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Letter: Why is the legislature beating up on business when the state needs jobs?

To the Editor:

Multiple recent studies and surveys have shown that Connecticut’s economic recovery is among the slowest in the country. Unemployment remains higher than the national and regional averages, and the workforce continues to shrink as people either stop looking for work or leave the state to find jobs elsewhere.

CNBC and Forbes both rank Connecticut near the bottom of their lists of business-friendly states. In an implicit acknowledgment of the weaknesses of the business environment, the administration itself continues to insist on the need to “play defense”, by offering significant incentives to individual businesses to ensure that they don’t leave Connecticut.

Under these circumstances, it would be odd for the General Assembly to make a concerted effort to create hurdles for creating, operating, and growing businesses. Yet during this legislative session, the Labor & Public Employees Committee has produced a steady stream of bills that do just that. One has already become law, one has just failed today in the Finance Committee, and several of them are still moving through the legislative process.

  • SB 249, An Act Promoting Retirement Savings, would make Connecticut the only state in the country to mandate a state-run retirement plan for private-sector workers. It would establish a state-run retirement trust and require any private-sector business with five or more employees that doesn’t offer them an IRA, 401(k), or pension plan to facilitate employee access to it. Employees would be automatically enrolled in the plan unless they explicitly opted out every two years. The Office of Fiscal Analysis estimates that the state would incur about $10 million in start-up costs for the plan. The measure would make the state a direct competitor of Connecticut’s key financial services sector, which employs more than 100,000 people and provides a full range of easily accessible retirement plan options. It would also impose multiple new costly and time-consuming obligations on businesses, including payroll deductions, plan payment transfers, special employee communications, and hosting open enrollment periods. These mandates would, of course, be particularly onerous for small businesses.
  • SB 32, An Act Concerning Working Families’ Wages, increases the state’s minimum wage from $8.70 to $9.15 on Jan. 1, 2015, to $9.60 on Jan. 1, 2016, and to $10.10 on Jan. 1, 2017. This bill was signed into law by the governor in March, making Connecticut the state with the highest minimum wage in the country.
  • HB 5280, An Act Concerning Executive Employee Compensation, would restrict eligibility for tax credits, tax exemptions, tax abatements, or other state financial assistance to employers whose executives’ annual compensation does not equal or exceed 50 times the average annual compensation of their employees. This measure constitutes an intrusion of state government into employers’ operating decisions, as it openly incentivizes businesses to structure their payrolls in a certain way.
  • SB 242, An Act Concerning Sick Leave for Teacher Assistants and Radiologic Technologists. Under the current administration, Connecticut became the only state to adopt paid sick leave legislation. This bill would extend the state’s requirement for employers with at least 50 service workers to provide paid sick leave to two additional categories of employees. The inclusion of teacher assistants would result in a new state mandate on local school districts and related cost increases for municipalities. The Office of Fiscal Analysis estimates that about 12,000 school employees would be affected.
  • HB 5069, An Act Concerning Low-Wage Employers, passed in the Labor Committee and has just been voted down in the Finance Committee today. It would have required employers with 500 or more workers to pay their employees at least 130 percent of the state’s minimum wage. If they did not, they would have to pay a fee of $1 for each work hour paid below that rate. The measure would have applied to both independent businesses and to franchises. Taking into account the new minimum wage increases recently signed into law, employers would have had to increase their lowest wages by more than 50 percent in just 3 years.

In terms of hurting businesses, these bills span the full spectrum from increasing their costs to interfering with their internal decisions to allowing the state to engage in out-and-out competition with them. The administration has said repeatedly that Connecticut is open for business. But if these bills become law, the state might as well just tell businesses to stay away.

While our neighbors New York and Massachusetts are taking steps to reduce taxes and business costs, Connecticut seems to be doing everything possible to make its economy less competitive.

What should we do? First, stop these bills and others like them from moving forward, like the Finance Committee did with HB 5069 today. Then, we must listen to business owners and executives who tell us again and again that the two things they need most to grow and create jobs are a reduction in their ongoing, everyday costs, including labor costs and taxes, and consistent, reliable tax and regulatory policy. The economic development policies of the last three years, which are based on cherry-picking and one-shot incentives for selected businesses, have essentially dismissed that feedback. We must help all businesses, not just a few, reduce their structural costs over the long term. And we must give them confidence that Connecticut is a place where they can make five to 10-year plans to hire, invest, build, and grow.

The legislative session ends in less than a month, and confronting the Labor Committee’s current crop of bills is one of the most urgent tasks before us. While it may be possible to argue the pros and cons or the good intentions of the individual proposals, seen as a group, these bills send a clear signal that Connecticut is not a place where businesses are welcome. There are many viable strategies for stimulating economic development and job creation. Beating up on businesses is not one of them.

State Rep. Gail Lavielle (R-143)

Gail Lavielle represents the 143rd Assembly District comprising parts of Wilton, Norwalk and Westport. She is the House Ranking Member of the Connecticut General Assembly’s Commerce Committee, and serves on the Appropriations, Education, and Higher Education committees.

Comments

3 responses to “Letter: Why is the legislature beating up on business when the state needs jobs?”

  1. Don’t Panic

    Without customers, there are no businesses. The objection to trying to increase consumer demand is the cri de cour of employers who don’t share their productivity gains worth their workers.
    .
    Workers are the only “businesses” who are trashed for raising their “retail” pricing when their “operating costs” go up. If businesses priced goods and services the way they expect labor to price theirs, we’d all still be paying a nickel for a loaf of bread.

  2. Norwalk Spectator

    Still in all, Panic, how many businesses do you know that have closed their doors recently?
    .
    Without trying very hard, I can think of at least three within a three block radius in South Norwalk. I mourned when Jeff’s Cuisine closed, and was sad to hear Papaya Thai is also gone. The restaurant business is tough and on average most don’t make it past 5 years. Add the tough economy and parking woes and businesses will fall like dominos. That’s not even considering the new State business regulations, including health care changes and minimum wage requirements.
    .
    Ask anyone you know who is involved with Federal grant money about the amount of time it takes to process the paperwork. That’s just governmental obligations, not general bookkeeping, ordering supplies, paying employees, etc. Seriously. There is a point in time when it is no longer worth the effort. That’s called the Law of Diminishing Returns.
    .
    A profitable business has a decent Return on Investment (ROI). The customers are happy with the product, the employees have jobs and the owner is making enough money to pay the bills, invest some of the profits back into the business and still feed his family. Just remember, the employer is taking all of the financial risks and basically carries all the liabilities. If the business becomes larger, then it’s time for stock options, share holders and franchises. But if any of those three components become out of whack, then there are major troubles ahead.
    .
    There are so many hidden costs in businesses. It’s easy to say, “Oh, he doesn’t want to pay his workers a fair wage” but in truth and fact, the owner may not be able to pay the employee someone’s idea of a “fair wage”.

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