The General Assembly’s Labor and Public Employees Committee has reserved two paid family and medical leave concept bills for an upcoming public hearing.

While these proposals are only a sentence long at this point, past versions evolved into expensive mandates that required Connecticut businesses to incur a host of costly new burdens.

Paid FMLA in Connecticut — A 2016 paid FMLA proposal would have cost the state tens of millions of dollars in startup and administrative costs.

Senate Bill 1, introduced by Senate President Pro Tem Martin Looney (D-New Haven), and HB 6212, sponsored by 26 representatives and one senator, seek to provide paid family and medical leave benefits to certain individuals employed in the state.

Who Pays?

Paid family and medical leave sounds great at first—until people realize that money from their own paychecks funds the program.

Last year’s version of the bill would have required employees in even the smallest of businesses to divert a portion of their paychecks into a statewide paid family and medical leave fund.

In return, the employee would be allowed to take up to 12 weeks a year for the care of their own or a family member’s illness.

The employee would be eligible to receive 100% of their pay during that leave—up to $1,000 per week.

While employees pay for a benefit they may never use—or one their coworkers could abuse—the program is by no means free to employers or the state.

While the labor committee approved the 2016 measure on a 9-4 vote, the bill died when the state Senate did not act on it.

Bureaucratic Burden

A study conducted by a Connecticut-based policy group that supports paid sick leave noted the 2016 proposal carried a $13 million startup cost, and would force the state to hire 120 new employees at an annual cost of around $18 million to run the program.

That’s a lot of money for a state that’s already facing annual deficits of about $1.5 billion in each of the next two years.

That doesn’t work out to much of a good deal for employees—all of whom will pay for the program in both taxes and payroll deductions.

Employees would be better off buying their own short-term disability policy, or saving a little extra in case of a medical emergency, as opposed to being forced to pay into a program they may never use.

The proposal carried a $13 million startup cost, and would force the state to hire 120 new employees at an annual cost of around $18 million.

It would be better for workers to keep their own hard-earned money rather than forking it over to the state to support what appears to be another unsustainable business mandate.

CBIA will monitor these two concept bills throughout the legislative session.

We also expect that some lawmakers will insist there are no costs associated with this proposal and that it’s actually good for business because it will help retain younger workers.

But the reality is that too many Connecticut workers have fled our borders for states where there are no paid family leave programs—but plenty of jobs.

Connecticut lost 13,300 jobs in the last six months of 2016. Without businesses moving here or expanding in the state, the conversation about employee benefits is moot.

That’s why lawmakers should focus first on creating jobs before worrying about the benefits those jobs provide.

For more information, contact CBIA’s Eric Gjede (860.244.1931) | @egjede

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Repositioning State Government

February 1, 2017, 8:52 am

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For years, our members have told us and their elected officials that one of the keys to ensuring a good return on their investments in Connecticut—whether they’re opening or expanding a facility, adding a new production line, or hiring additional workers—is stability and predictability in state government.

That means stability and predictability in fiscal matters and when it comes to workplace and other anti-competitive mandates, which are constantly being proposed by vocal special interest groups and taken up by the state legislature.

Connecticut Governor Dannel Malloy — Governor Malloy fields media questions after speaking to business leaders at the Jan. 9 economic summit.

When tax increases, unfavorable structural changes to the tax code, or more burdensome regulations are always lurking around the corner, businesses are hesitant to commit additional resources in Connecticut.

That hesitancy suppresses hiring and economic growth, to the detriment of everyone in the state, including those who rely heavily on state services.

So when the governor delivered his state-of-the-state address and later spoke at CBIA and the Metro Hartford Alliance’s Jan. 9 economic summit stressing the need for predictability in building business confidence, he hit the right notes.

Difficult Decisions

The challenge facing policymakers now, however, is that the state’s current fiscal and economic problems require making some difficult, thoughtful, and innovative decisions.

Our elected officials must find a way to close deficits well over $1 billion in each of the next two fiscal years.

And they’ll be working against the backdrop of continued disappointing jobs numbers (the state lost 1,700 jobs in December) and an economy that is not yet firing on all cylinders.

To get the job done, policymakers will need to do more than simply make across-the-board line item cuts, many of which will negatively impact important programs.

While line-item scrutiny is necessary, it does little to reposition government for a fiscally sustainable future. That has to come from comprehensive structural changes in the way state government delivers services.

Repositioning Connecticut will come from comprehensive structural changes in the way state government delivers services.

One such change that could begin immediately is illustrated in a recent report from the CT Community Nonprofit Alliance, which estimates that the state could save up to $1.3 billion over the next five years by moving state-operated human service programs to the nonprofit sector.

Hopeful Signs

In addition, policymakers must follow the lead of states like Washington and Indiana, which have been much more aggressive in implementing lean principals in government—a process that eliminates waste and inefficiency to improve service delivery and reduce costs.

There are some hopeful signs. First, the latest revenue estimates project a slim budget surplus for the current fiscal year (due largely to an increase in corporate business tax receipts).

In addition, although jobs numbers were off in December, the same employment report noted that Connecticut saw a gain of 1,000 manufacturing positions in 2016—only the third time in 26 years that sector has seen growth and the biggest annual gain over that period.

Let’s hope we can build on that trend going forward.

Joe Brennan is the president and CEO of CBIA.

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STEM Grads Expected to Be Top Paid in Class of 2017

February 1, 2017, 11:54 am

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When it comes to the top projected starting salaries for Class of 2017 graduates, the STEM disciplines still rule, according to a recent report from the National Association of Colleges and Employers.

Employers responding to NACE’s Winter 2017 Salary Survey project that average starting salaries for engineering, computer science, and math and sciences graduates will be the highest among Class of 2017 graduates earning bachelor’s degrees.

Although these technical majors are on top, employers anticipate boosting the starting salaries from last year across all categories of majors in this report, with average increases ranging from 2% to 15%.

The projected average starting salary for engineering majors overall is $66,097, almost 2% more than that for Class of 2016 engineering graduates.

The catalyst for this nudge is that the projected average salaries for all of the individual engineering majors exceed $60,000.

Graduates earning computer science and math and sciences degrees are expected to see greater gains than their engineering classmates.

The salary projection for graduates earning computer science degrees is $65,540, which is up almost 7% from last year.

Likewise, at $59,368, the average salary projection for math and science degrees has jumped 7.8% from last year.

The average salary projection for Class of 2017 business majors is $54,803, an increase of nearly 5% over last year’s average.

Meanwhile, although the projected starting salaries for Class of 2017 social sciences and communications graduates are down the list in terms of the highest-paid majors, they do have the highest projected increases in average starting salary at 15% and 10%, respectively.

The average projected salary for Class of 2017 social sciences graduates has climbed to $53,459, while employers plan to pay communications graduates an average of $51,925.

Salaries for humanities graduates are also projected to be on the rise, although not as dramatically.

The average salary projection of $48,733 for the Class of 2017 is up 5.8% over last year’s average projection.

Projected Average Salaries by Discipline, Bachelor’s Degrees

Broad Category	2017 Average	2016 Average
Engineering	$66,097	$64,891
Computer Science	$65,540	$61,321
Math & Sciences	$59,368	$55,087
Business	$54,803	$52,236
Agriculture & Natural Resources	$54,364	$48,729
Social Sciences	$53,459	$46,585
Communications	$51,925	$47,047
Humanities	$48,733	$46,065

Source: Winter 2017 Salary Survey, National Association of Colleges and Employers

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Employers Ask for Patience on Pay Equity Proposal

February 2, 2017, 1:10 pm

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A proposed bill that seeks to strengthen pay equity laws may have merit, but the state should see how a similar law plays out in Massachusetts before adopting it here.

Federal and state laws already make wage disparities based on gender illegal, but a bill proposed by state Rep. Derek Slap (D-West Hartford), is designed to target conditions that perpetuate the gender gap.

The bill was one of several measures the legislature’s Labor and Public Employees Committee considered during a Jan. 31 public hearing.

HB 5210 is based on a first-in-the nation law that passed in Massachusetts last year. Among other things, it would:

Prohibit employers from asking a prospective employee’s wage and salary history before an employment offer with compensation is negotiated. Prospective employees may volunteer information on their wage and salary history.
Prohibit employers from using an employee’s previous wage or salary history as a defense in an equal pay lawsuit.
Provide employers with an affirmative defense against an equal pay lawsuit if it can demonstrate that, within three years prior to commencement of the lawsuit, the employer completed a good faith self-evaluation of its pay practices and can demonstrate that reasonable progress has been made towards eliminating gender-based wage differentials.
Protect seniority pay differentials from adverse adjustments for time spent on leave due to pregnancy-related conditions or protected parental, family and medical leave.

Slap, who testified with his daughters, Maggie, 12, and Zoe, 10, said that as the father of two girls, he feels he must do something to address wage inequities.

“I believe the growing consensus that gender-based wage discrimination is bad for the economy,” he said.

Nationwide, women earn 79 cents for every $1 a man earns, he said.

In Connecticut, the figure is higher with women earning 83 cents to the dollar for men. But the amount is lower for Hispanic and African-American women, and single mothers, he said.

Such studies, like the one cited by Rep. Slap, fail to take into account the value of non-wage benefits and lifestyle choices desired by job candidates.

Connecticut staffing agencies have noted that while not true in every instance, some candidates typically only ask about a prospective job’s salary, while others ask more follow up questions on other benefits.

Pay History Shows Perceived Value of Work

“The Connecticut Business and Industry Association in no way supports gender-based wage discrimination. That’s absolutely reprehensible if there are businesses out there engaging in that,” said CBIA Counsel Eric Gjede, reinforcing that the association favors equal pay, which is already the law of the land.

Gjede said knowing an applicant’s salary history is important to employers, but not for reasons related to gender.

“Hiring a new employee is one of the most costly and time-consuming activities a business can engage in,” he said.

“Salary history can often provide information that is not in the resume. And often, it’s used to determine compatibility between the employer and the employee.”

Salary history often provides information that is not in a resume and is used to determine compatibility between employer and employee.

Gjede also noted that the proposal, as currently written, could put temporary-hiring companies out of business because it would prohibit them from asking an applicant’s salary history.

“One of the questions they ask is salary to see if they can get you more money in the next job,” he said.

Gjede urged committee members to monitor the effects of the Massachusetts law, which takes effect January 1, 2018, before rushing to pass it here.

The next step for the Labor Committee is to draft the bill into full statutory form so it can be considered for a committee vote.

“Right now, [the bill] is only a list with proposed changes. And a few of those seem reasonable,” Gjede said. “I do ask that we be part of this conversation about this bill going forward.”

Overtime Exclusions

Gjede also testified on HB 5286, which excludes certain “highly compensated” employees from receiving overtime under state law.

Currently, those employees are excluded only under federal law.

He said Connecticut businesses are seeking consistency between state and federal wage and hour laws, and this would help provide it.

“Making this change would certainly make compliance with the law easier for businesses but we would also suggest that you add computer employees and learned professionals to this list of folks you’re exempting from state overtime provisions to add additional consistency between state and federal wage-and-hour laws,” Gjede said.

He noted that highly compensated employees are, under federal law, people who earn $100,000 annually and would be above any overtime threshold changes proposed and retracted by the federal government in recent months.

Committee members will decide whether to take action on these proposals in the coming weeks.

For more information, contact CBIA’s Eric Gjede (860.480.1784) | @egjede

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February 2, 2017, 1:52 pm

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February 2, 2017, 1:52 pm

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Governor Proposes Insurance Premium Tax Cut

February 2, 2017, 1:55 pm

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The budget Governor Dannel Malloy unveils next week includes a tax break designed to help improve the business climate for Connecticut insurance companies.

Malloy’s office announced a proposal Jan. 30 to lower the tax rate on insurance premiums from 1.75% to 1.5%.

Connecticut Insurance Employment — Connecticut ranks first in the U.S. in insurance carrier employment as a percentage of state totals. Source: The New England Council.

It will be included in the two-year budget he unveils to a joint session of the General Assembly on Feb. 8.

He said the move will save the state’s insurers $11 million next fiscal year and $22 million the following year.

The state will cover that loss by limiting the use of tax credits that companies may apply against premiums tax liability.

“There are simple and relatively inexpensive ways we can improve the business climate by making state government more predictable and sustainable,” Malloy said in a statement.

CBIA president and CEO Joe Brennan said Connecticut was home to six of the country’s top insurance companies, with the industry employing more than 58,000 people and contributing about $20 billion annually to the state’s economy.

“The governor’s proposal will reduce overall costs here,” Brennan said. “It’s a step in the right direction.”

Malloy said 49 states and Washington, D.C., tax insurance premiums at rates ranging from 0.5% to 4.35%.

If an insurer does business in two states, it pays the higher premium.

Lowering the rate impacts costs because the liability for Connecticut-based insurers operating in another state with a lower tax rate will be significantly reduced.

“The insurance industry has a long and storied history in Connecticut, and we must ensure that we maintain our competitive edge so that they continue to thrive and grow in our state,” Malloy said.

For more information, contact CBIA’s Louise DiCocco (203.589.6515) | @LouiseDiCocco

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Tax Hike on Financial Sector Could Cost Jobs

February 2, 2017, 2:43 pm

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A proposal to raise millions of dollars by closing the so-called carried interest loophole on certain parts of the financial sector could cause more job losses in a state struggling to recover from the recession.

Advocates say the proposal, which amounts to a 19% tax hike, could raise $530 million for a state facing budget deficits of roughly $1.4 billion in 2018 and $1.6 billion in 2019.

2017 State Business Tax Climate — Connecticut’s business tax climate is ranked eighth worst in the country.

State Rep. Robyn Porter (D-New Haven), said HB 6973 would “create revenue streams for the state that will foster a budget based on tax parity.”

But not everyone agrees.

“We’re not going to solve our problems by raising taxes,” CBIA President and CEO Joe Brennan told the Hartford Courant. “We’re going to do it by economic growth, so more people are working and paying taxes.

“That’s why we’re in this mess—too many surcharges and taxes.”

The proposed surcharge on the state’s hedge-fund industry would only take effect if New York, Massachusetts, and New Jersey each adopted similar laws.

Connecticut’s hedge-fund industry is based largely in Fairfield County.

‘Detrimental to the State’

Governor Dannel Malloy said the proposal is not in the state’s best interests, noting that the state’s financial industry employs many people and pays high salaries.

“”We have employers who have a large number of employees in our state, and I just don’t think that’s an area that we should stake out,” Malloy said. “It would be detrimental to the state.”

We're not going to solve our problems with tax hikes. That’s why we’re in this mess—too many surcharges and taxes.
— CBIA's Joe Brennan

Under the federal tax code, hedge-fund and private-equity managers who are highly compensated pay a corporate gains tax of 20%.

The proposal would bump the tax to 39.6% to reflect the rate for regular income.

The concern of CBIA’s Brennan and others is that the proposal will have the opposite effect that lawmakers intend and could chase established, well-paying companies from the state.

Connecticut has the third-highest number of hedge fund managers and investors in the U.S., according to the Connecticut Hedge Fund Association.

For more information, contact CBIA’s Louise DiCocco (203.589.6515) | @LouiseDiCocco

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