Multiple recent studies and surveys have shown that Connecticut’s economic recovery is among the slowest in the country. Unemployment remains higher than national and regional averages, and the workforce continues to shrink. CNBC and Forbes both rank Connecticut near the bottom of their lists of business-friendly states.
In an implicit acknowledgment of the business environment’s weaknesses, the administration keeps invoking the need to “play defense” by offering big incentives to individual businesses to ensure that they don’t leave Connecticut.
In this context, it would be odd for the legislature to make a concerted effort to create hurdles for businesses. Nevertheless, 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 in the Finance Committee, and several are still moving through the legislative process.
- SB 249 would make Connecticut the only state to mandate a state retirement plan for private-sector workers. It would create a state-run retirement trust and require any private-sector business with five or more employees and no retirement plan to facilitate employee access to it. Employees would be automatically enrolled unless they explicitly opted out every two years. This would make the state a direct competitor of Connecticut’s key financial services sector, which employs more than 100,000 people. It would also give businesses multiple new obligations related to administering employee participation in the plan.
- SB 32 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 became law in March, making Connecticut the state with the highest minimum wage in the country.
- HB 5280 would restrict eligibility for tax benefits 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.
- SB 242 — Following Connecticut’s recent decision to become the only state to adopt paid sick leave legislation, this bill would extend to teacher assistants and radiology technologists the state’s requirement for employers with at least 50 service workers to provide paid sick leave. Including teacher assistants would result in a new state mandate on local school districts and related cost increases for municipalities.
- HB 5069 passed in the Labor Committee and has just been voted down in the Finance Committee. It would have required employers, including franchises, with 500 or more workers to pay their employees at least 130 percent of the state’s minimum wage. If noncompliant, they would have to pay a fee of $1 for each work hour paid below that rate. Employers would have had to increase their lowest wages by more than 50 percent in just three years.
In terms of hurting businesses, these bills span the spectrum, from increasing their costs to interfering with their internal decisions to allowing the state to engage overtly in competition with them. The administration insists that Connecticut is open for business. But if these bills become law, we might as well just tell businesses to stay away.
While 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 bills like these, like the Finance Committee did with HB 5069 Friday. Then, we must listen to business owners and executives who tell us 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 individual companies for one-time giveaways, have dismissed that feedback. We must help all businesses, not just a few, reduce their ongoing structural costs, and give them confidence that Connecticut is a place where they can make long-term business plans.
The legislative session ends May 7, and confronting the Labor Committee’s current crop of bills is one of the most urgent tasks before us. While it’s possible to argue the pros and cons or the good intentions of the individual bills, as a group they 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.
Republican state Rep. Gail Lavielle represents Wilton, Norwalk and Westport. She is ranking member of the General Assembly’s Commerce Committee.