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Senate Solar Subsidy Could Add $600 Million to Electric Bills

Posted by Robert Rio on Jul 27, 2015 7:35:47 AM

The state Senate last week passed on a voice vote with little debate a solar-energy subsidy that could add as much as $600 million to the electric bills of Massachusetts consumers, businesses and institutions.

solarpanels.smallApproval of an amendment doubling the scope of state subsidies for solar power will leave consumers with a total tab of $4 billion by 2020. The amendment contained none of the ratepayer protections advocated by AIM and others.

The measure now goes to the House of Representatives as part of a larger bill that would require virtually all permitting and financial decisions by the state to conform to a still-vague plan to adapt to climate change.

Associated Industries of Massachusetts opposes increasing the solar subsidy because virtually all the savings (except for wholesale fuel costs) attributable to solar installations are basically a transfer from non-participating ratepayers to those who have solar, increasing costs for those who may not be able to take advantage of solar programs.

AIM supports instead the creation of new policies that continue to promote the expansion of solar energy in Massachusetts without forcing non-solar customers to subsidize millions of dollars in profits for developers.

“It is unconscionable for lawmakers to take money from low-income homeowners and small businesses that already pay the highest electric rates in the country and put it in the pockets of solar developers,” said John Regan, Executive Vice President of Government Affairs at AIM.

The cost of solar subsidies in Massachusetts is almost twice the level in neighboring states. AIM and others, as part of a task force established by the Legislature last year, advocated reforming the current program and bringing costs into line with other states before expanding the program.

We believe:

  • Reducing the cost of solar programs and electricity should be the priority.
  • Competition in solar procurement will drive down costs.
  • Those who are still “Connected” to the grid must pay their fair share of maintaining the grid that they in fact rely upon. 
  • There should be no grandfathering of the current program when a new program is enacted.
  • The current net metering cap should not be increased until a new solar program is developed that is cost-effective and sustainable. 

All these increases have come at a time when Massachusetts pays the highest electric rates in nation because of past bad policy decisions. According to the US Energy Information Administration (EIA), an arm of the Department of Energy, residential rates in April were the second highest in the continental US, just a fraction of a cent below Connecticut and nearly double North Carolina.

Comparing the data to the same time last year, residential electric rates in Massachusetts have increased 23 percent while the national average has inched up only 2.7 percent.

In the Commercial and Industrial sector, rates increased 10 percent relative to last year, while the average national rate for these sectors declined.

Topics: Massachusetts economy, Energy

Role of Business in Society Unchanged from 1916

Posted by Brian Gilmore on Jul 22, 2015 11:02:20 AM

Editor’s Note – Associated Industries of Massachusetts is committed to the idea that only a sound private-sector economy can guarantee prosperity. It’s hardly a new idea. Then Massachusetts Lieutenant Governor, and future President of the United States Calvin Coolidge delivered a full-throated defense of the role of business in society in a speech to the AIM annual dinner on December 15,1916. Here are excerpts of that speech.

In the last fifty years we have had a material prosperity in this country the like of which was never beheld before. A prosperity which not only built up great industries, great transportation systems, great banks and a great commerce, but a prosperity under whose influence arts and sciences, education and charity flourished most abundantly.

CoolidgeAs a part of this discussion we have had many attempts at regulation of industrial activity by law. Some of it has proceeded on the theory that if those who enjoyed material prosperity used it for wrong purposes, such prosperity should be limited or abolished. That is as sound as it would be to abolish writing to prevent forgery.

We need power. Is the steam engine too strong? Is electricity too swift? Can any prosperity be too great? Can any instrument of commerce or industry ever be too powerful to serve the public needs?

We are coming to see that we are dependent upon commercial and industrial prosperity, not only for the creation of wealth, but for the solving of the great problem of the distribution of wealth.

There is just one condition on which men can secure employment and a living, nourishing, profitable wages for whatever they contribute to the enterprise, be it labor or capital, and that condition is that someone make a profit by it. That is the sound basis for the distribution of wealth and the only one.

It cannot be done by law, it cannot be done by public ownership, it cannot be done by socialism. When you deny the right to a profit you deny the right of a reward to thrift and industry.

The law that builds up the people is the law that builds up industry. What price could the millions, who have found the inestimable blessings of American citizenship around our great industrial centres, after coming here from lands of oppression, afford to pay to those who organized those industries?

Shall we not recognize the great service they have done the cause of humanity? Have we not seen what happens to industry, to transportation, to all commercial activity which we call business when profit fails? Have we not seen the suffering and misery which it entails upon the people?

Let us recognize the source of these fundamental principles and not hesitate to assert them. Let us frown upon greed and selfishness, but let us also condemn envy and uncharitableness. Let us have done with misunderstandings, let us strive to realize the dream of democracy by a prosperity of industry that shall mean the prosperity of the people, by a strengthening of our material resources that shall mean a strengthening of our character, by a merchandising that has for its end manhood, and womanhood, the ideal of American Citizenship.

Topics: Associated Industries of Massachusetts, Massachusetts economy

Pay Equality - Right Goal, Wrong Approach

Posted by Meghan Sullivan Esq. on Jul 21, 2015 9:57:00 AM

Megan B. Sullivan, Esq. is Managing Partner of Sullivan, Hayes & Quinn LLC in Springfield and a member of the AIM Board of Directors. 

An Act to Establish Pay Equity, scheduled for a hearing today on Beacon Hill, is another duplicitous law to benefit lawyers.

Two_WomenPlease don’t patronize me by pretending to create “new” protections  when you are not bringing anything new to the table on behalf of women.  The laws have long been clear:  No employer has been allowed to discriminate against women for decades. No employer has been allowed to discriminate against women in terms of compensation for almost a half century.

Since the 1930s, when the National Labor Relations Act was passed, no employer has been allowed to retaliate against an employee who discusses how much money they make or someone else makes. 

All of the alleged “new” rights outlined under An Act to Establish Pay Equity have existed for decades and have been supported by teams of government agencies employed for the purpose of regulating, investigating and enforcing the rights of women.

The only new element here is that the bill provides another way private sector lawyers can make more money.

Please ask our elected officials why they are copying an existing wheel and trying to suggest that a new invention is being deployed. 

Please ask why we are regurgitating existing rights rather than committing reources to enhancing existing solutions or otherwise investing in opportunities that present positive solutions and advancements in high paying fields of study or work to overcome barriers which inhibit opportunities?

Please ask our elected officials why they apparently did not know that they lead a state that scored first, second and third in the entire country, on issues related to the rights of women in the workplace!

According to the Institute for Women’s Policy Research, Massachusetts ranks third in the nation on its overall composite scores for opportunities for women and economic security.  On a critical component for women, health insurance, the same report ranks Massachusetts as first in the nation. On still another critical component, education, Massachusetts is ranked number two:  

http://statusofwomendata.org/app/uploads/2015/04/PO-Chapter-4.7.2015.pdf

While educational attainment overall for women in Massachusetts is exceedingly high, the Women’s Policy Research reports that educational progress made by women has not been distributed equally across racial and ethnic groups.  The report also finds that men continue to outpace women in certain degree programs  such as engineering. 

In light of the available research, it appears that Massachusetts is a remarkably successful state for women overall. If we desire to continue to excel at providing women opportunities, we need to focus on presenting opportunities for women and minorities in terms of education and training.  The passage of a gender neutral law, that arguably does not allow us to pay higher qualified women more than men, does not appear designed to accomplish the objective of increasing opportunities for the women in Massachusetts who need it most.

While the Institute for Women’s Policy Research finds Massachusetts as tied for number three in terms of earnings and employment, the same report finds an on-going wage gap flowing from the highest paid, Asian/Pacific Islander women to the lowest paid, Native American and Hispanic women.  Within the races identified, there is roughly a 50 percent annual difference between the medians of highest paid women and the lowest paid.  In other words, Asian and Caucasian women are out-earning Hispanic women, according to the study. 

A duplicative law focused on gender neutrality is not a tool that will accomplish any meaningful change to those numbers.

According to the White House Task Force on Equal Pay, “Education and outreach efforts educating employers and employees about their rights and responsibilities under our nation’s equal pay laws is essential to ending the pay gap. Many workers are unaware of their rights and of the fact that pay discrimination is still a problem in the twenty-first century American workplace. For this reason, Task Force members have spent significant time and resources educating the public about equal pay laws.”

During her inaugural address last January, Attorney General Healey demonstrated such education and outreach when she advised the commonwealth that “It’s against the law to pay a woman less for the same job!”   She is right. 

Treasurer Deborah Goldberg’s inaugural plan to create a new Office of Economic Empowerment  designed to build a statewide financial literacy program about college affordability, scholarships, loan repayment for science and math students and creating a structure of college savings plans for children who need it would be the kind of enlightened, multi-layered educational programs that could reflect the message recommended by the White House Task Force on Equal Pay.

As a management-side labor and employment lawyer and former assistant district attorney, I understood the inaugural addresses by women this past January when they spoke of hard work, educational attainment and support of family.  Having officials continue to enforce  the existing laws that prohibit pay inequality and discrimination reflects the values that I know were hard fought and won so women like me could have the opportunities I current enjoy.

But when I make decisions in my workplace, I am not looking at whether the employee is a member of a particular protected class. I am measuring performance-based on objective data, like hours worked, and subjective data like commitment to our customers.  When I decide that a female with fewer years of “seniority” has skills and abilities greater than a male coworker, under this new law, I will be precluded from advancing her career and rewarding her outstanding “hard work.”

I prefer to make business decisions based on non-discriminatory business reasons, rather than any politically expedient edict of the state or federal government.

When I see female employees outperforming their male counterparts, this gender-neutral bill precludes me from paying her more.

Long-term strategy to ensure pay equity in the workplace is to ensure that both women and men possess the education and skills that allow employers to succeed an in increasingly complex global economy. The dilemma of pay equity is influenced by a complex range of factors such as educational opportunities, family obligations, voluntary or involuntary absences from on-going training, and seniority in the workplace due to child care and other caregiver obligations.  

For the reasons described above, I oppose An Act to Establish Pay Equity. The bill is unnecessary and, most importantly, won’t achieve the proponents’ objective of ensuring that women earn the same as men for the same work. The mechanisms to further protect, support and enable women already exist.   And, U.S. Department of Labor data shows that the pay gap is narrowing among younger workers, with millennial women near parity. 

In the continuing areas of inequality, education and status as a racial minority, this bill does not offer any solution or improvement and it doesn’t even pretend to address those needs.

Associated Industries of Massachusetts, which hosts this blog and for which I serve as a director, also opposes the legislation, along with a plurality of the business community.

AIM and I both unequivocally support gender-based compensation equity. AIM supports The Boston Women’s Compact with the City of Boston, and the Executive Office of Labor and Workforce Development’s Women in the Workplace Initiative, which includes partner organizations like the Center for Women and Business at Bentley University. And I have spent much of my career working with employers to develop fair and competitive compensation and workplace policies.

Gender equity is more than a platitude for these companies. AIM’s new Blueprint for the Next Century economic plan makes clear that at a time when employers across multiple industries struggle to find qualified workers, any company that shortchanges half of its potential employees is unlikely to be around until the next economic cycle. Female software engineers not satisfied with their compensation at one company have plenty of options here in Massachusetts.

The Act to Establish Pay Equity  is fundamentally unworkable:

  • It would require job postings to include “minimum rate of pay,” a provision that places limitations on salary (from both perspectives) if it has to be specified in any advertisement.  Someone with the desired skills and experience may not apply for the job because she or he believes that the posted pay makes the job undesirable.
  • It would make it an unlawful practice to seek salary information from a potential candidate or for the employer to respond to a request from another employer.  Salary history is an important part of matching the needs of a potential employee with the wants of a business.
  • The proposed legislation does not exempt commission pay.  Would employers be able to pay commissions based on sales considering this could result in pay differentials not related to years of service?
  • How would businesses handle mid-career hires considering they have no service when they start?  They may need to be paid more than the lowest paid person based on their skill sets in order to attract them.
  • How would a business handle long-term unemployed hires considering they may not have the most up-to-date skills?  They may need a different rate of pay that reflects that necessary training required to bring the new hire up to par with others in a similar job.

Massachusetts lawmakers would far more effectively address gender equity by ensuring that women are prepared for the economic opportunities of the 21st century rather than trying to pretend like something new and exciting is being introduced when the anti-discrimination laws have existed for decades.

The current White House; the current State Treasurer; the current Attorney General have all expressed better ideas.  I propose we move forward with those ideas and actually work to provide minority women and female students with the tools they need to succeed in one of the best states in the country for female employees.

 

Compromise Reached on Controversial Tax Change

Posted by Brad MacDougall on Jul 17, 2015 12:22:00 PM

Governor Charlie Baker, legislative leaders and the business community have reached a compromise on the controversial corporate tax change that was inserted into the state budget to pay for an extension of the Earned Income Tax Credit for low-income workers.

StateHouse-resized-600The agreement means the so-called FAS 109 deduction will be delayed for five years instead of repealed, as recommended a week ago by the legislative conference committee hammering out a budget for the fiscal year that began July 1. The time period over which a company may claim its overall deduction will be increased from seven to 30 years.

The deal follows several days of intense negotiations among employers, business associations, the Baker administration, House Speaker Robert DeLeo and Senate President Stanley Rosenberg. Associated Industries of Massachusetts supported the expansion of the earned income tax credit (EITC), but opposed the repeal of the FAS109 provision.

“We all agree that expanding the Earned Income Tax Credit is a critical tool to provide tax relief to over 400,000 low income individuals and working families and my administration believes in providing a stable, competitive business climate to encourage economic development across the Commonwealth,” Baker said.

“In that effort, we have reached a joint compromise to extend the delay of the FAS-109 deduction implementation for five years and extend the length of the deduction’s life from seven to 30 years, minimizing the annual revenue impact on the state budget.  I am pleased the legislature is ready to act on these new parameters for the FAS-109 deduction by the end of July.”

Verizon and other companies that stood to be affected by the repeal, expressed support for the compromise.

"Governor Baker, Senate President Rosenberg and Speaker DeLeo continue to find ways to work together to address some of the tough problems facing our Commonwealth. Increasing the Earned Income Tax Credit helps low income workers when they need it the most,” said Donna C. Cupelo, Region President – New England for Verizon.

“Embracing a new approach to the FAS 109 provision recognizes that we have capital-intensive companies that steadily invest in the infrastructure that forms the platform for our economy.  When we match fair policies with the right investments in people and infrastructure, we make Massachusetts a stronger global competitor. "

Employer groups, including AIM, also applauded the agreement.

“As representatives of the state’s business community, we applaud you for finding a solution that both preserves the 2008 agreement on the FAS 109 deduction and extends tax relief to the state’s hard working residents by raising the state’s Earned Income Tax Credit,” said a letter sent within the hour to Baker, DeLeo and Rosenberg from Associated Industries of Massachusetts, the Massachusetts Taxpayers Foundation, the Massachusetts Business Roundtable and the Greater Boston Chamber of Commerce.

“This agreement provides certainty for the state’s businesses regarding the FAS 109 deduction for several years, and such predictability is critical for economic growth and business development. We are grateful for your recognizing this, for the collaborative manner you brought to these discussions, and for the hard work of your dedicated staff.”

Proposed repeal of the deduction of the FAS 109 deduction would have reversed an agreement reached between business and the Legislature as part of the 2008 “combined reporting" tax policy change. The repeal would have caused significant financial harm to capital-intensive national and global companies.

The combined reporting law brought income from companies' operations in other states into a unitary or "combined" Massachusetts return. The FAS 109 deduction was adopted to avoid penalizing companies after the fact for making capital investments. FAS 109 is an accounting standard that requires that financial statements reflect the tax consequences of all book/tax differences.

The governor signed most of the remaining $38.1 billion Fiscal Year 2016 budget, which includes no broad-based tax increases and makes substantive public-transportation reforms.

The MBTA reforms included in the budget provide Baker with many of the tools he is seeking to overhaul the transit agency. The budget would suspend for three years the onerous privatization vetting of the Pacheco Law, give the secretary of transportation the authority to hire an MBTA general manager, increase the size of the state Transportation Board and create a temporary fiscal and management control board for the T.

The governor also made $162 million in line-item and outside sections vetoes, including $38 million in earmarks. 

Topics: Taxes, Charlie Baker, massachsetts legislature

Baker: Hydro Power Key to Stabilizing Price of Electricity

Posted by Christopher Geehern on Jul 9, 2015 1:04:00 PM

Legislation filed today by the Baker administration to increase purchases of hydroelectric power from Canada takes a constructive first step toward stabilizing the price of electricity and helping the commonwealth meet impending deadlines to reduce greenhouse gas emissions.

HydroThe measure would require Massachusetts electricity distribution companies to seek competitive proposals and sign long-term contracts – potentially in partnership with other New England states – for 1,200 to 2,400 megawatts of hydro power from sources that would likely include Hydro-Quebec and other Canadian producers.

State officials say hydro power will stabilize electricity rates by providing cost-effective, clean base load generation that would ensure system reliability in the face of an anticipated loss of as much as 8,500 megawatts of regional electric generation capacity by 2020. Hydro power, these officials maintain, can be dispatched around the clock while solar generation produces electricity only13 percent to 14 percent of the time.

Associated Industries of Massachusetts, which has been working to reduce some of the highest electric rates in the nation, is reviewing the Baker hydro proposal.

“The 4,500 member employers of Associated Industries of Massachusetts support any proposal for renewable or low carbon power that is competitively bid and results in real energy price relief for consumers,” said Robert Rio, Senior Vice President of Government Affairs for AIM.

“We intend to work with the Legislature and the administration to verify that clear and rigorous review standards are contained in Governor Baker’s bill so any result may be judged objectively against alternatives consistent with good economic principles.”

The Baker bill would allow utilities to enter into contracts lasting 15 to 25 years with hydro producers. It would also allow companies to seek proposals for electric transmission infrastructure to interconnect load centers in the New England control area with regions or areas where clean energy generation resources may be available. And it would not preclude intermittent renewable energy resources, such as wind, from participating in the solicitation provided the renewable resources is supported by hydropower.

The Global Warming Solutions Act requires Massachusetts to reduce greenhouse gas emissions 25 percent by 2020. The Act anticipated that part of that reduction would be accomplished through the purchase of 1,200 megawatts of electricity generated by hydro producers.

Officials say the legislation is necessary to allow Massachusetts to move forward on a regional basis with Connecticut, Rhode Island and other states that already have the authority to forge long-term deals for hydro power. Baker met with other New England governors in April and emphasized an “all-option approach” on energy that calls for importing hydroelectricity from Canada and expanding the region’s natural gas capacity.

“This legislation is critical to reducing our carbon footprint, meeting the goals of the Global Warming Solutions Act and protecting ratepayers already stuck by sky high energy prices,” Baker said.

“Increasing the flow of hydroelectric power into Massachusetts and New England diversifies our energy portfolio and makes it clear we are ready to collaborate with our neighboring states to secure cost-effective, carbon-reducing energy solutions for the region.”

 

Topics: Energy, Charlie Baker

Budget Plan Includes T Reforms, Troubling Tax Reversal

Posted by Brad MacDougall on Jul 8, 2015 11:17:00 AM

A proposed $38.1 billion state budget to be debated today on Beacon Hill contains no broad-based tax increases and makes substantive public-transportation reforms sought by the business community.

State_House_and_One_BeaconEmployers are disappointed, however, that the spending blueprint reverses an agreement reached between business and the Legislature as part of the 2008 “combined reporting" tax policy change. Repeal of the so-called FAS 109 deduction, which had been postponed as the state revenues declined during the recession, could harm capital-intensive national and global companies.

“AIM continues to review the final budget for Fiscal Year 2016, but the budget conference committee has generally maintained the kind of spending discipline that employers support,” said John Regan, Executive Vice President of Government Affairs.

“The proposal lays the groundwork for real changes at the MBTA, changes intended to prevent the widespread service breakdowns we saw this past winter.”

The committee budget increases spending by 3.5 percent, less than the predicted 4.8 percent consensus on revenue growth. Unrestricted local aid would rise by $34 million and local education aid by $111.2 million.

The MBTA reforms provide Governor Charlie Baker with many of the tools he is seeking to overhaul the transit agency. The budget would suspend for three years the onerous privatization vetting of the Pacheco Law, give the secretary of transportation the authority to hire an MBTA general manager, increase the size of the state Transportation Board and create a temporary fiscal and management control board for the T.

The budget contains other good news for employers as well:

  • Requires state executive offices and agencies to develop measurable, outcome-based performance goals and metrics.
  • Forms a special commission to improve state agency information-sharing capabilities to facilitate new business registration.
  • Authorizes the commissioner or revenue to offer an amnesty program for tax penalties in 2016.
  • Provides $2 million to the Workforce Competitiveness Trust Fund, which will train new workers in manufacturing, hospitality and other high-need industries.

Beacon Hill observers say the FAS 109 deduction is being repealed to pay for an increase in the earned income tax credit for low-income workers. The reversal sends a troubling signal to employers that previous agreements on major tax policy may be changed on a whim.

“It certainly does not help the commonwealth’s reputation for consistency on tax matters,” Regan said.

AIM and other business groups will recommend today that the governor veto the FAS 109 repeal.

The 2008 Combined Reporting tax law brought income from companies' operations in other states into a unitary or "combined" Massachusetts return. The FAS 109 deduction was adopted to avoid penalizing companies after the fact for making capital investments. FAS 109 is an accounting standard that requires that financial statements reflect the tax consequences of all book/tax differences.

Fiscal Year 2016 began on July 1. If the Legislature approves the blueprint today, it goes to Governor Baker for his review. The Governor has 10 days to review the budget and take action - approve or veto the entire budget, veto or reduce specific line items, veto outside sections or submit changes as an amendment to the budget for further consideration by the Legislature.

The Legislature can override the governor’s vetoes with a two-thirds vote in each branch. The House must vote first to override any vetoes before they may be considered by the Senate.  

 

Topics: Massachusetts state budget, Budget, Taxes, Transportation

Greek Crisis Dampens Employer Confidence

Posted by Andre Mayer on Jul 7, 2015 9:44:30 AM

Confidence among Massachusetts employers ebbed for a third consecutive month in June as uncertainty in Greece, Europe and China outweighed a strengthening economy at home.

BCI.June.2015The Associated Industries of Massachusetts Business Confidence released this morning declined by one point in June to 56.3, extending its decline from March’s post-recession high of 60.2. Confidence remained well above the 50-point level that signifies optimism, and 2.6 points better than in June 2014.

The Massachusetts Index, assessing business conditions within the Commonwealth, at 56.9, was the biggest gainer on both the month (+1.0) and the year (+6.0). The U.S. Index of national business conditions was up 0.7 from May and 2.6 from last June at 50.8.

“The first quarter of 2015 was a very weak one for the economy, but a strong one for the AIM Index, which gained each month; whereas the second quarter, though much better in terms of economic growth, has seen three monthly losses,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“The two indicators of domestic business climate actually rose in June,” he pointed out. “Meanwhile, the sub-indices related to survey respondents’ own operations lost ground, which we interpret as reflective of growing uncertainty. Events overseas, in China and in Greece and the Eurozone, are casting shadows on relatively good conditions at home.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The bullish view of the Massachusetts economy represents a profound change in employer attitudes over the 24 years that AIM has published the Business Confidence Index, according to association President and Chief Executive Officer Richard C. Lord.

“In July 1991, the Massachusetts Index of in-state conditions was at 25.8, about half the U.S. Index’s 51.2; it took 65 months for the state indicator to surpass its national counterpart, and 78 months to do so two months in a row.  By contrast, the Massachusetts Index has now outpaced the U.S. Index for 73 consecutive months,” Lord said.

“Much of this improvement in employer’ perception of Massachusetts business conditions is due to a positive engagement with employer issues on the part of elected officials of both parties.”

Employer evaluations of their own business prospects weakened last month amid financial concerns on two continents.

The Current Index, which assesses overall business conditions at the time of the survey, was off 1.2 points on the month at 56.2, while the Future Index, measuring expectations for six months out, lost seven-tenths to 56.4. The Company Index, reflecting overall business conditions, lost 2.2 points 58.0; the Sales Index was off 2.1 to 57.9; and the Employment Index was down 3.3 to 54.7.

“These are still positive numbers, revealing wariness rather than fear about the second half of 2015,” said Michael A. Tyler, CFA, Chief Investment Officer, Eastern Bank Wealth Management, a BEA member.

“Greece is a small economy and a tiny market for Massachusetts exports; despite talk of contagion to Spain or Italy, the Eurozone isn’t collapsing and there isn't likely to be any meaningful impact in the U.S. or Massachusetts. China’s economic slowdown is a more substantive matter, one that American investors rightly should be watching carefully.”

Topics: AIM Business Confidence Index, Massachusetts economy

President Seeks Business Support for Export-Import Bank

Posted by Christopher Geehern on Jul 2, 2015 9:51:06 AM

U.S. President Barack Obama, in a phone call yesterday with AIM’s international trade executive Kristen Rupert and other business representatives, called for the Export-Import Bank to be reauthorized immediately.

presidentobama“Ex-Im” has provided export loans, credit, guarantees and insurance to nearly 200 small and medium size businesses in Massachusetts during the past several years.  Congress allowed the Ex-Im charter to expire on June 30, so no new export credit can be issued by the Bank.

The action puts U.S. exporters at a disadvantage versus foreign competitors, many of whom benefit from export financing provided by their own countries’ version of Ex-Im.  In fact, 85 export credit agencies in 60 different countries compete with Ex-Im.

The Export-Import Bank, which originated in the 1930s, has been reauthorized at least 16 times, most recently in 2006 and 2012.  This year, however, conservative Republicans in Congress have held up reauthorization, and Congressional leadership has so far refused to bring a reauthorization vote to the floor. 

President Obama pointed out during the conference call that the bank does not just benefit large corporations. Ninety percent of its loans go to small and medium businesses.  Support for Ex-Im is bipartisan.  And the bank actually returns money to the U.S. Treasury each year.

General Electric, a longtime AIM member, is a major Ex-Im Bank customer. Hundreds of companies in New England are GE suppliers, and many have said they will institute layoffs if Ex-Im goes away.

Other Massachusetts firms, in industry sectors ranging from food products to plastics to jewelry, have emphasized that their exports to emerging markets in Latin America, Africa and the Middle East would simply not happen without Ex-Im credit, because conventional commercial banks in the U.S. are not willing or able to take on the higher level of risk associated with these developing countries.

"Here’s why this matters," the president wrote in an Op-Ed piece in The Boston Globe yesterday.

"Over the past five years, we’ve worked hard to open new markets for our businesses, and as a result, more American goods are being sold around the world than ever before. Last year, we had record exports for the fifth straight year.

"And exports support nearly 11.7 million American jobs — 1.8 million more than when I took office — so by increasing exports, we’re helping put more Americans to work. Plus, export-supported jobs are good jobs."

What happens next?  Congress is in recess and Ex-Im supporters hope to bring a vote on the bank to the floor later in July.  Reach out today to your Congressional representative or to AIM to voice your support for Ex-Im Bank reauthorization.  Contact AIM’s Kristen Rupert at krupert@aimnet.org for further information on the Export-Import Bank.

Topics: Exports, International Trade, Export-Import Bank

Trade Vote Benefits Massachusetts Economy

Posted by Kristen Rupert on Jun 25, 2015 3:52:27 PM

Weeks of heart-stopping twists and turns in the debate over international trade agreements finally appear to have ended in Washington with a big boost for international commerce.

USCapitolYesterday, the U.S. Senate agreed on a bill to give the president "Fast-Track" authority for international trade deals.  The House of Representatives had already approved the bill. Also called "Trade Promotion Authority," or TPA, this legislation gives the president the power to ask Congress for a simple Yes or No vote when US-negotiated international trade agreements are presented for approval. No amendments or filibusters are permitted. 

The measure brings the United States a big step closer to concluding negotiations for the TPP, or Trans-Pacific Partnership, which involves 12 Pacific Rim countries representing 40 percent of the world's economic output. With China's influence expanding significantly, the U.S. and its longtime strategic partners in the Asia-Pacific region are seeking to finalize the deal promptly.

Meanwhile, the US is negotiating another large trade deal called TTIP, or Transatlantic Trade & Investment Partnership, with the European Union, although those negotiations will not conclude for several years.

Why does trade matter?

We live in a global world.  For centuries, Massachusetts companies have manufactured products and sold them in global markets.  In the next decade, millions of people in Latin America, Asia, Africa and the Middle East will enter the middle class.  Families from these emerging economies are purchasing consumer goods, paying for health care, and opening bank accounts.

The rising demand for US-made products and services gives Massachusetts companies an excellent opportunity to increase exports and expand jobs at home.  Bay State firms producing semiconductors, plastic containers, molding equipment, medical devices, software, pharmaceuticals, foodstuffs and financial services are already benefiting from globalization, and the trend is expected to continue.

Trade agreements remove economic barriers. The US currently maintains 20 such agreements with countries as varied as Morocco, Australia, Israel and Singapore, in addition to the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

Making trade easier involves lowering or eliminating tariffs, streamlining regulations, standardizing testing and labeling requirements, easing restrictions, protecting intellectual property and workers' rights, and ensuring environmental protection.  All these issues are components of the two massive trade deals in which the US is engaged. 

Massachusetts companies exported more than $27 billion in commodities to world markets last year. Exports are a key driver of the Massachusetts economy, and trade agreements such as the TPP and TTIP will benefit Massachusetts employers in a variety of industry sectors and ultimately lead to more international trade. This week's Trade Promotion Authority bill, which President Obama is expected to sign shortly, is an important step in furthering free and fair trade.

Topics: International Trade, Massachusetts economy, U.S. Congress

Non-Compete, Independent Contractor Issues Define State Approach to New Economy

Posted by Christopher Geehern on Jun 23, 2015 9:10:32 AM

Microsoft Founder Bill Gates once said that “The intersection of law, politics and technology is going to force a lot of good thinking.”

jobsearchcomputer.smallPerhaps, but it is also forcing a lot of muddled thinking as state and federal policymakers struggle to define a rapidly evolving economy with traditional laws and regulations. Associated Industries of Massachusetts will today seek to change some of that thinking on two issues that are critical to the commonwealth’s economic future – the ability of employers to protect intellectual property with non-compete agreements and the ability of entrepreneurs to work as independent contractors.

AIM plans to provide testimony on the two issues at a hearing of the Massachusetts Legislature’s Joint Committee on Labor and Workforce Development. The association opposes efforts to ban or limit the use of non-compete agreements and favors changing the law that prevents virtually any individual in Massachusetts from unambiguously passing the legal test to qualify as an independent contractor.

“The 4,500 member employers of AIM believe that government should encourage the research, innovation and investment that make the Massachusetts economy unique. Maintaining non-competes and broadening the definition of independent contractors will ensure that great ideas continue to generate good jobs here in the commonwealth,” said John Regan, Executive Vice President of Government Affairs.

Massachusetts lawmakers last year rejected efforts by a small group of well-heeled venture capitalists to ban the use of non-compete agreements in the commonwealth. AIM believes the non-compete issue is about choice for both individuals and employers, who should be free to negotiate contracts of mutual benefit as long as the employee is a part of the process.

Employees already enjoy legal protection against overly restrictive non-compete agreements.  Case law dictates that enforcement of agreements occurs only when:

  • they are narrowly tailored to protect legitimate business interests;
  • they are limited in time, geography, and scope;
  • they are consonant with public policy; and
  • the harm to the employer from non-enforcement outweighs the harm to the employee.

“Non-compete agreements may not be used to curtail ordinary, fair competition or to prevent employees from using their general skills. Massachusetts has a long history of case law that strikes the right balance between employee freedom of mobility and financial incentives with employer interests in protecting intellectual property (IP), trade secrets, confidential information, and goodwill,” says Brad MacDougall, Vice President of Government Affairs at AIM.

The association surveyed its members last year and found that non-competes are used widely in every segment of the Massachusetts economy, including manufacturing, life sciences, medical devices, finance, retail, marketing, publishing, construction, energy, professional services, insurance and health care. A manufacturing company with fewer than 50 employees wrote on the survey that eliminating non-competes “could put us out of business.”

The independent contractor issue revolves around an overly restrictive statute that leaves Massachusetts on the sidelines of one of the fastest developing sectors of the economy.

One out of every three American workers, from software engineers and researchers to graphic designers, freelance journalists and nannies, today works independently outside the bounds of traditional 9-to-5 employment. The trend includes the so-called sharing economy that provides apps allowing individuals to exchange goods and services ranging from rides to housecleaning.

But Massachusetts' share of that job growth is threatened by a state law that imposes a confusing and complex three-factor test to determine whether a worker is an employee or independent contractor.

Employees must currently meet three requirements to be considered an independent contractor:

  1. The individual is free from control and direction in connection with the performance of the service, both under his/her contract for the performance of service and in fact; and
  2. The service is performed outside the usual course of the business of the employer; and,
  3. The individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed. 

An advisory from the Massachusetts attorney general in 2004 concluded that “the new law is so broad in its definition of employee that virtually every occupation, individual entrepreneur and every employer, including the public sector, have been affected, putting Massachusetts at odds with every other state in the country.”

Simply replacing the word “and” with “or” after Section 2 would bring Massachusetts into alignment with the 20-factor IRS test for determining employment versus contractor status, and validate normal and accepted employment practices in many sectors of the economy.

It’s a modest change that would help thousands of legitimate Massachusetts independent contractors who choose to manage and operate their own business and earn a living outside a traditional employer-employee relationship.

Both the non-compete and independent contractor issues underscore the fact that Massachusetts must regulate a 21st century economy with 2st century laws.

Topics: Independent Contractor Law, Massachusetts Legislature, Non-Compete Agreements

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