Hartford Business Journal

20 Hartford Business Journal • October 1, 2018 • www.HartfordBusiness.com Opinion & Commentary EDITOR'S TAKE Private sector must lead on workforce development W orkforce development is top of mind for most Connecticut employers. And rightfully so. The state's aging and shrinking population, slow-growing economy and tight labor market have intensified competition for talent, leaving several industries — manufacturing, construction and health care — with worker shortages. It's an issue Hartford Business Journal thought was significant enough to spotlight in a five-week series, which ended Sept. 24. We published nearly a dozen stories highlighting the depths of Connecticut's labor challenges (employers will need to fill an estimated 56,000 jobs annually through 2024), how state government is responding and innovative private- and public-sector programs to train new workers. What did we learn? There's one key theme that sticks out in my mind: While the state and federal governments have important roles to play in workforce development, it's the pri- vate sector, in close coordination with local colleges and high schools, that must lead the way in recruiting and grooming Connecticut's next-generation workforce. And it's not as easy as simply having a HR director who posts job openings online and screens candidates. Companies, particularly those in industries ramping up employment, must have comprehensive strategies to woo new workers and treat human capital development as important strategically as new customer development, because you can't have one without the other. It's hard work. It can mean visiting local colleges and high schools to see what internship or training programs are availabe that might match the skill sets your company is recruiting. And if those programs don't exist you might need to take the extra initiative to create them. Partnerships have become the norm between Connecticut colleges and industries in severe need of labor and it's one of the best ways to ease the skills gap. The state's manufacturing sector has taken a lead role in this respect and offers a blueprint for other industries. HBJ highlighted various programs in which employers of all sizes — ranging from Pratt & Whitney and Electric Boat to EDAC Technologies in Cheshire — proactively formed partnerships with lo- cal colleges and high schools on curriculum and skills training that have led to direct employment for students immediately upon graduation. Even with those efforts, manufacturers are still reporting thousands of un- filled jobs, which shows there's more work to be done. We also heard from state officials who said more funding is needed for work- force development. That may be so, but funding has been declining both at the state and federal levels over the years, and Connecticut's fiscal crisis means future workforce-development dollars will be limited. So we must ask ourselves, what is the best role for state government in work- force development? The simple answer is that government must primarily be a convener, bringing together employers, colleges, nonprofits and other stake- holders, to help identify weaknesses and develop strategies and programs — largely underwritten by the private sector — that help fill the skills gap. Giving public money to companies to train and hire workers isn't a long-term solution. We've seen an increasing number of public-private partnerships in recent years that have been effective in training new workers. They must be expanded to more employers and industries. More importantly, state lawmakers must solve our budget crisis and make the state more economically competitive. Connecticut's workforce issues have as much to do about demographics as anything else. Connecticut's population is getting older and declining at the same time, which means the pool of able-bodied workers is shrinking. Mean- while, 38 percent of Connecticut residents 25 years and older have a bachelor's degree or higher, but by 2020 over 70 percent of jobs will require postsecondary degrees, according to federal data. Hitting the 70-percent target will require 300,000 more grads than current rates of production will supply and if Connecticut is going to hit that target it will have to lure more college-educated individuals from out of state. The only way we'll do that is if we have a growing private sector and vibrant cities that attract a younger workforce. We've got a long way to go on both fronts. OTHER VOICES State-mandated retirement program wrong for CT By Eric Gjede D espite what's being touted by advocates, including AARP, as a solution to a growing retirement- readiness problem, the state's controversial retirement mandate is not the answer. It's important that residents under- stand the financial risks it will impart upon many Connecticut workers. The Connecticut Business & Indus- try Association and many business community allies strongly oppose this new man- date, and have been warning businesses and residents alike of our concerns. For example, the mandate re- quires business- es with five or more employees to en- roll any full- or part-time worker not eligible for an employer-sponsored plan into an IRA plan administered by the newly created Connecticut Retirement Security Authority. Employers are responsible for the cost and burden of "selling" the plan on behalf of the state and then penal- ized for any delay in transmitting employee contributions. In other words, employers who did not offer retirement plans in the work- place due to a lack of adequate resourc- es needed to manage such plans, or a lack of employee interest, will now be required to do so under penalty of law. And employees will be automatically enrolled into the "voluntary" plan and see 3 percent of their pay deducted each pay period. The only way to opt out of the plan is in writing, every single year. Advocates are hosting events to pro- mote the state-mandated plan as the solution to Connecticut's retirement- savings crisis. Here are six truths about the plan that they won't tell you: 1. The plan is built on the false narrative that people do not have ac- cess to retirement plans. While not every employer offers a retirement plan, there are hundreds of retire- ment and investment plans readily available online or at local banks. 2. The state's retirement plans do not offer the tax benefits of private- sector plans. Unlike most private- sector plans, contributions to the state's plan will be deducted from your pay after taxes. The reason for this is simple: the state is compelling you to participate in a retirement plan, but doesn't want to provide a tax benefit that reduces your income taxes. 3. Plan options will be limited. Instead of the best products and services from multiple vendors, the state plans to move forward with multiple plans from a single vendor. 4. The cost of the plans may necessi- tate the state to automatically double the stated reduction in employee wages to fund the plan. While state law prohibits the authority from using taxpayer dollars to fund the plan's startup costs, they may borrow up to $1 million from the state's general fund to cover these costs. When contem- plating how such a loan would be re- paid, the board determined one option was doubling the mandatory enrollee contribution from 3 to 6 percent. 5. There is a question about the plan's ability to remain solvent. The reason most people are unprepared for retirement is not due to lack of ac- cess to retirement plans, but because they can't afford to, or choose not to participate in a plan. Given the plan will allow for penalty-free withdrawals at any time, participants can tap their savings for every emergency situation. This means the plan may never achieve its target goal of $1 billion in assets needed to be self-sustaining, putting all participants' savings at risk. 6. The plan may be illegal. When the General Assembly designed the CRSA, it was premised on a "safe harbor" rule proposed by the U.S. Department of Labor. The safe harbor would have exempted state run retirement plans from the Employee Retirement Income Security Act, a federal consumer pro- tection law. Since then, Congress has rejected the proposed rule, questioning the legality of Connecticut's mandate. There is no question that many Connecticut residents are not saving enough for their retirement. But in a time when our economy con- tinues to lag the region and nation, the last thing we need is another mandate on small and mid-sized businesses. Eric Gjede is a lobbyist for the Connecticut Business & Industry Association. Greg Bordonaro Editor Eric Gjede

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