Employer Confidence Surges

Posted by Christopher Geehern on Dec 6, 2016 9:18:57 AM

Employer confidence in Massachusetts surged during November amid a post-election economic rally that saw financial markets rise to record levels and the state unemployment rate drop to 3.3 percent.

BCI.November.2016.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose 1.9 points to 58.1 last month, 1.2 points higher than its level in November 2015. The third consecutive monthly increase in employer sentiment reflected across-the-board bullishness about the state and federal economies, along with a strong recovery of confidence among Massachusetts manufacturers.

U.S. financial markets rose three percent to record highs in the weeks following the unexpected election of Donald J. Trump as president. In Massachusetts, meanwhile, the news was even better as the jobless rate fell to its lowest level since April 2001.

“Employers and investors alike put aside their initial concerns about a Trump presidency and decided that the president-elect would prioritize conventional economic growth measures such as infrastructure investment and tax cuts,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“How long will that confidence last? It may depend upon President Trump’s commitment to following through on issues that employers are less likely to support, such as setting aside the Trans Pacific Partnership trade agreement and dismantling federal health-care reform.”

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 index has remained above 50 since October 2013.

All of the sub-indices based on selected questions or categories of employer were up in November.
The Massachusetts Index, assessing business conditions within the commonwealth, gained 1.9 points to 59.8, leaving it a healthy 1.5 points ahead of the same time last year. The U.S. Index of national business conditions rose 2.8 points to move into optimistic territory for the first time since July.

Employers have been more optimistic about the Massachusetts economy than about the national economy for 79 consecutive months.

The Current Index, which assesses overall business conditions at the time of the survey, increased 0.9 points to 56.9 while the Future Index, measuring expectations for six months out, surged 2.9 points to 59.2. The future outlook was 1.2 points better than a year ago and higher than at any point since March 2015.

The sub-indices bearing on survey respondents’ own operations also strengthened considerably.

The Company Index, reflecting overall business conditions, rose 1.6 points to 59.5, while the Employment Index moved up 2 points to 57.4 and the Sales Index gained 2.7 points.

The AIM survey found that nearly 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months were stable – 37 percent hiring and only 10 percent downsizing.

“The most encouraging element of the November BCI is the degree to which employers are translating their overall optimism about the economy into optimism about their own plans for sales growth and hiring,” said Alan Clayton-Matthews, Professor of Public Policy and Urban Affairs at Northeastern University and a BEA member.

He noted that manufacturing companies are driving much of the overall rise in business confidence after several years of concern about weakness in overseas export markets in Europe and Asia.

“Optimistic manufacturers are good for the Massachusetts economy,” Clayton-Matthews said.

The BCI Manufacturing Index jumped 2.6 points during the month and 4.1 points for the year. Still, the overall Business Confidence Index among non-manufacturers was 60.1 compared to 56.1 for manufacturing companies.
Companies in the eastern part of the Massachusetts were slightly more optimistic at 59.2 than those in the western part of the state at 57.4.

AIM’s President and CEO Richard C. Lord, also a BEA member, said the surprise election of a president with no record in public office upon which to make judgments will make 2017 an uncertain time for Massachusetts employers and the state economy.

“Will President Trump and the Republican Congress succeed in reducing corporate taxes? Will they keep their promise to simplify the regulatory structure? What will the potential scrapping of health-care reform mean to Massachusetts? And will the new president follow through on his intent to end or renegotiate trade agreements important to employers? That’s a lot of uncertainty,” Lord said.

“The good news is that Massachusetts remains one of the strongest state economies in the nation thanks to years of sound fiscal management and attention by elected officials to the needs of employers. We have every expectation that Governor Baker and the Legislature will follow the same course in 2017-2018.”

Topics: AIM Business Confidence Index, Massachusetts economy, Donald Trump

The Expert Trail to Sustainability

Posted by Tyler Fairbank on Dec 5, 2016 7:30:00 AM

Editor's note - Tyler Fairbank is Chief Executive Officer of The Fairbank Group, which manages Jiminy Peak Mountain Resort in Hancockand other outdoor resort areas. Jiminy Peak recently won an AIM Sustainability Award.

As a ski resort, it’s not surprising that the environment is something we pay close attention to at Jiminy Peak.

JiminyPeak.jpgWinters’ remaining cold is vital to the future of our business. In addition, environmental consciousness is something that is important to people in our world right now. We want our guests to feel good about the choice to ski at Jiminy and bring their children here.

As much as it is important to make sustainability efforts for reasons such as these, it is equally important to the bottom line of the company. It takes a lot of energy to operate a ski resort for 120 days a season; have lodging, restaurants and events taking place year round; and have summer activities run during the warmer months. We rely on snowmaking to provide our guests with the best on-snow experience and we are open nightly throughout the season with 21 of our trails lit for skiing. It is therefore imperative to our success as a business to take steps to reduce our reliance on the grid and, thus, our electric bill.

Sustainability is not new for us - it began many years ago. We began with small things, like changing out light bulbs, and quickly grew to much larger items, including the construction of a reservoir at the summit that allows us to feed water down the mountain via gravity for snowmaking.

Perhaps our most iconic initiative, and the project that brought a national focus to Jiminy’s efforts, was the construction of our 1.5 MW GE wind turbine during the summer of 2007. Most recently, we partnered with Nexamp to install the largest community shared solar project in the Northeast and replaced our snowguns and a portion of our lighting for skiing with much more energy efficient technology.

As a result of our efforts we have now reached 100 percent renewable - but that doesn’t mean we stop here. This is something that is now part of our DNA and we will continue to seek ways to reduce our costs for the health of our business as well as the future of the ski industry.

Attend the AIM Sustainability Roundtable

Topics: Sustainability, AIM Sustainability Roundtable

Trump on Trade: More Questions than Answers

Posted by Kristen Rupert on Dec 1, 2016 8:30:00 AM

What will happen to U.S. trade under the new Trump administration?  Which voices in the Cabinet and Congress will prevail?  Are free trade deals dead?  Will the U.S. impose high tariffs on China and Mexico? Will we become more protectionist?  Will companies be punished for creating jobs overseas or rewarded for keeping jobs state-side?

international.flagssmall.jpgAnswers to these questions remain unknown.  It’s still uncertain how the new presidential administration will proceed on trade.  Although candidate Trump campaigned on a strong anti-trade platform targeting China, Mexico, NAFTA (North American Free Trade Agreement) and the TPP (Trans-Pacific Trade Pact), President-Elect Trump is already softening some of his rhetoric.

AIM has been engaged in discussions with state and federal political leaders, company executives, trade organizations, Congressional staff members, and seasoned trade professionals to understand how to keep US international trade fair and unencumbered and help Massachusetts companies continue to prosper.  Here’s what we know:

  1. Although there’s general agreement that trade is critical for jobs and the economy, employers need to do a better job telling the story of how trade has helped companies grow and create jobs.
  2. Manufacturing, an industry important to President-elect Trump, is a vital part of the U.S. and Massachusetts economies, responsible for millions of jobs and a significant component of GDP. Most manufacturers export or send their finished products up the supply chain to larger exporters—meaning that international trade is key to business success.
  3. NAFTA has been a strong driver for economic growth in the U.S., although not all parts of the U.S. have benefitted evenly. NAFTA can be renegotiated and modernized, but scrapping it would be disruptive and damaging to supply chains, investment and more.
  4. Job losses in manufacturing over the past several decades have been due in significant part to automation, not solely to overseas production.
  5. Training and re-training of displaced workers needs to be a priority on the state and federal levels through vocational schools, community colleges and other initiatives.
  6. Canada, Mexico and China are the three top trade partners for Massachusetts. Any disruption of trade across our northern or southern borders threatens thousands of jobs in the Bay State.
  7. China is a valuable import source and export destination for Massachusetts. Millions of Chinese citizens entering the middle class represent strong trade potential.  High tariffs or a U.S. trade war with China would have a significant negative impact on our citizens and companies. 
  8. Under Trump, the US Trade Representative (USTR) job may be downgraded from a Cabinet-level position to a senior-level administrator within the US Department of Commerce. This would put the U.S. at a significant disadvantage at the negotiating table.
  9. Trump needs early wins on trade. Recent negotiations with Ford and Carrier, who are scaling back plans to move jobs out of the U.S., may help with this.  As one expert noted, Trump is perhaps less anti-trade and more “pro-good deals.”

So, what can you do?

Tell your personal stories about trade - how you identified a new market for your product, how you work with international customers to meet their needs, how you’ve grown jobs at your company because of global trade.  Share these stories with your state and federal elected officials—and with AIM.  Many jobs depend on trade—that message needs to be delivered to lawmakers.

Stay informed.  Participate in events at which trade will be discussed.  Strengthen your existing trade relationships.  Communicate regularly with your international customers.  Reach out to potential clients in new markets.  Identify sticky trade problems that need to be solved.

Finally, remember that countries have been trading goods and services across borders since the beginning of time.  Presidents and prime ministers may come and go, but trade relationships persist.  Even in tough times, good companies find a way to meet customer needs and make deals happen. 

Topics: Associated Industries of Massachusetts, International Trade, Donald Trump

Judge Puts Hold on New Overtime Regulations

Posted by Russ Sullivan on Nov 23, 2016 10:17:01 AM

Yesterday, a federal judge in Texas imposed an injunction effectively blocking changes to federal overtime laws that were to take effect on December 1.  The decision affects employers in all states, including Massachusetts.  In deciding the case, U.S. District Judge Amos Mazzant of the Eastern District of Texas ruled that the Department of Labor regulations exceeded its authority.  As a result, once again employers who scrambled to meet the new regulatory requirements find themselves in the difficult position of either undoing the changes they have made to comply or leaving those changes in place, as well as the associated costs.

The Fair Labor Standards Act (FLSA) establishes overtime rules and the standards by which employees may be exempted from them.  Exemption requires that employees perform certain duties and be paid at a certain threshold level.  Although the FLSA does not specify that employees must be paid at a certain threshold, regulations issued by the Department of Labor in 1940 and updated numerous times since then have set a minimum salary threshold as one of the requirements for exemption from overtime.  The salary threshold was most recently updated in 2004 to $455.00 per week, or $23,660 per year.

The Department of Labor’s new regulations, issued in May and scheduled to take effect on December 1, would more than double the threshold to $913.00 per week, or $47,476.00.  In his ruling Judge Mazzant stated the increase of this magnitude would “supplant” the duties test, adding that responsibility belonging to Congress, not the DOL.

The eleventh hour ruling means that many employers who have already implemented changes to employee’s pay and timekeeping procedures now have to decide if they want to roll back those change or just forge ahead.  Unfortunately, many employers have already communicated these pay and procedural changes.  For these employees, it will be difficult to take advantage of the injunction and delay any changes until a final ruling is made.

Unknown at this time is whether the DOL will appeal the ruling.  Ultimately, the court process may drag on while the new Congress takes action to undo the regulations.  Employers may want to communicate to employees the current uncertainty and that they will be monitoring developments.  In the meantime, employers who have not implemented or communicated changes should sit and wait.  Those who have implemented or communicated changes should assess the business and employee relations impact of undoing these changes and determine whether they will proceed as planned or return to prior practices.+++

Topics: Employment Law, Overtime

Attorney General: Massachusetts Well-Positioned on Health and Energy

Posted by Christopher Geehern on Nov 17, 2016 11:35:50 AM

The approach that Massachusetts takes to key employer issues such as health care and energy will depend heavily on decisions that will be made during the next several months by the Trump Administration, Attorney General Maura Healey said this morning.

The good news, Healey told several hundred business leaders at the AIM Executive Forum, is that Massachusetts is prepared for such uncertainty because of the collaborative policy work that has been done by several governors, the legislature, the attorney general’s office and the private sector.

She pointed to the fact that Massachusetts has its own health-care reform law that will remain even if President Trump and Congress change some or all of the Affordable Care Act. She also noted that the Legislature passed a wide-ranging energy bill earlier this year to diversify the commonwealth’s energy supply.

“I would love to have the Massachusetts way to be the American way,” Healey said.

The attorney general opened her remarks with several observations on the presidential election and her decision to establish a hotline for people to report incidents of bias or harassment. She reported that more than 200 people from all sides of the political spectrum have called the hotline in the past two days.

“It sends a message that we know the difference between right and wrong,” Healey said.

She acknowledged that the degree to which the Trump Administration changes Medicaid funding levels - and potentially shifts that funding to block grants - will have a significant effect on the Massachusetts health-care system. The attorney general’s office has issues multiple reports looking at rising health-care costs in Massachusetts and methods to improve the market.

“Regardless of federal changes, the legal framework Massachusetts put in place under Governor Romney, that served as the model for the ACA, remains. So, in key ways, I believe we are strongly positioned to keep our health care systems running smoothly. But we need everyone at the table and working together.

“While we get ready to respond to changes at the federal level, we will continue to work on our affordability agenda here at the state level. And there’s plenty to do on this front.”

Energy policy will also depend on the direction of a president who campaigned on the need to exploit coal and other traditional fuels to control the cost of electricity. Healey said the new Massachusetts energy law commits the commonwealth to diversifying its energy portfolio through a competitive market.

“I believe diversification of our energy sources is critical,” she said.

“The role for my office is to make sure that we have a competitive, transparent process that results in cost-effective contracts and minimize customer risk.”

Healey said the trend of collaboration between employers and her office continued earlier this year with passage of the nation’s first pay-equity law. AIM worked with Healey and legislative leaders on a compromise bill that ensures fair compensation for all workers while allowing employers to attract and retain skilled employees.

Topics: Health Care Reform, Energy, Maura Healey, Attorney General Maura Healey

Dear President-Elect Trump

Posted by Rick Lord on Nov 9, 2016 2:42:14 PM

Dear President-Elect Trump,

Associated Industries of Massachusetts (AIM) and its 4,000 member-employers congratulate you on your election as President of the United States. Massachusetts employers, large and small, from all sectors of the economy, affirm our commitment to unifying this great nation and to restoring faith in our economic and government institutions.

AIM employers proudly provide jobs that allow 650,000 people to build lives for themselves and their families. We embrace the notion that private sector has the unique ability - and responsibility – to create the common wealth for the citizens of Massachusetts.

The days after a hard-fought presidential election have traditionally been a time to mend the divisions in our country, with political parties and nominees moving beyond the harshness of the campaign season and putting our nation, and our democratic system, first before all else.

We take encouragement from your words early this morning:

“Now it’s time for America to bind the wounds of division; have to get together. To all Republicans and Democrats and independents across this nation, I say it is time for us to come together as one united people.”

The rancor and divisiveness of both the presidential campaign and the general political discourse make unity not just a polite platitude in 2016, but an essential part of reinvigorating our democracy. We are reminded of the words of Abraham Lincoln: "America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves."

Associated Industries of Massachusetts looks forward to working with the Trump Administration to strengthen the United States economy and raise the economic fortunes of all Americans. We certainly will not agree on all issues, but AIM believes in the transformative power of political debate and will make our voices heard respectfully on all issues affecting employers.

We commit to maintain a constructive dialogue and an approach guided by an unwavering commitment to a greater purpose. AIM has already taken that approach by creating a long-term economic plan for Massachusetts called The Blueprint for the Next Century.

The Blueprint articulates the objectives, priorities, hopes and dreams of Massachusetts employers:

  1. Develop the best system in the world for educating and training workers with the skills needed to allow companies to succeed in a rapidly changing global economy.
  2. Support business formation and expansion by creating a uniformly competitive economic structure, a structure that must include a reliable transportation system.
  3. Establish a world-class regulatory system that ensures the health and welfare of society in a manner that meets the highest standards of efficiency, predictability, transparency and responsiveness.
  4. Moderate the immense long-term burden that health care and energy costs place on business growth.

Those objectives inform the position of Massachusetts employers on a host of issues you will confront upon taking office, from encouraging fair agreements on international trade to creating a balanced National Labor Relations Board to correcting problems with federal health-care reform that threaten the economic survival of small companies here in the commonwealth.

Most immediately, the employers who create prosperity in Massachusetts eagerly anticipate your efforts to accomplish the “urgent task of rebuilding our nation and renewing the American dream.” 

Congratulations again.

Topics: Elections, Massachusetts economy, Donald Trump

Marijuana Question Passes; Now What for Employers?

Posted by Tom Jones on Nov 9, 2016 7:24:50 AM

Massachusetts has a new law permitting the possession and recreational use of marijuana. Voters approved Question 4 on legalization yesterday by a margin of 53.6 percent to 46.4 percent.

Marijuana.jpgAnd unlike the earned sick time law a couple of years ago, this one comes with a short lead-in period - the law takes effect on December 15.

What does the 12-page statute mean for employers?

The law focuses almost exclusively on the regulation and taxation of the sale of recreational marijuana. The measure will actually have little to no direct impact on most employers. There is only a short reference to employment in section 2, which discusses limitations of the law:

(e) This chapter shall not require an employer to permit or accommodate conduct otherwise allowed by this chapter (i.e. the use of recreational marijuana) in the workplace and shall not affect the authority of employers to enact and enforce workplace policies restricting the consumption of marijuana by employees.    

Companies that addressed their drug-testing and drug-use policies in response to the 2012 medical marijuana law can prepare for the 2016 law with little more than a quick review. For companies that did not establish policies four years ago, now is the time to do so.

Review your drug/alcohol-free workplace policies to ensure that they cover all forms of drug use, including marijuana. You should also review your drug- and alcohol-testing polices to ensure they cover the topics you want.

You may want to revise your policy to ensure that it covers all aspects of your workplace, including vehicles used for business purposes, off-site duties at customer sites, work-related events, seminars and company owned parking lots and garages.

Employers should keep an eye out for potential court cases related to the new law. Such cases could materially affect the manner in which employers implement the law in the future.

There has been only one legal case so far in Massachusetts involving an employee and medical marijuana. In that case, the employee was terminated, sued claiming discrimination, and the court ruled in the employer’s favor on all six counts, except privacy.

Call AIM with any questions about the new marijuana law or about reviewing and updating your drug-use related polices. Contact Beth Yohai and or call her at 617-262-1180 x335. 

Topics: Elections, Workplace Safety, Marijuana

Economic Growth Tops Employer Concerns on Election Day

Posted by Christopher Geehern on Nov 7, 2016 2:12:00 PM

Job creation, economic growth and government spending top the list of concerns among Massachusetts employers as Americans head to the polls tomorrow, a new AIM survey finds.

Craneandworkerssmall.jpgForty-two percent of employers responding to the survey identified job creation and economic growth as the issues about which they are most concerned heading into the presidential election. Twenty-four percent pointed to deficit and government spending, 13 percent to national security and terrorism and 11 percent to health care.

The survey appeared as a special question on the October AIM Business Confidence Index. Many of the 144 companies that participated expressed discouragement with the tenor of the race for the White House.

“One candidate wants to spend us to death and the other hasn't a clue. There is no clear vision for the path forward,” wrote one employer.

Another commented: “We need more responsible individuals in government. Government needs to focus less on revenue and more on cutting costs,” wrote one employer.

Other potential issues listed on the AIM survey were climate change, immigration and moral values.

The employers looking at election issues have been more confident about the Massachusetts economy than the national one for 78 consecutive months.   The Massachusetts segment of the AIM Confidence Index currently stands at 57.9, versus 49.2 for the U.S. Index of national business conditions.

Polls indicate that Democrat Hillary Clinton is expected to win easily in Massachusetts, while many races for state House and Senate remain competitive as Republicans have leveraged the popularity of Governor Charlie Baker.

Topics: Elections, Massachusetts economy

Speaker Outlines Objective to Create 'Jobs, Jobs and More Jobs'

Posted by Christopher Geehern on Nov 7, 2016 7:54:11 AM

The formal portion of the 2015-2016 session of the Massachusetts Legislature produced landmark laws governing energy, economic development and pay equity. House Speaker Robert DeLeo recently sat down with AIM Executive Vice President John Regan to talk about the sesssion and what the results will mean for employers.

Topics: Massachusetts Politics, Massachusetts economy, Massachusetts House of Representatives

Business Confidence Rises for Second Consecutive Month

Posted by Christopher Geehern on Nov 1, 2016 8:58:33 AM

Confidence among Massachusetts employers rose for a second consecutive month during October, bolstered by a surprising improvement in the outlook among manufacturers and the continued strong performance of the state economy.

BCI.October.2016.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose 0.3 points to 56.2 last month, 0.6 points higher than in October 2015. The increase was driven by a 2.6-point jump in the manufacturing index, which has lagged overall confidence readings for the past 18 months as companies struggled with economic weakness in Europe, China and other key export markets.

The increase came as the Massachusetts unemployment rate fell to 3.6 percent, its lowest rate since the dot-com boom of 2001.

“Local unemployment rates dropped in 22 of 24 labor market areas throughout Massachusetts during September, which is consistent with gains in the AIM Employment Index over both the month and year,” said Sara Johnson, Senior Research Director, Global Economics, IHS Global Insight and a member of the AIM Board of Economic Advisors (BEA).

“Both sets of numbers indicate that Massachusetts economy continues to perform well. State employment is growing faster than at the national level.”

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 index has remained above 50 since October 2013.

Constituent Indicators Mixed  

Almost all of the sub-indices based on selected questions or categories of employer were up in October.

The Massachusetts Index, assessing business conditions within the commonwealth, gained 0.9 points to 57.9, leaving it a healthy 3.8 points ahead of the same time last year. The U.S. Index of national business conditions remained unchanged at 49.2, 1.7 points lower than its level of October 2015.

Employers have been more optimistic about the Massachusetts economy than about the national economy for 78 consecutive months.

The Current Index, which assesses overall business conditions at the time of the survey, increased slightly to 56 while the Future Index, measuring expectations for six months out, rose 0.3 points to 56.3. The future view is virtually the same as it was a year ago.

Operational Views Strengthen

The three sub-indices bearing on survey respondents’ own operations also strengthened.

The Company Index, reflecting overall business conditions, rose 0.2 points to 57.9, while the Employment Index surged 0.9 points to 55.4. The Sales Index lost ground, however, falling 1.2 points during October and 3.9 points during the previous 12 months.

The AIM survey found that nearly 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months were stable – 38 percent hiring and only 10 percent downsizing.

Despite the rise in the Manufacturing Index, non-manufacturing companies still maintain a significantly brighter outlook than manufacturers. The overall Business Confidence Index among non-manufacturers was 59.3 compared to 53.5 for manufacturing companies.  

“The yearlong weakening of the Sales Index presents some concerns in an otherwise upbeat report since sales ultimate drive employment growth,” said Barry Bluestone of Northeastern University, a BEA member.


“In the longer term, concerns remain about the changing demographic structure of the state population, as relatively few young people enter and a large group of older workers leave (or are poised to leave) the workforce.”

The Economy and the Election

AIM’s President and CEO Richard C. Lord, also a BEA member, said the economic recovery appears to be benefitting the entire commonwealth, not just the metropolitan Boston area.

“It’s great to see unemployment falling in areas outside the Boston-Cambridge technology belt, which has been enjoying explosive economic growth since the onset of the recovery,” Lord said.

“One of the key tenets of AIM’s Blueprint for the Next Century economic plan for Massachusetts is that lawmakers must make public policy that allows economic opportunity to flourish in all areas of the commonwealth, from Boston to the Berkshires. We look forward to bring that perspective to the Legislature when it begins its new session in January.”

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