Associated Industries of Massachusetts has been negotiating for more than six months to reach reasonable compromises on three potential ballot questions that collectively could wreak havoc on the Massachusetts economy.
I write today to report on where we stand in those negotiations and how the outcome may affect your company and the 4,000 other employers who make up the largest employer association in the commonwealth.
The proposed ballot questions put forward by a coalition of unions and progressive groups would ask voters in November to:
- mandate paid family and medical leave for Massachusetts employees;
- increase the state minimum wage to $15 per hour; and
- reduce the sales tax from 6.25 percent to 5 percent.
A fourth question, a constitutional amendment that would impose a 4 percentage-point surtax on incomes of more than $1 million, has been challenged by myself and four other prominent business leaders in the courts. The Massachusetts Department of Revenue estimates that 80 percent of the returns that would be affected by the surtax include some amount of business income.
We engaged in these negotiations for several important reasons.
First, the AIM Board of Directors and the larger membership of the association believed it was in the best interests of employers to pursue a negotiated settlement that might moderate the radical nature of the three initiatives.
Second, House Speaker Robert DeLeo and Senate President Harriett Chandler asked AIM, other business groups and sponsors of the three initiatives in early April to expand the discussions and work toward a “grand bargain” that would allow the Legislature to resolve all the issues before they reached the ballot. AIM agrees with the legislative leaders that initiative petitions represent an inefficient method of addressing public policy decisions that should be left to elected lawmakers.
There is, finally, the sobering reality that the questions enjoy overwhelming support in early voter polls, not surprising given proposals that appear to offer something for nothing. Recent polls put support for the paid family and medical leave question at 82 percent and support for a $15 minimum wage at 78 percent.
Experts believe that a campaign to defeat questions with those sorts of poll numbers could cost $10 million per initiative. The ballot process is one-sided, winner-take-all. Coming to a legislative compromise avoids that by allowing a broader group of people to have input into key decisions to create policies that work for everyone.
Our objectives for the negotiations have been clear:
- Encourage a legislative compromise that is balanced and fair, and that protects a strong Massachusetts economy.
- Adopt a compromise that protects jobs by keeping Massachusetts a competitive place to do business for employers.
- Create programs that are accountable, have strong controls, and allow employers the flexibility to offer benefits that will attract and retain their employees.
Any compromise on the three issues will have to be wrapped up before ballots go to print in early July. And to make matters even more confusing, conclusion of a “grand bargain” is inextricably tied to an imminent decision by the Massachusetts Supreme Judicial Court on the graduated income tax proposal.
AIM has said virtually nothing publicly about the ongoing negotiations because participants agreed at the outset to maintain the confidentiality of the discussions. The idea was that it would be harder to reach common ground if everyone litigated the issues in the news media. We have honored our confidentiality promise, and, even now, cannot disclose all the details of the negotiations until a deal is in place.
Here is what we can tell you.
Negotiations on the paid family and medical leave question began in November and significant progress has been made toward compromise. The talks have been intense but respectful on a complex and multi-faceted proposal that could add more than $1 billion in benefit costs to employers and workers if passed in November.
Challenging issues remain and anyone involved in negotiations knows that the final compromises are always the most difficult. But it’s fair to say that we are confident about reaching an agreement on a paid leave plan that will be far less economically punitive than the one set out in the ballot question.
That question would allow covered workers to take up to 16 weeks of family leave or 26 weeks of medical leave. Workers could take family leave to care for a child after the child’s birth, adoption, or placement in foster care; to care for a seriously ill family member; or to address needs arising from a family member’s active duty military service.
The prospects for agreement on minimum wage and the sale-tax decrease are more uncertain.
Raise Up Massachusetts, the coalition behind the minimum wage, paid leave and the income surtax, sent a letter last week to DeLeo and Chandler indicating that the talks had reached a “standstill” over proposals from the Retailers Association of Massachusetts to eliminate time-and-a-half for Sunday retail work and creation of a minimum wage for teen-aged workers.
Progressive groups have since stepped up their public campaign with a massive lobbying effort on Beacon Hill and a separate protest for the $15 per hour minimum wage that tied up traffic for hours on Monday in Boston’s financial district.
Jon Hurst, President of the retailer’s organization that is sponsoring the proposal to reduce the sales tax, said last week that business groups remain committed to finding a solution on all issues.
“Although our ballot proposal has the support of almost 70 percent of voters in a recent public poll, we remain committed to working with legislators, other employer organizations, and other negotiators to see if a legislative solution can be reached,” Hurst said.
AIM members need to understand that we will be satisfied but far from happy if we reach a grand bargain. None of the potential agreements on paid leave, minimum wage or sales tax will be the ones employers would have designed. We may be able to improve some potentially catastrophic ballot initiatives, but employers will still ultimately face the unsavory trifecta of mandated paid leave, an accelerating minimum wage and possibly an income tax surcharge.
The long-term lesson may be a fundamental change in the way employers approach ballot questions. Stay tuned.
Please contact John Regan, Executive Vice President, Government Affairs, at firstname.lastname@example.org for updates on these issues.