Gov. Dannel P. Malloy has called a special session of the General Assembly to deal with job creation and economic development, both clear negatives in our state for many years. I applaud the governor for his leadership and hope that both parties can have a serious discussion on potential solutions.
Connecticut is not growing and has not done so in decades. Young people are seeking opportunities in other states, while old people are being squeezed by high property taxes and are also moving out. Businesses see an ever-increasing tax burden and the Economic Development Department has not had a coherent policy in many a moon.
So, where do we go from here? Options are very limited and fiscal reality will prevent tax reductions on corporate income.
I would suggest two focus areas: a new cash incentive for hires in the high-tech and manufacturing sectors and an aggressive recruiting effort focused on foreign companies.
Governments at all levels offer tax credits on machinery and equipment. Fair enough, as we need to achieve superior productivity levels and manufacturing quality. But who will operate those machines? Already manufacturing surveys are identifying lack of skilled labor as the No. 1 worry of such companies.
I want to encourage companies to hire new employees and train them to operate the high-tech machinery utilized in their manufacturing processes. My solution: Offer cash incentives to companies that add to their staff at the entry level and provide training to such employees.
To be effective such payments must be substantial: I would suggest we cover 50% of the wages with a cap of $25,000 per job and a time limit of no more than two years. Incentives would be available to companies within the manufacturing, high-tech, software, bio-med or bio-tech industries; would be available to start-ups in those fields; and would be in cash and not tax credits for the simple reason that start-ups especially don’t have the earnings to take advantage of tax credits. I would limit such payments to companies with fewer than 200 employees as a way to limit the overall cost and to focus on the small and medium companies.
I believe this program would produce a skilled work force that would be the envy of the world, and lead to the retention of existing companies while also serving as a major competitive advantage to attract companies into our state. And at a maximum cost to the state of $50,000 per job, it would be more cost effective than some of the incentives packages offered recently.
The second proposal would revitalize our efforts to bring more foreign companies into Connecticut.
We already have a very large contingent of such firms. Our state’s cost structure is very competitive compared with foreign and especially European countries. We offer a lifestyle unmatched in the world, and we have the tech-savvy labor force to support the most sophisticated industries. The problem is that no one is actively promoting our state on the global scene! I fail to understand what is preventing us from pursuing this goal, especially given the modest expense of such an initiative. I would estimate the cost at no more than $500,000, especially since we can leverage existing foreign companies’ contacts and utilize contract staff to carry out the business development efforts.
Our state, like our country, is faced with a very difficult fiscal situation at a time when the economy is also struggling: traditional approaches have not and will not work. Enhancing the skill set of our work force while encouraging start-ups and renewed efforts at recruiting foreign companies will lead to our economic revival!