The year 2013 remains indelibly defined by images of smoke and human suffering from two bombs that exploded near the finish line of the Boston Marathon in April. It was a tragedy that in an all too familiar manner underscored both the vulnerability of the American way of life in the 21st century and the moving resiliency of people determined to preserve that way of life in the face of persistent threat.
The marathon bombings symbolized a year in which external events outside the control of anyone in the commonwealth drove the Massachusetts business economy. From government shutdowns in Washington to the problematic adoption of federal health reform to a lingering recession in Europe, Massachusetts employers spent most of the year trying to manage things that were being done to them rather than charting their own paths.
The Top 10 stories to affect Massachusetts employers in 2013:
- Twin bombings at the Boston Marathon disrupt Back Bay businesses; generate broad involvement by employers in recovery.
The bombings near the finish line of the Boston Marathon on Boylston Street not only killed three people and injured 176, but also forced dozens of businesses to close as a wide swath of the Back Bay became a crime scene. Thousands of Massachusetts businesses closed on April 19 as police hunted for one of the suspects. The business community responded by donating millions of dollars to The One Fund Boston, with AIM member John Hancock Financial Services leading the way with an initial donation of $1 million.
- Firestorm of criticism prompts the Massachusetts Legislature and Governor Deval Patrick to repeal a controversial tax on computer software and services.
A transportation funding bill passed by the Legislature in July that included a $160 million extension of the sales tax to computer software and services generated loud and immediate blowback from one of the fastest growing sectors of the state economy. Software entrepreneurs unaccustomed to political activism used social media to flood the Statehouse with texts, emails and calls of protest. State leaders relented in September and made the repeal retroactive to the July 31 effective date of the tax.
- Obama Administration refuses a request by Governor Patrick for a limited waiver from provisions of federal health reform that threaten to raise premiums for small companies.
The 2006 Massachusetts Health Care Reform Law may have served as a model for the federal Affordable Care Act, but one major difference between the two laws could raise premiums for some small employers by up to 57 percent. Federal reform limits to four the rating factors used to calculate small group health insurance premiums, while current Massachusetts law allows for additional consideration of factors such as industry, participation rate, group size, intermediary discount and group purchasing cooperatives. The Legislature compelled Governor Patrick to seek a waiver from the rating-factor provisions, but Secretary of Health and Human Services Kathleen Sebelius turned down the request on September 26.
- State economy gives mixed signals.
The recession in Europe, uncertainty over the nation’s budget outlook and a sequester that fell heavily on key industries such as defense and medical research boosted unemployment in Massachusetts from 6.4 percent in March to 7.2 percent in October. On the positive side, third-quarter economic output increased 3.5 percent on the strength of a recovering housing market and consumer spending. Employer confidence, measured by the AIM Business Confidence Index, meandered in an up-and-down pattern around the neutral 50 mark as companies confident about their own prospects remained skittish about the future in the face of serial government shutdowns, default scares and a seemingly intractable partisan fiscal standoff.
- Federal budget impasse causes shutdown of the federal government and threatens default on the nation’s debt.
The United States government shut down and curtailed most routine operations October 1-16 after Congress deadlocked over a continuing budget resolution. At the center of the disagreement was an attempt by House Republicans to remove funding for federal health care reform. A concurrent deadlock over raising the debt ceiling, similar to one that lowered the country’s credit rating in 2011, raised the specter of a default that analysts believed would throw the nation back into recession. Congress eventually approved an agreement forged by Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell to fund the government through January 15 at sequestration levels and suspend the debt limit until February 7.
- Legislature and the governor freeze unemployment insurance rates for the fifth consecutive year but again fail to enact structural reform to the system.
Governor Patrick signed a supplemental budget on February 19 that rolled back a $500 million Unemployment Insurance rate increase on employers that took effect January 1. The measure freezing UI contributions at the current Schedule E still left the fund used to pay benefits to unemployed people with a balance of $600 million at the end of the year. AIM was encouraged at by comments from House Speaker Robert DeLeo that he may link structural changes to the UI system with an anticipated effort to increase the state minimum wage or other issues.
- Federal Appeals Court vacates a National Labor Relations Board rule requiring employers to post a notice informing employees of their right to join a union.
The May 7 ruling made it unlikely that employers will have to post notices in the workplace informing employees of their right to join a union. The United States Court of Appeals for the District of Columbia Circuit vacated the controversial National Labor Relations Board (NLRB) rule requiring six million private sector employers in the United States to post a notice of employee labor rights. It marked the latest skirmish between business and an activist NLRB determined to tilt the labor-relations playing field toward organized labor.
- Former Governor Argeo Paul Cellucci dies after a long battle with Lou Gehrig’s Disease.
Former Massachusetts Governor and U.S. Ambassador to Canada Argeo Paul Cellucci died in June. The commonwealth’s chief executive from 1997 to 2001, Cellucci strengthened the foundations of the Massachusetts economy at a critical time. He worked with Governor William Weld to secure scores of tax cuts, and then keep a steady hand overseeing the successful implementation of key reforms to the workers compensation and public education systems. He spent his later years working with researchers at the University of Massachusetts Medical School to find a cure for ALS.
- Massachusetts employers struggle with a critical shortage of skilled people in high-value jobs.
A tepid economy did nothing to relieve a pervasive, long-term shortage of skilled workers in areas ranging from information technology to manufacturing to restaurants. Business groups, including AIM, responded by laying the groundwork for more education reform and the commonwealth invested heavily in workforce education, but some growing employers were left to offer five-figure referral bonuses for new workers. Manufacturers face the task of filling 100,000 job vacancies in the next decade.
- Shift of Manufacturing to the United States accelerates.
The number of American manufacturing companies looking to shift production from China to the United States has doubled since 2012, according to a study released in September by The Boston Consulting Group. The study found that 54 percent of U.S.-based manufacturing executives at companies with sales greater than $1 billion are planning to “re-shore” production, or are considering it, up from 37 percent who responded to a similar survey in February 2012