Hartford Business Journal

34 Hartford Business Journal | March 8, 2021 | HartfordBusiness.com By Rebecca L. Watts C onnecticut's economy can afford to leave no one behind, and no stone unturned. "Our workforce is at an inflection point," Garrett Moran, chair of the Connecticut Governor's Workforce Council said recently, as the state's economy was being buffeted by the coronavirus, business shutdowns and employee furloughs and layoffs. The state's goals are focused on a strong future: To develop and sustain a world-class workforce, expanded economy and abundant prospects for Connecticut residents to advance in their careers by seizing opportunities in emerging, evolving or growing industries. It is essential to assure access to higher education as a prerequisite for that individual and shared economic progress. Too often, those most in need of higher education are hard-pressed to pursue educational opportunities that lead to economic opportunity for themselves and their families. Whether due to high cost, a limiting work schedule, family commitments or absence of digital resources, people are being left behind. The current disparities in Connecticut are stark, and the consequences are felt not only by those facing barriers but also by Connecticut businesses and industries. The Council's workforce strategic plan stresses that to unleash all the talent that is out there "we should be talking about closing the opportunity gap, not just a skills gap." Connecticut's workplaces are changing rapidly, Gov. Ned Lamont has said, emphasizing that if we don't take action now, "we will be letting down current and future generations of workers and their families and stifling the growth and innovation of the Connecticut economy." Data from the UConn Center of Economic Analysis are revealing. More than 320,000 state residents (12% of adults) have not earned a high school diploma. An additional 20% of high school diploma holders have not mastered sufficient skills for postsecondary and employment success. A growing population of 120,000 are non-native speakers learning English as a second language. Across all three populations, the need — and opportunity — for continued education is substantial. And, with that education, there are jobs to fill. Information technology is one of the highest-growth sectors in the Connecticut economy. There are 6,000 open computing jobs here, the workforce council points out, with future demand anticipated to reach 13,000 positions. In health care, the state reports annual workforce demand exceeds 7,000 new workers, with significant shortages in nursing, certified nursing assistants, skilled technician roles and long-term and home health care. Leading companies are among many seeking qualified employees locally, including The Hartford, Travelers, Hartford HealthCare, Adnet Technologies and Axiom Technologies. The scope of the workforce challenges Connecticut faces requires multiple remedies and cooperation to ensure that residents have access to relevant education-to-career pathways, and businesses and industries have access to well- qualified candidates they require. Connecticut's outstanding colleges and universities continue to provide life-changing education for many; for others, however, another approach to earning a degree might be more effective. Western Governors University (WGU) — with more than 1,200 Connecticut alumni — pioneered competency-based, online education more than two decades ago. WGU measures each student's skills and subject knowledge, rather than "hours" spent in a classroom. And every student receives one-to-one faculty support. WGU enrollment by Connecticut residents has more than tripled during the past five years, and currently includes well over 700 students — in fields including information technology, health care, business and education. Low-cost, online learning that offers a flexible schedule is uniquely positioned to advance equity by meeting the needs of those historically under-represented: people living in poverty, students of color, first-generation students, rural and urban residents, and learners who pursue postsecondary education long after high school. As the workforce council pointed out, "The urgent need to upskill our workforce hasn't disappeared because of the pandemic, it has gained greater urgency." To accomplish Connecticut's ambitious agenda, we need an all-hands-on-deck strategy, with heightened industry and higher education collaboration to expand opportunity. Rebecca L. Watts serves as a regional vice president for Western Governors University. EDITOR'S TAKE CT's new jobs incentive program good policy, but other pro-growth efforts needed OTHER VOICES Preparing for tomorrow's jobs must start today I f you've read my columns over the years you know I've not been a fan of the state's economic incentives strategy, which in some years required the government to borrow over $200 million to provide upfront grants to businesses that agreed to add or move jobs to Connecticut. The policy isn't sustainable long term, never moved the dial in terms of sparking a major economic resurgence, and also puts government far too deep into the game of choosing winners and losers. Then, of course, COVID-19 hit and the state and federal support spigot to the private sector blew open. For example, Connecticut companies and nonprofits have received over $8 billion from the federal government's Paycheck Protection Program. Despite all its flaws, the PPP has been a lifesaver for many small businesses harmed by a pandemic they had no control over. The state's emergency loan and grant programs were also helpful. But as we begin to look toward a post-pandemic world, it's time for Connecticut to end its reliance on private-sector incentives. And the Lamont administration's newly unveiled earn-as-you-grow tax rebate program is good policy. Luckily it seems to have bipartisan support. During a recent videoconference roundtable hosted by Lt. Gov. Susan Bysiewicz, top Democratic lawmakers and Connecticut Business & Industry Association CEO Chris Dipentima were all singing kumbaya about the proposed policy. The so-called JobsCT Tax Rebate Program essentially moves the state toward a performance- based, "earn-as-you-go" system. That means employers won't reap state incentives — which under the program are tax rebates — until they create a certain number of jobs. That will prevent the cash-strapped state from having to borrow money to provide upfront incentives to businesses, or clawback funds from companies that fail to live up to their deals. It is a more sensible policy, but admittedly there are risks. Economic incentives have become big business, as states compete fiercely for jobs and companies. Let's not forget the fight for Amazon's second headquarters, where states, including Connecticut, offered hundreds of millions or even billions of dollars in incentives to lure the e-commerce giant. Connecticut may become less competitive in the incentives arms race. That will mean the state must compete more on its own merits. And certainly we have many of them, including a well-educated workforce and quality of life that has become more in demand during the pandemic, as New Yorkers have increasingly moved to Connecticut for its suburban lifestyle. But we also need to recognize our weaknesses, including a high cost of living, high taxes, exorbitant energy costs and a state pension crisis that policymakers have failed to address. If we are going to provide fewer incentives to offset some of those costs, lawmakers must work harder not to exacerbate those pain points — or better yet, improve them. Breaking down the incentive You'll likely need an accountant or lawyer to figure out the new tax rebate program, but here's an overview. First, it targets incentives to employers in the state's top and emerging industries — aerospace and defense, clean energy, life sciences, manufacturing, etc. — that create a minimum of 25 new full-time jobs with salaries above $37,500, or 85% of the median household income of the municipality where the jobs will be located, whichever is greater. Employers that hit and maintain those benchmarks for at least two years will receive a fully- refundable rebate equal to 25% of the withholding taxes from the new employees over the next five to seven years. The rebate goes to 50% if a company locates or expands in a distressed municipality or Opportunity Zone. There are also incentives for companies that hire workers at lower wages from disadvantaged backgrounds. Rebates per job range from $1,000 to $5,000 per year, except for jobs that are created in calendar year 2021, which will have a minimum rebate of $2,000 per employee. Rebates are capped at $40 million per fiscal year. Here's a real-world example of how a company could benefit, according to the Department of Economic and Community Development. Say you have a company that creates 25 new jobs with an average salary of $60,000. The withholding tax revenue that would be generated from those jobs over a seven-year period, based on the state's 5.5% income tax rate, would be $577,500. If those jobs were located in an Opportunity Zone, the employer would get a $206,250 rebate after seven years, or a $125,000 rebate if it was located elsewhere. That's real money and a worthwhile incentive to grow jobs in Connecticut. We just need to supplement that with other pro-growth policies — and begin to really address our long-term fiscal issues — to take advantage of a post-pandemic world where the state has new opportunities to really leverage its assets. Opinion & Commentary Greg Bordonaro Rebecca Watts

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