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New Solar Subsidy Program Gets It Right

Posted by Robert Rio on Feb 2, 2017 2:00:00 PM

The Massachusetts Department of Energy Resources (DOER), after months of public comment, released on Tuesday its proposal for a new solar-energy incentive program to replace the complex and overly expensive program now in place.

solarpanels.small.jpgWe think the state got it right. And employers and other electric customers will be the better for it.

The proposal adopts suggestions made by AIM to rely on market competition to establish the amount of incentives that developers will receive to install solar energy. The result will be a program that costs half as much as the current one and still encourages the development of solar installations throughout the commonwealth.

Total savings to employer and other electric ratepayers: $250 million per year.

The new program will eliminate Solar Renewable Energy Credits (SREC), one of two methods through which solar developers currently collect subsidies. The other, net metering credits, will remain unchanged.

While some of the details are still being worked out, the new program, called the Solar Massachusetts Renewable Target program or SMART program, will establish a solar tariff rate only after bidding is complete for an initial 200 megawatt block of solar projects. Developers will receive that bid price for 20 years.

That incentive rate will remain the same for all solar projects and will automatically decline 4 percent for every 200 MW block in the future. There will be some “adders” to the base price - for building-mounted systems, solar canopies, and cases in which solar is combined with storage technologies - that would add small amounts to the baseline price.

Projects may still receive net metering credits, but those will offset the tariff to determine the final subsidy. So if the base rate is established at 15 cents and the developer receives net metering credits of 10 cents, the utility will make up the 5-cent subsidy through the tariff.

AIM opposed the scope of the current solar program and was concerned that early proposals for the new program relied on government officials to set tariff levels for solar incentives without using the competitive market to drive down costs to the ratepayer. Such a system would fail to pass along to the ratepayer the 50 percent reduction in solar installation costs that have occurred over the last few years. 

Driving down costs is important for the future of the Massachusetts economy. Massachusetts not only has one of the highest electricity costs in the country, but one of the most generous solar and renewable incentive programs, adding up to nearly $1 billion in 2016 and $2 billion by 2020. Those subsidies add up to nearly 4 cents per kilowatt hour for individual customers even before the new solar incentive program kicks in.

AIM, in a series of comments, urged DOER to adopt a model based on competition. Other states where solar installations cost half as much as Massachusetts already use the competitive model.

Read First Set of AIM Comments

Read Second Set of AIM Comments

Competition reduces prices. Competition is also the hallmark of the recently passed Massachusetts energy bill, which requires utilities to solicit market proposals for hydropower and offshore wind, a notion AIM supports.

The solar proposal still needs to go through public comment and any tariff needs to be approved by the Massachusetts Department of Public Utilities. During the transition period between now and the point at which the new program is approved by the Department of Public Utilities (DPU) – expected January 2018 - the existing solar incentive program will remain in place at a lower incentive rate.  

DOER has developed a program that is well thought-out and enjoys wide support. AIM commends DOER for this step in the right direction and we look forward to working with the Baker Administration and others to get this program approved and implemented as soon as possible. 

If you are interested in following this issue and engaging with AIM on Massachusetts electricity prices, contact me at rrio@aimnet.org or 617-262-1180

Review the DOER Proposal

Topics: Energy, Solar Subsidies

Proposed Assessment Will Hurt Employers Who Provide Health Insurance

Posted by Rick Lord on Jan 26, 2017 3:00:40 PM

Governor Charlie Baker yesterday described his proposal for a $300 million health assessment on employers as an attempt “to wrestle with the fact that a huge portion of people who are working full-time are either not taking coverage that's available through their employer and going on MassHealth, or are working for people who aren't offering them coverage at all, and going on MassHealth."

health_care.jpgHe added, according to State House News Service, that “the centerpiece of this budget really is a smart and common-sense approach to address the problem of costs being shifted from private sector employers for their employees onto state government."

Set aside for the moment the questionable premise of rampant cost shifting in a commonwealth where 76 percent of employers offer health insurance compared to 55 percent in the rest of the country.

The important point is that the governor’s sweeping proposal goes far beyond targeting employers who offer no health insurance, and instead penalizes employers who already offer high-quality insurance coverage to their employees.

It appears that money, not fairness, is driving the new fair-share assessment.

The administration plan would impose a $2,000-per-employee fee upon companies at which at least 80 percent of full-time worker equivalents do not take the company’s offer of health insurance, and that do not make a minimum contribution of $4,950 annual contribution for each full-time worker. If 70 percent of a company’s employees accept company health insurance, the company would be assessed $2,000 per employee for the number of employees represented by the 10 percent difference.

The employer assessment, which would bring an estimated $300 million into state coffers, represents a revival of the so-called fair share contribution plan that was a linchpin of the 2006 universal health care law in Massachusetts before it was repealed to make way for the federal Affordable Care Act. The state employer mandate was repealed in 2013 as lawmakers and former Gov. Deval Patrick worked to bring Massachusetts into compliance with federal health-care reform.

AIM asked multiple employers of varying sizes to determine whether they would be subject to an assessment under the governor’s plan. Every one of the companies, from small manufacturers to international financial institutions to corner retailers, reported that they would face assessments. Most fell short of the 80 percent threshold because of employees using spousal health plans or because of the calculation of full-time equivalent employees.

“There is widespread concern among responsible employers that they are being dragged into an assessment intended for companies that provide no health coverage,” said Katie Holahan, Vice President of Government Affairs at AIM.

Holahan said AIM has developed an online calculator that will allow employers to determine how much they might owe under the governor’s proposal.

AIM opposes the employer assessment because the growing shortfall at Masshealth, which provides health insurance to 1.9 million low-income Massachusetts residents, is attributable solely to problems arising from the federal Affordable Care Act (ACA), a law that may well be repealed by the time Massachusetts solves its Medicaid problems. 

ACA made access to health insurance an entitlement based on expanded income eligibility.  Under the Massachusetts health care reform law of 2006, employees who were offered employer-sponsored health insurance were ineligible for MassHealth.  The ACA reversed that policy and allowed employees to decline employer coverage and still seek insurance through MassHealth.

The change created a migration of newly-eligible individuals from their employer-sponsored insurance to MassHealth, substantially increasing the commonwealth’s financial burden.  ACA made it an economically rational choice for eligible residents.

As MassHealth enrollment grows, the commonwealth experiences the reality that employers have faced for years - the high cost of health care coverage in this state threatens the underpinnings of the state economy.  This challenging moment underscores the fact that policymakers have concentrated too heavily on access issues instead of controlling the cost of health insurance, and now face a renewed imperative to lower costs for everyone in Massachusetts.

AIM looks forward to working with the administration and the Legislature to find a fair solution to the commonwealth’s challenging health-care financing issues.

Topics: Health Care Costs, Health Insurance, Charlie Baker

Infographic: The Governor's Proposed Health Assessment

Posted by Katie Holahan on Jan 25, 2017 4:21:34 PM

The Baker Administration filed a budget proposal today that, as expected, would impose a $2,000-per-employee tax on some employers to close a deficit in MassHealth. AIM opposes the assessment as unfairly burdening employers for a problem they did not create.

Which employers will be subject to the assessment? Here is an infographic that summarizes the administration proposal. AIM is developing a calculator that will allow employers to determine exactly what their costs will be under the new assessment.

If you have any feedback or questions about this proposal, please contact Katie Holahan at keh@aimnet.org or 617.262.1180.

Fair Share 2017.jpg

 

Topics: Health Care Costs, Health Insurance, Charlie Baker

Business Leaders Share Outlook for 2017

Posted by Christopher Geehern on Jan 23, 2017 10:10:11 AM

What lies ahead for Massachusetts employers as a new administration comes to Washington in 2017? Listen as three distinguished business leaders - Robert Reynolds, President and Chief Executive Officer of Putnam Investments in Boston; Donna Cupelo, region president of Verizon in New England; and Lisa Chamberlain, managing partner of The Chamberlain Group in Great Barrington – share their opinions as part of the AIM Economic Outlook Forum. Moderator is Jeff Brown, Business Editor of WBZ Radio in Boston.

Topics: Massachusetts economy, Massachusetts employers, AIM Executive Forum

IBM Watson Health Redefines Boundaries of Health, Information Technology

Posted by Christopher Geehern on Jan 20, 2017 2:24:55 PM

Associated Industries of Massachusetts President Richard C. Lord used his annual State of Massachusetts Business Speech this morning to highlight IBM Watson Health in Cambridge as emblematic of the commonwealth's growing economy.

IBM Watson Health is prospering by exploring the still unknown boundaries between health care and information technology. The company seeks nothing less than to redefine the relationship between technology and humanity in a manner that improves the quality of medical care for all of us. IBM Watson Health could have located anywhere, but decided to establish its operations and hundreds of employees in Kendall Square, Cambridge, the epicenter of the global biosciences and software industries.

The idea behind IBM Watson Health is to use cognitive computer systems that understand, reason and learn to make sense of the estimated 80 percent of health data that is currently invisible to computer systems because it is unstructured.

Topics: Massachusetts economy, Technology, State of Massachusetts Business Address

State of Massachusetts Business - The Age of Uncertainty

Posted by Christopher Geehern on Jan 20, 2017 10:47:52 AM

The success of diverse Massachusetts companies like VIBRAM and IBM Watson Health underscores the need for employers to engage in public policy debates, Associated Industries of Massachusetts President Richard C. Lord said Friday.

Lord used his annual State of Massachusetts Business address to more than 350 business leaders to call for call upon elected officials and all involved in public policy to set aside polemics and engage instead in civil debate on behalf of the large number of Americans who clearly feel restive, uneasy and suspicious of institutions like government and business.    

“Let us resolve to talk with each other, not at each other. Let us resolve to speak in full sentences, not 140-character missives that reduce to two dimensions the complex issues with which we must wrestle,” Lord said just hours before Donald J. Trump took the oath of office as the 45th president of the United States.

“Let us seek bipartisan consensus rather than intractable fiscal cliffs and government by inaction. Let us make hope and hard work our watchwords and not allow cynicism to leave undone the important work of business and government.”

Lord warned that conservative administrations in Washington often prompt progressives in Massachusetts to make the commonwealth an example of big government, higher taxes, inefficient regulation and fiscal instability. Employers are already on the defensive, he said, having barely held off scores of expensive social-engineering bills ranging from a ban on non-compete agreements to the creation of a state-run pension system for private-sector workers.

The first step for business, according to Mr. Lord, is to articulate a positive agenda for economic growth. He noted that AIM is attempting to do that through its Blueprint for the Next Century, which makes four primary recommendations to create economic growth and opportunity for the people of Massachusetts:

  • Government and business must develop the best system in the world for educating and training workers with the skills to allow Massachusetts companies to succeed in the global economy.
  • Massachusetts must create a uniformly competitive economic structure, including an efficient transportation infrastructure, across all industries, geographic regions and populations.
  • Establish a world-class state regulatory system that meets the highest standards for efficiency, predictability, transparency, and responsiveness.
  • Massachusetts must find a way to moderate the substantial burden that health care and energy costs place on business growth.

A panel of business leaders responded to Lord’s speech and underscored the sense of uncertainty surrounding the transfer of power in Washington.

Robert Reynolds, Chairman and Chief Executive Officer of Putnam Investments, expressed optimism that the new Trump Administration and Republican Congress will accelerate economic growth and move away from the monetary approach that has dominated US economic policy.

“They already have so-called shovel ready plans,” on taxes, replacement of federal health reform and other issues, Reynolds said.

Donna Cupelo, New England Regional President of Verizon, said that a national technology sector that did not strongly support Trump is now “getting its boots back on” to address issues such as infrastructure, taxes and work-force development.

Lisa Chamberlain, Managing Partner of The Chamberlain Group in Great Barrington, said the potential repeal of the Affordable Care Act’s tax on medical-device companies is good news for her company’s customers, but repeal also creates uncertainty for small employers like herself.

“The instability of the present moment brings me some concerns and it concerns some of my neighbors,” she said.

Topics: Associated Industries of Massachusetts, Massachusetts economy, Donald Trump

Proposal to Revive Fair-Share Assessment Raises Concerns

Posted by Katie Holahan on Jan 17, 2017 8:17:07 AM

The 4,000 member employers of Associated Industries of Massachusetts (AIM) believe that the Baker Administration’s proposal to impose a $2,000-per-employee tax on some employers is an unfair way to close a deficit in MassHealth.

health_care.jpgThe proposal would force employers to foot the bill for a problem they did not create. The $600 million shortfall at Masshealth, which provides health insurance to 1.9 million low-income Massachusetts residents, is attributable solely to problems arising from the federal Affordable Care Act, a law that may well be repealed by the time Massachusetts solves its Medicaid problems 

AIM acknowledges that the ACA-generated deficit at MassHealth is not the creation or responsibility of the Baker Administration.

The Affordable Care Act (ACA) made access to health insurance an entitlement based on expanded income eligibility.  Under the Massachusetts health care reform law of 2006, employees who were offered employer-sponsored health insurance were ineligible for MassHealth.  The ACA reversed that policy and allowed employees to decline employer coverage and still seek insurance through MassHealth.

The change created a migration of newly-eligible individuals from their employer-sponsored insurance to MassHealth, substantially increasing the commonwealth’s financial burden.  ACA made it an economically rational choice for eligible residents.

As MassHealth enrollment grows, the commonwealth experiences the reality that employers have faced for years - the high cost of health care coverage in this state threatens the underpinnings of the state economy.  This challenging moment underscores the fact that policymakers have concentrated too heavily on access issues instead of controlling the cost of health insurance, and now face a renewed imperative to lower costs for everyone in Massachusetts.

State House News Service reports that the administration plan would impose a $2,000 fee for all full-time workers - defined as someone who works 35 hours or more - upon businesses that don't cover at least 80 percent of their workers and share at least 60 percent of the premium cost with employees.

The employer assessment, which would bring an estimated $300 million into state coffers, represents a revival of the so-called fair share contribution plan that was a linchpin of the 2006 universal health care law in Massachusetts before it was repealed to make way for the federal Affordable Care Act. The state employer mandate was repealed in 2013 as lawmakers and former Gov. Deval Patrick worked to bring Massachusetts into compliance with the ACA.

There are positive elements to the administration’s proposal as well. AIM supports a freeze on new mandated health-insurance benefits and a cap on provider rates.

AIM recognizes that the administration’s proposal is the opening bid in what will be a protracted debate. We look forward to productive discussions with the administration and the Legislature to find a solution that does not wreak irreparable harm on the Massachusetts economy.

Topics: Health Care Reform, Health Care Costs, Health Insurance

Trump Policies on International Trade Take Shape

Posted by Kristen Rupert on Jan 5, 2017 11:27:58 AM

President-Elect Donald Trump’s international trade leadership team is now complete. 

international.flagssmall.jpgRobert Lighthizer was announced this week as US Trade Representative.  Lighthizer joins incoming Commerce Secretary Wilbur Ross, new National Trade Council head Peter Navarro, and Jason Greenblatt, special representative for international negotiations, as Trump’s picks to set and execute US trade policy.

 What might we expect from this team?  What are the issues to watch in 2017?

NAFTA.  The North American Free Trade Agreement with Mexico and Canada is widely expected to be renegotiated.  An update of NAFTA is welcomed by many trade experts.  NAFTA came into force in 1994, before the rise of the Internet.  Because of the breadth, depth, complexity, and influence of technology on trade today, new rules are needed.  Mexico and Canada have signaled a willingness to modernize the treaty—under certain conditions.  Scrapping NAFTA altogether, which Trump previously championed, would threaten millions of US jobs.

China.  Trump speaks frequently about China’s currency manipulation, steel-dumping and aggressive trade practices.  His trade appointees are likely to stand tough on China—and this toughness may serve the US well.  However, a proposal to hit some China imports with significant tariffs is meeting resistance. AIM has heard from Massachusetts manufacturers concerned that components they source from China may become prohibitively expensive.

Russia.  The US levied trade sanctions on Russia in March 2014, after the Crimea incursion.  Many European countries did the same.  Given Trump’s frequent praise of Russian president Vladimir Putin and his desire to strengthen ties with Russia, might US sanctions be lifted?  Complicating the US-Russia relationship is Russia’s ongoing cyberwarfare against the US, which appears to have affected the recent US presidential election.   Trump’s Secretary of State designee Rex Tillerson, CEO of ExxonMobil, is known to have business ties with Russia.  More will be learned during confirmation hearings.

Brexit.  The 2016 vote by citizens of the United Kingdom to leave the European Union surprised the world.  New UK Prime Minister Theresa May is overseeing “Brexit” and has proposed March 2017 as the start date for the two-year process.  However, the recent requirement for a Parliamentary vote to approve Brexit and the appointment of a new UK ambassador to the EU have muddied the Brexit waters.  The UK is searching worldwide for hundreds of trade negotiators needed to lead trade talks with the EU.  Although US President-elect Trump has signaled interest in negotiating a bilateral trade agreement with the UK, that country cannot negotiate any new trade agreements while it is still part of the EU.  So any US-UK agreement would have to wait until 2019 or 2020.  In the meantime, US and UK diplomats are working to continue and grow the US-UK trade relationship.

Key Europe Elections.  The Brexit vote was the first step in the resurgence of populism in Europe.  Concerns about immigration and terrorism have driven European voters to rebuff convention and vote for change.  Italy’s recent vote was a win for populism and resulted in the resignation of the Italian Prime Minister.  France is holding its presidential election in May.  Current president Francois Hollande will not seek re-election.  Former Prime Minister Francois Fillon beat ex-president Nicolas Sarkozy in the primary to become the conservative nominee for president.  Marine Le Pen, leader of the Far Right National Front, is her party’s nominee.  A Socialist Party nominee will be selected this month.  In Germany, Chancellor Angela Merkel will run for a fourth term in the Fall 2017 elections.  She has been Chancellor for 11 years and she leads the Christian Democrats Union party.  The EU-US trade relationship is the largest trade relationship in the world, so any changes in leadership in the key EU countries will affect US commerce.   

Other issues to watch:

The US Export-Import Bank lacks a quorum and cannot approve loans of more than $10 million.  Will the new administration break the logjam?  Cuba is now welcoming US commercial cruise lines and airlines.  JetBlue—Massport’s largest carrier—hopes to be approved for future non-stop flights between Logan Airport and Havana—but only if the further opening of the Cuba market continues under a new US presidential administration.

Israel is not a significant trade partner for Massachusetts, but there’s a strong Massachusetts-Israel talent pipeline and Israeli-founded companies represent thousands of jobs in the Bay State.  Will the recent UN vote on Israeli settlements affect that relationship?  Will the Trump administration’s pick for US Ambassador to Israel move the US embassy from Tel Aviv to Jerusalem?

The Trans-Pacific Partnership (TPP) is considered to be on life support, as President-elect Trump has promised to withdraw from this 12-country pact.  Key concerns on abandoning TPP are the US relationship with its long-time trading partner Japan, the rising influence of China in the Pacific region, and the likelihood that many Asian countries will now sign on to the China-led Regional Comprehensive Economic Partnership Trade Agreement, or R-CEP, which will lower trade barriers in the region but will not benefit the US.

Other US Free Trade Agreements.  The US now has 14 FTA’s covering 20 countries.   Will the Trump trade team renegotiate these?

It’s going to be an interesting year for trade.

Topics: International Trade, Manufacturing, Donald Trump

Raising Minimum Wage Would Boost Costs for Majority of Employers

Posted by Christopher Geehern on Jan 3, 2017 7:55:31 AM

Three-quarters of Massachusetts employers would face increases in their compensation costs if state lawmakers pass a $15 per hour minimum wage, according to two recent surveys by Associated Industries of Massachusetts.

TeenJobsCrop.jpgAnd those compensation increases would be enough to force some companies to postpone hiring or consider leaving the commonwealth altogether.

Both the monthly survey question attached to the AIM Business Confidence Index in December and the annual AIM HR Practices Survey, also taken a December, found that 13 percent of companies employed people at the former $10 per hour Massachusetts minimum wage, while another 24 percent employed people at between $10 and $15 per hour and would have to raise those wages if the minimum moved to $15.

Thirty-four percent of companies employed people at slightly more than $15 and would have to increase pay for some of those employees to deal with wage compression. Thirty-seven percent of companies said they pay much more than $15 per hour and will not be affected by a minimum-wage increase.

The Massachusetts minimum wage rose by $1 to $11 per hour on January 1, the final step in a three-year increase.

“While we are empathetic with the challenges facing lower wage staff, it is also the case that we will employ fewer hourly employees at higher minimum wages. Each dollar increase costs our company $1.5 million per year,” wrote one employer on the Business Confidence Survey.

Another commented: “This would be too much for the small business community to absorb. You'll lose many small businesses. The Massachusetts legislature should concentrate on cutting costs and make Massachusetts a more affordable place to live.”

AIM believes that raising the minimum wage to $15 per hour, while emotionally appealing and politically expedient, is an ineffective way to address income inequality.

Raising the minimum wage, in fact, represents a fundamental distraction from addressing the real economic impediments that prevent all Massachusetts citizens from sharing in the state’s prosperity. These are the same impediments, ironically, that contribute to the persistent skills shortage that threatens innovation and economic growth in Massachusetts.

Workers are ultimately compensated according to the skills, education, work ethic and value they bring to the enterprise.

Minimum-wage increases impose an arbitrary standard of value on entry-level jobs, disproportionately burdening small businesses while creating no long-term improvement in living standards for people at the lower end of the wage scale. The issue in an economy with a staggering 3.3 percent unemployment rate is not how to raise the wage but instead how to raise the economic value of each employee.

Consider a sandwich shop in Cambridge serving food to employees of companies such as Google, Biogen, or Novartis that have made Massachusetts a global center for information technology, biosciences, research and development. Many of the engineers, software designers, researchers and professional services workers who come to the restaurant for lunch make six-figure incomes from companies locked in a pitched battle for talent that will determine their success or failure in the global markets.

Given the degree to which those highly compensated employees are bidding up housing and other prices in Massachusetts, increasing the minimum wage for the restaurant workers represents a dead-end and pyrrhic victory that keeps them outside the economic mainstream.

The task instead should be to pave the way for those restaurant employees to cross the street and join the high-value economy, which will once and for all allow them to support their families and achieve financial stability.

How does that happen? Start by improving the ability of our educational system to teach all students; reduce the long waiting lists for vocational schools; make community colleges accountable for graduating students with the skills needed in the marketplace; create more high-tech software coding academies; and promote other efficient structures to provide people with the skills to succeed in the areas of fastest economic growth.

Those tasks are far more complex than raising the minimum wage but ultimately more effective. The alternative is not attractive.

“If we move to minimum wage of $15 per hour in Massachusetts, we would immediately terminate many unskilled positions and use temps.  That would allow us to better eliminate labor in the slower seasons.  Note that our competition is located outside Mass and would end up with a significant competitive advantage,” said one employer in the survey.

 

Topics: Compensation, Minimum Wage, Massachusetts Legislature

Business Confidence Hits 12-Year High

Posted by Christopher Geehern on Jan 3, 2017 7:30:00 AM

Confidence among Massachusetts employers hit its highest level in 12 years during December amid the prospect of growth initiatives from the new administration in Washington and a continued strong state economy.

BCI.December.2016.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose 2.3 points to 60.4 last month, a full 5.1 points higher than its level in December 2015 and the highest reading since December 2004. It marked the fourth consecutive monthly increase in sentiment among employers in a commonwealth where the unemployment rate recently fell to 2.9 percent.

The November and December BCI readings mirror the post-election rally in U.S. financial markets, which have risen five percent as President-Elect Donald Trump prepares to work with a Republican Congress on business-friendly issues as tax reductions, regulatory reform and infrastructure spending. The AIM survey showed a 5.5-point jump in confidence in the national economy last month, leaving that indicator at its highest level since 2007.

“Massachusetts employers are taking the president-elect at his word that he will prioritize economic growth at the national level, especially if he is able to work with Congressional Democrats on a $1 trillion infrastructure initiative,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“But employer enthusiasm is also based upon a solid economic expansion during 2016 that most analysts believe will continue in a methodical manner though the first half of 2017.”

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 Mostly Higher

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

The Massachusetts Index, assessing business conditions within the commonwealth, gained 2 points to 61.8, leaving it 5.5 points ahead of the same time last year.

The increase in the U.S. Index of national business conditions put that figure 7.5 points higher than its level of a year ago, but still short of the Massachusetts index. It marked the 80th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, increased 2.2 points to 59.1 while the Future Index, measuring expectations for six months out, rose 2.5 points to 61.7. The future outlook was 5.5 points better than a year ago and higher than at any point since March 2015.

Operational Views Strengthen

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

The Company Index, reflecting overall business conditions, rose 1.4 points to 60.9 while the Sales Index increased 3.2 points to 61.4. The Employment Index was the only indicator to lose ground, falling 0.2 points to 57.2.

The AIM survey found that nearly 38 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.

“One of the most positive results of the December survey is that business confidence is strengthening uniformly across almost every sector of the economy,” said Elliot Winer, Chief Economist, Winer Economic Consulting and a BEA member.

“Employers both large and small, manufacturers and non-manufacturers, from the Pioneer Valley to Great Boston are more optimistic about their prospects than at any time since prior to the Great Recession.”

The BCI Manufacturing Index jumped 0.6 points during the month and 2.6 points for the year. The overall Business Confidence Index among non-manufacturers was 63.3 compared to 56.7 for manufacturing companies.

Companies in the eastern part of the Massachusetts were slightly more optimistic at 61.4 than those in the western part of the state at 57.6.

AIM President and CEO Richard C. Lord, also a BEA member, said employers appear to be encouraged by the prospect that President-Elect Donald Trump and a Republican Congress will be able to pass their tax and regulatory agenda.

At the same time, Lord said, there remains uncertainty about a possible repeal of federal health Care reform and the future of international trade agreements that are critical to Massachusetts companies.

“The only certainty appears to be uncertainty for the next six months,” Lord said.

“The key will be to ensure that any tax reductions and regulatory reforms made on the national level are not obviated by state measures intended to make Massachusetts a progressive ‘model’ for the rest of the country.”

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

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