What the 2016 Election Could Mean for the CT Economy

     

 

what-the-2016-election-could-mean-for-the-ct-economy

The 2016 election has been the most lively and contentious in memory. The presidential candidates have broken, even shattered established campaign rules and have made this election a high-stakes horse race, with the future of the country as the prize. However, all the election action isn’t just about what will happen in Washington. Here in Connecticut there is a lot of concern about the future of the CT economy, and voters have the power to make some big changes in Hartford as well.

According to the Quinnipiac University Poll or Q Poll, 72 percent of voters are dissatisfied with the direction of the state, and 65 percent are unhappy with the job the state legislature is doing. More than one-third, 36 percent, of voters polled point to the economy and jobs as the biggest areas of concern. And 53 percent of voters see the Connecticut economy as getting worse.

“Improving our economy and getting the state’s fiscal house in order have to be the top priorities of state government,” said Joe Brennan, President and CEO of the Connecticut Business & Industry Association (CBIA). “The reality is that you can’t have one without the other. You need business confidence to grow the economy, you can’t have that without predictability and stability.”

So many believe this state election will decide the future of the Connecticut economy.

Are Growth Policies Backfiring?

Whether you agree with his policies or not, Governor Daniel P. Malloy is taking much of the blame for the failing Connecticut economy.

Since he was elected in 2010, Connecticut became the first nation to raise the minimum wage to $10.10 per hour. The state also expanded paid sick leave and implemented a higher tax on millionaires. At the same time, Connecticut is losing big business. General Electric announced early in 2016 that it was moving its headquarters from Fairfield to Boston, which was a big blow to the state economy. Aetna is also threatening to leave the state, which would be an even bigger blow considering Connecticut’s long-standing reputation as the hub of the insurance industry. Granted, a new aerospace deal for Pratt & Whitney promised to add 8,000 jobs to the state in the next 10 years, but the economic downturn has cost the state 44,000 workers and $4 billion in taxable income between 2011 and 2014.

To address these issues, the CBIA has launched the Fix Connecticut campaign to reach voters. Using social media and other tools, the CBIA is urging Connecticut residents to vote in substantive changes in the legislature to get the state back on economic track. As Brennan said, “Voters have the power to create change by electing lawmakers who will make the economy and jobs their number one priority.”

However, at the same time that both residents and big business are leaving the state, the CBIA also reports that business profits are at a 10-year high. Of companies surveyed, 62 percent reported a profit, which is the highest level since 2005, and 47 percent said they were focused on job creation. The U.S. Department of Labor reports there has been an increase in median income and job growth in the state as well.

Is this a disconnect for the CBIA? As critics point out, the CBIA is seeking to instate a Republican-controlled legislature that will enact more business-friendly laws, such as keeping wages lower and reducing mandated benefit costs. The Connecticut economy needs to be stabilized, but whether that is best achieved by providing working class families with a solid foundation (e.g. better wages and benefits) or making the state more attractive to business is a matter of opinion.

What About Connecticut SMBs?

As big businesses consider whether they have a future in Connecticut, small- to medium-sized businesses are finding new profit potential in the state.

Connecticut has about 350,000 small businesses, and a survey of SMB owners say there are a number of advantages to operating a small business in the state. The per capita income averages $20,000 more than most other states, and there is a larger, more skilled labor pool from which to draw. At the same time, real estate is costlier, taxes are higher, and the cost of operating a business is generally higher.

Despite some of these drawbacks, the Connecticut economy is proving a rich environment for service-oriented SMBs. The “Uber economy” is providing smaller Connecticut businesses an opportunity to compete using on-demand service platforms that connect freelancers and small companies with customers. Even without these on-demand service platforms, Connecticut SMBs are thriving providing services to larger companies, keeping both skilled and unskilled workers employed while saving larger companies payroll overhead.

Whether you believe that the tax and business climate needs to change to promote big business, or whether you believe providing a better wages and benefits will provide a fair and stable economy for growth, this election is going to be decisive for the Connecticut economy. Whatever the outcome, Connecticut residents need to demand that legislators consider the long-term needs of the state and implement economic policies that will appeal to big employers while nurturing entrepreneurs and small businesses so everyone can thrive.

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About The Author

President of NSI, Tom has been helping small and medium businesses succeed in Connecticut for over 25 years.