Hartford Business Journal

20 Hartford Business Journal • July 6, 2015 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL CT economy's fast start overshadowed by budget woes A s we reach the midway point in 2015, it's a good time to reflect on the good, bad and uncertainty impacting Connecticut's business community and economy. It's been a wild ride so far this year, with promising jobs numbers getting over- shadowed by a nasty budget fight that has led to a new wave of tax increases. A merger- and-acquisition wave sweeping through the healthcare industry has also created a lot of uncertainty over the future employment ranks of several large Connecticut companies. The Good Connecticut's jobless rate fell to 6 percent at the end of May and the labor force grew to an all-time high of 1.92 million, signs that the state's economy continues to improve. The state added 6,400 jobs in May alone, and 13,700 jobs since January, despite a tough winter that weighed down economic growth in much of the Northeast. The state Department of Labor characterized the state's 2015 job growth as the strongest since 2010. No doubt, Connecticut has made progress this year digging itself out of the deep pit left by the Great Recession. The state has now recovered 97,800, or 82.2 percent, of the jobs lost between Mach 2008 and February 2010. The Bad While the first half of this year saw solid job growth, the second half has storm clouds hovering over it. The state legislature's initial decision to increase taxes by $2 billion has done harm to Connecticut's economy. Although Gov. Dannel P. Malloy and legislative leaders rolled back $178 million in tax hikes last week during a special ses- sion, the damage to the state's business climate can't be undone. Once again Connecticut made national headlines for all the wrong reasons, as some of our blue-chip corporate residents shouted loudly that they weren't only opposed to tax increases but threatened to flee the state if they were enacted. We can't say for sure what, if any, impact the tax hikes will have on the economy this year, but Malloy and the legislature are playing a dangerous game of chicken with business- es. Some lawmakers have accused General Electric, Aetna and other employers of voicing empty rhetoric: threatening to move without any intentions of actually following through. That conclusion, however, just reinforces the obtuse thinking of many of our leg- islative leaders. We believe Connecticut has finally reached a tipping point, where the unfriendly business climate will significantly hamper private sector investment in the state. As a result, we expect job growth to stall during the second half of this year. Reinforcing that negative thinking is a recent report by the Connecticut Center for Economic Analysis, which revised its bullish economic outlook for the state down to a paltry 0.6 percent growth. The Uncertain Mergers and acquisitions typically lead to job losses as conjoined companies scale up and eliminate duplicative positions and departments. Bank mergers in the 1990s, for example, cost Connecticut hundreds of jobs. Now the worry is a similar consolidation wave, this time in the healthcare sector, will lead to more pink slips. The damage, however, could be worse as hospitals and insurers represent two of the state's largest employment sectors. We've seen already massive consolidation in the healthcare industry in recent years with countless hospitals and physician practices joining forces. Now health insurers are joining the fray with Aetna working on its purchase of Kentucky-based Humana, and Indianapolis' Anthem and Bloomfield-based Cigna negotiating a possible deal. Combine that with tax increases and other major Connecticut employers' threats to move elsewhere, and the amount of uncertainty hanging over the state becomes troubling at best. n OTHER VOICES Connecticut residents deserve a more coordinated problem-solving approach By Kim Morgan, Merle Berke-Schlessel, Susan Dunn and Kevin Wilhelm A s the leaders of several United Ways, we have a unique perspective into the nonprofit and corporate worlds. We talk daily with nonprofit leaders who share their concerns about declining budgets and increased demand for services. We visit cor- porate leaders who share with us both the successes of and stresses upon their busi- ness models in today's ever-changing eco- nomic climate. Wherever we are, two themes emerge — employers want to have productive and satisfied employees, and people want to help people in need. We recognize the hard choices our elect- ed officials face and that they care deeply about the well-being of their constituents. But the public discourse over the recent budget and how to address the financial chal- lenges of the state of Connecticut devolved into a black-and-white choice of helping busi- nesses or supporting social services. This approach to problem solving will not be successful. Many residents facing challenges in our community require a level of gov- ernment assistance, either directly or through services of a nonprofit supported by government grants. However, the fact is that non- profits also rely heavily on corporate support in order to serve those most in need. We know from the ALICE (Asset Limited, Income Constrained, Employed) report published in November 2014 by the Connecticut United Ways and Rutgers Uni- versity that more than 35 percent of Connecticut residents live paycheck to paycheck or in pover- ty. We also know that education and jobs are the No. 1 way to lift people out of poverty. Without a strong business presence in our state and local communities, we can anticipate that social ser- vice needs will go up while resources diminish. We have heard anecdotally and in the media people talking about business needing to "pay its fair share" without any concrete data on how much corporations actually contribute through taxes and other means. Corporations provide financial support to United Way and human service organizations through sponsor- ships, grants and serving as an access point for employees to give and volunteer. Millions of dollars are flowing from busi- nesses big and small in Connecticut every day. Many companies in the regions served by our United Ways offer generous matching dollars to their employees' giving (including Aetna, A.R. Mazzotta Employment Special- ists, Beiersdorf, Citizens Bank, Enterprise Rent-a-Car, FM Global, GE, Genworth, The Hartford, Nestlé Waters, Peoples United Bank, Pepperidge Farm, Pratt & Whitney, Praxair, Travelers, Standard Knapp, United Technologies, Webster Bank, Zygo and many others). If these businesses were to leave Connecticut, the safety net that exists for our most vulnerable residents would be greatly compromised. Gov- ernment funding is at its limit and could not begin to support the negative impli- cations from loss of jobs and loss of phil- anthropic dollars. As we have observed this bud- get debate, which seemed more vitri- olic than past years, we question whether there is a mechanism in place where busi- ness and govern- ment, alongside our nonprofits, can look at the social service needs of our commu- nities? We must find new ways to work together to support our safety net while also meeting the needs of businesses that must focus on the return to their shareholders. A desire for qual- ity education, dependable transportation, sus- tainable wages, safe housing and a motivated workforce are all shared in common. All three sectors have a vital role to play in addressing the challenges we face in Connecticut. United Ways across the state are well posi- tioned to act as conveners at the local and state level. Substantive solutions to the challenges of ALICE families and other critical issues will not be found in the demonization of business, government or any other stakeholder, but only when business, government and nonprofits commit to working together. n Kim Morgan is the CEO of the United Way of Western Connecticut; Merle Berke-Schlessel is president and CEO of United Way of Coastal Fairfield County; Susan Dunn is president and CEO of United Way of Central and North- eastern Connecticut; Kevin Wilhelm is execu- tive director of Middlesex United Way. HARTFORDBUSINESS.COM POLL What percent of your workforce is aged 55 or above? ● Less than 25% ● 25-50% ● 51-75% ● More than 75% To vote, go online to HartfordBusiness.com. Last week's poll results: Is downtown Hartford better than it was five years ago? 60.6% Yes 39.4% No ▶ ▶ The public discourse over the recent budget and how to address the financial challenges of the state of Connecticut devolved into a black- and-white choice of helping businesses or supporting social services. This approach to problem solving will not be successful. Send Us Your Letters The Hartford Business Journal welcomes letters to the editor and guest commentaries for our opinion pages. Electronic submissions are preferred and welcome at: editor@HartfordBusiness.com. Or you may fax submissions to Editor, Hartford Business Journal, at (860) 570-2493.

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