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Jobs & the Economy, Taxes & Government Spending

Summary of CPI Forum on Jobs Policy

  • Aug 13, 2013
  • Ben Zimmer and Alex Forrester

Last week, the Connecticut Policy Institute held a lunch briefing and policy discussion with John Rathgeber, the CEO of the Connecticut Business & Industry Association (CBIA).  Rathgeber’s presentation was entitled “What It Will Take to Get Connecticut Employers Hiring”, a fitting topic given the alarming condition of Connecticut’s job market.  According to the U.S. Department of Labor’s employer survey, in 2012 non-farm employment in Connecticut grew by 0.52% -- roughly one third the national average of 1.49% and half the northeast average of 0.96%.  The Department of Labor’s household survey reveals even more concerning data.  The number of Connecticut residents employed dropped by 1.17% in 2012, the second worst rate in the country and the worst in the northeast.  The 2013 data so far paints a similarly dismal picture.

Rathgeber’s presentation and the ensuing discussion explored what factors have contributed most to this situation, and the steps Connecticut needs to take to reverse course.  Rathgeber focused specifically on several themes:

1) “You can’t be pro-employee without being pro-employer”

Rathgeber centered his remarks around a quote from former U.S. Senator Paul Tsongas (D-MA): “You can’t be pro-employee without being pro-employer.” He stressed the interdependent relationship between employer success and workers’ wellbeing.  Profitable businesses expand, leading to larger staff and more job opportunities for Connecticut residents.  When businesses fail, there are fewer job opportunities and less income for Connecticut workers.

Rathgeber argued that the Connecticut government’s fiscal and regulatory policies have created a hostile environment for employers, which has stifled job growth.  He said Connecticut doesn’t need to be the cheapest place to do business, but it does need to be the best.  He cited a CBIA survey of Connecticut businesses in which 80% of employers surveyed called Connecticut a more difficult place to do business relative to other states.

Rathgeber focused particularly on the state’s fiscal climate, noting that as Connecticut taxes perpetually increase, taxpayers are not getting a good return on these tax dollars.  He noted that state spending has increased 150% in the last 12 years, driven by a 178% increase in correction costs, 180% increase in Medicaid spending, 204% increase in debt services costs, 583% increase in spending on state employee pensions, and an astonishing 981% increase in spending on state employee health benefits. While Rathgeber acknowledged the importance of these services, he noted that they do not benefit the majority of CT residents or promise any return on the invested funds.  This is driving businesses out of the state, reducing the tax base and making it more difficult to provide these services.

2) “Growing your base … is a much more efficient use of time and resources than attracting other people in”

Rathgeber argued that Connecticut would do better to focus on growing its existing economic base rather than pursuing expensive deals to bring new companies to Connecticut.  He argued that Connecticut already has the proper foundation for a vibrant economy.   Rathgeber listed Connecticut’s workforce, which he called “the best most productive workforce in the country,” the presence of world class businesses, its location between Boston and New York, and its high levels of private sector R&D investment as just a few of the state’s current assets.  As evidence that Connecticut continues to create and sell valuable products, Rathgeber cited a CBIA survey result that 56% of Connecticut businesses said they had been actively recruited to move their companies to other states.

Rathgeber argued that building on this foundation is an easier way to grow jobs than bringing in new companies.  He said Connecticut should not completely renounce incentive programs to attract businesses from out-of-state, but that when too costly these programs are self-defeating.  He argued Connecticut should focus instead on changing its fiscal and regulatory policies so that Connecticut’s existing businesses feel comfortable expanding in the state and out-of-state companies want to move here even without huge incentive programs.  He also advocated for aggressive education reform to ensure that Connecticut’s workforce remains strong in the future.

3) To get change, you need a “burning bridge”

In the Q&A, Rathgeber was asked what it would take politically to get Connecticut’s government to actually act on his policy recommendations.  Paraphrasing former U.S. Comptroller David Walker, he stated “You’re not going to get change until you have a burning bridge.”  Put otherwise, until everyday Connecticut residents understand that bad policies in Hartford are impacting their day-to-day lives, they will not act to change those policies.  

Rathgeber stressed the importance of informing and mobilizing the public, especially private sector workers whose interests tend to be underrepresented relative to public employee unions and social service providers.  Those more vocal groups exercise disproportionate influence to their numbers because of their high levels of political participation.  Rathgeber urged private sector employers to talk to their employees about state economic issues, the challenges they face as a result of state policy, and how those challenges directly impact employees' lives.  Without endorsing political candidates, he urged employers to help their employees become more informed about state government and civically engaged in advocating for better policy.  He noted that surveys have shown that employees trust their employers more than any other source when it comes to fiscal and economic policy.

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Rathgeber's presentation was covered by the Connecticut Television Network, and you can watch their video of the full presentaiton here.  Columnist Don Pesci wrote an article on the event, which you can read here.