and the 1 percent” did not make those cuts permanent for working people.
Emily O’Leary, cofounder of Beaver County Voice for Change, said it is too soon to notice the true implications of the tax cuts, which appear to be benefiting lower income families witha small boost in their income but will likely increase their health care costs.
“The increase in their income may be washed out in the end and, I assume, many will end up paying more out of their own pockets,” Ms. O’Leary said. “Corporations have given bonuses, one-time bonuses. Where are the permanent increases to employee salaries?”
There is some evidence to this. According to an analysis by the left-leaning Tax Policy Center, the cuts will “end up making most households worse off than if [they] had not been enacted,” estimating that the increase in after-tax income will be proportionally higher in high-income households.
Mr. Rothfus said the average person in his district is getting $1,500 more per year in take-home pay, which he called “real money to real people.” The conservative Heritage Foundation estimated that taxpayers in the newly drawn 17th will save an average of $1,403 from the tax cut in 2018 from an income tax decrease of 10.8 percent.
If the Democrats win in November,Mr. Rothfus said, they’ll raise taxes and “send us right back to the sluggish economy we had two years ago.” Mr. Lamb said he has never been in favor of raising taxes on working class families but wants to ensure corporations are paying their fair share.