Transcript Slide 1

Associated Industries of Massachusetts
Established in 1915, Associated Industries of Massachusetts is
the largest nonprofit, nonpartisan association of Massachusetts
employers. AIM's mission is to promote the well-being of its
members and their employees and the prosperity of the
Commonwealth of Massachusetts by:
 Improving the economic climate of Massachusetts,
 Proactively advocating fair and equitable public policy,
 Providing relevant, reliable information and excellent
services.
© 2010 Associated Industries of Massachusetts
Topics to cover
• The State Economy
• Survey Says
• Healthcare Cost Containment Campaign
• Issue Updates
• On the Horizon
© 2010 Associated Industries of Massachusetts
The State Economy
Massachusetts Jobs and Unemployment – January 8.3%
National Unemployment is 9%
Executive Office of Labor and Workforce Development
© 2010 Associated Industries of Massachusetts
The State Economy
AIM Business Confidence Index Dropped Back in February – 51.2
"When we hear that the Fortune 500 companies are bringing in record profits, we must bear
in mind that Massachusetts is predominantly a small-employer economy. Most of our
employment is in smaller companies, and they will have to produce most of the new job
creation we hope for. That's why the negative perspectives of small employers, highlighted
by these survey results, are of the utmost concern.“Richard C. Lord, President and CEO of
AIM and a BEA member.
© 2010 Associated Industries of Massachusetts
The State Economy
AIM Business Confidence Index -Small Employer Concerns Spike
"When we talk about high costs of doing business, high employment costs, we're not just talking
about the national and global competitiveness of large companies. Health insurance costs are the
largest of these costs - and they are especially heavy, and volatile, for small employers. We applaud
the Governor and the Legislature for their pledge to address health care costs in a meaningful way.
It is incumbent upon policy leaders and policy makers to focus on the whole array of costs, and to
tackle those we can bring down.“ Richard C. Lord, President and CEO
© 2010 Associated Industries of Massachusetts
Northeast Has Highest Employee
Compensation Costs
Average cost for wages and salaries and benefits (per hour)
• $31.63 (Northeast)
• $29.78 (West)
• $26.78 (Midwest)
• $24.83 (South)
Wages and salaries
• $22.04
Benefits (life, health and disability insurance; Social Security, workers' compensation and
unemployment insurance; and paid leave including vacation, holiday, sick and personal
leave benefits.
• $9.59 (30 percent over total employee compensation)
United States compensation costs among private industry employers
• $27.75 (average)
News Release: http://www.bls.gov/news.release/ecec.nr0.htm
Sub-Indices: http://www.bls.gov/news.release/ecec.toc.htm
© 2010 Associated Industries of Massachusetts
Massachusetts Has
Highest Labor Costs
Highlights of Moody’s “Cost of Doing Business Survey”
Massachusetts - One Of The Highest Cost of Doing Business States
• #1 for high cost of labor
• #2 (behind Hawaii) for overall high cost of doing business
• #3 for high cost of electricity
• #26 for state & local taxes
Northeast - Remains the highest-cost region in the country to do business
• 14% above the national average
• All nine of the Northeast states have a business cost index above 100, or the
U.S. average
• The measurements included for labor costs explicitly includes total
compensation including WC, UI and HC.
http://www.economy.com/store/product.asp?pub=11
© 2010 Associated Industries of Massachusetts
Excessive Regulations Costs Thousands
of Massachusetts Jobs
Highlights of US Chamber Study:
• Excessive regulation deprives more than 26,000 jobs and 1,655 business starts each year
• MA is among 15 states to earn a “poor” ranking on labor and employment-law
The report attributes Massachusetts’ poor ranking to several factors:
• Mandatory treble damages law in Massachusetts
• Extensive restrictions on pre-hire background checks;
• Wide-ranging state employment discrimination laws beyond federal requirements;
• Extensive wage-hour regulation beyond federal requirements;
• Presumption against independent-contractor status and aggressive enforcement;
• Three-hour reporting pay requirement;
• Prevailing and living wage laws; and
• Notice payment law that can require severance for change in control.
“The Impact of State Employment Policies on Job Growth: A 50-State Review “
© 2010 Associated Industries of Massachusetts
Case Study:
20m Nails / 4 Truck Loads = 1 Job
Marathon Tool - Franklin, MA
• Bill and Donna Olson, owners of a small contractor supply company (Nails)
• 2006 had $4 million in annual sales and 17 full and part-time workers
• Recent uptick in sales – but doesn’t translate into new hires
• Why? Cost(s): salary, UI , and other expenses
One clerk at $35,000/year salary
• $1,750 in state UI premiums
• $2,170 in federal payroll taxes
• $583 for workers’ compensation insurance
• $280 for federal unemployment insurance.
• Just salary = sell about 17.5 million more nails
• Add nonwage costs = another 2.4 million nails
Boston Globe -For small businesses, a hesitancy to hire - Added costs can outweigh gains in sales
© 2010 Associated Industries of Massachusetts
Case Study: 20m Nails = 1 Job
Marathon Tool - Franklin, MA: “We’re treading water instead of sinking.’’
Quick Story Facts:
• Nonwage expenses can total as much as 40% of annual pay in MA
• MA has the highest labor costs of any state, according Moody’s Analytics.
• Cost of Doing Business index estimates that overall labor costs in MA are 14%
above the national average.
Direct Impact of Healthcare and High Costs:
• Although the company recently started scheduling overtime for the first time.
• 2008 faced rising health care costs, the Olsons eliminated health care coverage,
offering employees a one-time payment of up to $5,000.
• Laid off workers for the first time. Olsons’ unemployment insurance rates rose
after the layoffs, tightening the financial squeeze.
• As demand has increased, the Olsons, like many other business owners, have
increased the hours of existing employees, rather than take on the costs of
hiring new ones.
Boston Globe -For small businesses, a hesitancy to hire - Added costs can outweigh gains in sales
© 2010 Associated Industries of Massachusetts
Survey Says!
Great Concern
Moderate Concern
Mild Concern
No Concern
500
450
435
400
350
300
250
200
150
100
246
231
231
203
202
154
151
133
118
115
93
80
71
62
50
0
© 2010 Associated Industries of Massachusetts
Government Affairs Update
Health Care Cost Containment Project Update
Our goal is to reduce the cost of health care for our members
and to make AIM the employer voice on health-care policy
issues with the administration, lawmakers, stakeholders and the
media.
• Long term cost containment
• Short term cost containment
• Municipal Health Care Cost Reform
• Health Care Cost Educational Efforts – Spring Events Planned
© 2010 Associated Industries of Massachusetts
Government Affairs Update
Status of Legislation
• Most of the House and Senate bills now in committee
• AIM typically monitors 1,000 bills – hearings will begin shortly
• Some new chairs
• 21 AIM bills filed, plus negative bills back
–Paid sick leave and paid family leave,
– UI and workers compensation benefit expansions,
– negative tax, electricity and health care
© 2010 Associated Industries of Massachusetts
Government Affairs Update
Unemployment Insurance Rate Freeze Update
• Governor Deval Patrick – Signed February
– Averts an average 40% jump of $228 per employee
– Limits the average increase for Massachusetts employers to 10 percent,
or $61 per employee
– Keeps more than $400 million in the private sector
• Be aware – 50% jump in medical insurance assessments
• December to revised estimate of the Trust Fund balance from
a negative $302 million to a positive $12.7 million.
© 2010 Associated Industries of Massachusetts
Government Affairs Update
On the horizon…..
• Hearings
• State Budget
• Health care cost containment
• UI Reform
• SJC Rulings
© 2010 Associated Industries of Massachusetts
Government Affairs Update
• Not competitively bid
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24 cents per kWh average (power only)
Almost 1 Billion in extra costs over 15
years
Adds almost 0.25 cents per kwh first yr
• Violates law
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exceeds 3% of total load
method of distributing above market
costs violates Electric Restructuring Act
and Green Communities Act
• Harms ratepayers who
competitively purchase their
own power
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Costs buried in distribution rate
All NGRID distribution customers will
pay, even those on competitive supply
 Competitively bid
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Received 23x amount needed
Analysis shows 9-10 cents per kWh
Almost 100 million BELOW
expected power prices
 Complies with law
 Enhances competition
 Reduces cost
• May result in net savings to
customers
© 2010 Associated Industries of Massachusetts
Government Affairs Update
Q&A
© 2010 Associated Industries of Massachusetts