Hartford Business Journal

20 Hartford Business Journal • November 26, 2018 • www.HartfordBusiness.com OTHER VOICES Regulatory reform: An inexpensive way to boost biz climate By Carol Platt Liebau & Scott Shepard F or the sane and rational, few illusions remain about the state of Connecticut's economy. Taxes are high. The state's budget in coming years is wildly unbalanced. Many municipali- ties are pressed to the financial wall — and some even teeter on the brink of bankruptcy. The key driv- ers of financial distress — the cost of pension and retirement benefits for government workers and retirees — continue to rise every year, yet the government has clear plans neither for containing those costs nor paying the bills. Our once-thriving state is caught in a vicious cycle. High taxes and a puni- tive business climate push out the most productive — and highest tax-paying businesses and families. In turn, the eroding tax base leaves fewer resources to meet still-escalating costs, which pushes taxes still higher, exacerbating the whole problem. Connecticut could break the cycle by containing costs enough to reduce taxes, thus making our state attractive to busi- nesses again. But if this is impossible — politically or otherwise — then we must consider other ways to stop the down- ward spiral and enhance Connecticut's appeal to business. It is time for regulatory reform. Regulation in Connecticut is both extensive and expensive. Business owners claim, with ample justification, that they are harassed by regulators who quibble over trivial violations. Meanwhile, especially in the labor and environmental fields, ill-consid- ered and poorly executed regulations raise the costs of doing business in our state with minimal public benefit. The new government should quickly enact a series of structural reforms that will direct government resources to reviewing, revising and paring back regulation — with the same vigor and dispatch that has characterized state and municipal promulgation of those regulations. A few suggestions follow. The state should establish an office charged with reviewing regulations, then revising or eliminating those that are outdated, duplicative, unnecessary or otherwise inappro- priate. It should have the power to act on its own ini- tiative and a duty to act promptly on properly support- ed public petitions seeking review of specific regula- tions. This office should have the power to require agencies to defend their regula- tions in current form, and to revise or repeal regulations it finds wanting. The new administration should require that agencies, when promul- gating new regulations, undertake cost-benefit analysis similar to what has been required at the federal level for nearly 40 years. By sensible and consistent stan- dards, agencies should be expected to quantify all the reasonably foreseeable benefits expected to be generated by the regulation, as well as what it would cost to implement the rule. It should be permitted to enact the regulation only if it determines — with sufficient evidence and after pub- lic comment and review — that the benefits of acting outweigh the costs. Agencies should also have to ac- count for their regulations. They should be required to catalog the regulations they currently enforce, along with the purpose for and ap- plicability of those regulations. In the same process, they should be obliged to draw up "safe-harbor" checklists for the types of entities they regulate. Such checklists could provide some much-needed relief from excessive or unexpected enforcement for businesses proceeding in good faith. These are just a few ways that the state could make enforcement of its regulations both clearer and more just while upholding its responsibility to protect public health and safety. Carol Platt Liebau is president of the Yankee Institute for Public Policy, a free-market think tank. Scott Shepard is its director of policy and research. Carol Platt Liebau Scott Shepard OTHER VOICES Higher min. wage, paid family leave thwart wealth inequity By Jamie L. Mills C onnecticut's economy is picking up steam after a slow recovery and years of sluggish economic growth following the Great Recession. Unemployment is at historic lows, investment in key sectors is grow- ing, and some of our urban areas are experiencing a building boom. Despite these welcome eco- nomic indica- tors, our state does not offer equal opportu- nity to every- one. Low- and median-wage workers have not recovered their pre-recession income levels. Between 2007 and 2017, median wages for workers at the lowest in- come decile (that is, the 10 percent of workers with the lowest wages) have remained flat. Median salaries declined an aver- age of 0.3 percent a year during the same period. In contrast, workers at the top decile saw their wages increase 0.4 percent a year. While Connecticut ranked in the top 10 states in the nation for rela- tive income equality in the 1990s, today we rank as the third most unequal state in the country, behind only New York and Florida. There is a risk of these alarming disparities becoming a permanent feature of our economy, depriving many Connecti- cut working families and children of the opportunity to reach their full potential, and depriving the state of the robust economic growth tied to increased income equity. Wage inequity is a matter of color as well as class. Black and La- tino households in our state earn less than two-thirds of what white house- holds earn. These wage disparities for people of color exist across education and income levels. Connecticut stands out nationally not only for its growing wage ineq- uity but also for trends in poverty. While both overall poverty and child poverty have declined nationwide, neither measure declined in Con- necticut between 2016 and 2017 despite falling unemployment. Policy decisions have caused these racial and income disparities. People of color in Connecticut face systemic barriers to economic opportunity, including a history of neighborhood redlining and continued residential segregation, a property tax system in which low-income taxpayers pay substantially higher tax rates. Increasingly we have tools to quan- tify the cost of short-sighted and discriminatory policies. According to the National Equity Atlas, in 2015 our state's economy would have been $34.3 billion larger if there had been no racial gaps in income. Come January, the new governor and legislature should make elimi- nating these barriers to opportunity their highest priority. First, policymakers should raise the minimum wage to $15 per hour, index it to prevent loss of value over time, restore the earned income tax credit to 30 percent of the federal tax credit to bolster income for those workers who need it the most, and implement a paid family leave program. Next, policymakers should reform our tax system, which currently in- creases inequality, as low- and middle- class families pay a higher share of their income than wealthy households. Lawmakers should change how we raise revenue both to make the system fairer and to pay for the es- sential investments we need so all children and families can succeed. Naysayers might suggest that these policies are too costly or burdensome for employers, but the evidence does not bear out those claims. Research in- dicates that increasing the minimum wage does not cause net job loss, but it does increase incomes for low-wage workers. The earned income tax credit has a long history of bipartisan sup- port and has proven effective both at increasing labor-force participation. Paid family medical leave, as imple- mented in other states, had clear positive impacts on job retention and children's health, with most employ- ers supporting the measure. Fairness and economic prosperity go together. Only by investing in all our children and families can we ensure broad-based economic growth. Jamie L. Mills is director of fiscal policy and economic inclusion of Connecticut Voices for Children, a progressive think tank. Opinion & Commentary Jamie L. Mills

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