Labor shortage considered a key issue of this legislative session
As Connecticut’s labor shortage continues to dampen the economy, state lawmakers this session will consider a range of proposals aimed at attracting more people to in-demand jobs, especially in industries such as manufacturing and healthcare.
The data is alarming: According to the Department of Labor, Connecticut recovered only 75% of the 292,400 jobs lost due to pandemic shutdowns and restrictions in March and April 2020, well below the US recovery rate.
Overall, there are 74,300 fewer people working in the state today than in February 2020. And employers reported 110,000 open positions at the end of December, according to Bureau of Labor Statistics data. the United States.
Late last summer, 80% of Connecticut businesses reported having difficulty finding or retaining workers, according to the Connecticut Business & Industry Association’s 2021 Connecticut Business Survey.
The CBIA has made tackling labor shortages a top priority this session, and while legislative leaders have said there are political obstacles to a number of labor initiatives , there is also at least some bipartisan support for some policy proposals.
These include efforts to: Recognize out-of-state licensing for certain industries; exempting workforce training programs from state sales and use tax; expand the State Manufacturing Apprenticeship Tax Credit to include small and medium-sized manufacturers; reduce regulatory burdens; and supporting a loan forgiveness program for medical students and residents.
Meanwhile, Governor Ned Lamont recently proposed spending $87.4 million over the next fiscal year on workforce development efforts, including expanding career path programs for residents without employment and providing more scholarships and training for in-demand jobs in the health sector.
Still, lawmakers and business advocates admit that any new legislation will not be a panacea, especially to help lower-paying industries like restaurants and retailers fill vacancies.
“I don’t think legislation can really help in this area,” said Connecticut Minority Leader Vincent Candelora, a Republican from North Branford.
What is causing the shortage?
Kenneth Entenmann is an economist at NBT Bank, based in New York, which covers the Northeast region.
Across the country, he said there are about 8 million fewer people in the workforce today compared to before the pandemic.
Many economists and others have blamed improved government benefits for keeping some people, especially those in lower-paying, high-risk jobs, out of work over the past year.
However, these additional unemployment benefits have largely expired, even as the labor shortage persists.
Others left the workforce due to a lack of childcare or because they feared contracting or spreading the virus to more vulnerable family members. In some cases, the shortages are industry specific. For example, the healthcare sector has experienced a labor shortage compounded by the pain, suffering and demands created by the pandemic.
Entenmann said three factors continue to aggravate the shortage: early retirements, decreasing legal immigration of workers and a significant increase in self-employment.
“While we are seeing improvements in labor shortages, this is happening at a much slower pace than we would have expected,” he said.
Entenmann said Connecticut should review its tax and regulatory structure if it wants to revive economic activity.
“They need to look at ways to incentivize new business,” Entenmann said. “Connecticut is one of the highest taxing states in the country, in the top third. Analyze the tax structure and overall regulatory burdens you impose on businesses and business formation. »
Laundry list of proposals
During his State of the State address earlier this month, Lamont set the tone for making workforce development a key priority this legislative session.
“Our budget is investing ten times more money than ever before in workforce development – with a particular focus on trade schools, apprenticeship programs and tuition-free certificate programs where students of all ages can earn an industry-recognized degree in half the time, with full-time employment almost guaranteed,” he said. “This investment will train more than 10,000 students and job seekers this year in company-designed courses around the skills they need.”
Among his proposals, he is investing an additional $15 million in the state’s CareerConneCT program, which is designed to help workers who have lost or quit their jobs during the pandemic access short-term training programs, where they can obtain an industry-recognized credential and enter the job market. in in-demand sectors including manufacturing, information technology, healthcare, infrastructure and clean energy.
Lamont is also allocating $17 million to expand a student loan forgiveness program for healthcare workers, and $55 million to expand college scholarships and faculty for in-demand healthcare fields.
AABC President and CEO Chris DiPentima said a top priority for his organization is to get lawmakers to support corporate tax relief measures to spur growth in the industry. use.
“The premise of these tax relief measures — which target nearly all small businesses, which represent 99% of all Connecticut employers — is to free up money that can be invested in training and workforce development. work,” DiPentima said.
HBJ FILE PHOTO
Chris DiPentima stands outside the State Capitol, where the CBIA is lobbying lawmakers on a range of trade issues.
The CBIA’s demands include restoring the FTE tax credit to its original level of 93%, which would save small businesses $53 million a year; exempting safety clothing and personal protective equipment from sales and use tax; and expanding the R&D tax credit for small businesses.
For many years, tax cuts would not be the focus of the state legislature, but Connecticut is forecasting a $2.5 billion surplus for this fiscal year and has a fund of 3, $1 billion for rainy days. That has prompted Republicans and Democrats to offer hundreds of millions of dollars in tax cuts in recent weeks.
The AABC also wants to streamline state requirements for professional licensing, including having Connecticut recognize more out-of-state licenses.
“There are 351 different license types in Connecticut,” DiPentima said. “We are overloaded with licenses.”
As an example, DiPentima said, Connecticut requires animal trainers to be licensed while 41 other states do not. Tree trimmers also need a license to operate in Connecticut, while 43 other states have no such requirement.
“We are also the only state in the country that requires a home entertainment installer and forestry worker license. It’s unreal and pretty crazy,” he said.
The CBIA has other proposals aimed at workforce development. He wants to exempt workforce training programs from state sales and use tax and strengthen workforce development efforts for incarcerated and returning citizens.
The AABC also wants to expand the state’s Apprentice Manufacturer Tax Credit program to include small and medium-sized manufacturers, a move the group has promoted unsuccessfully for years.
But the measure could finally gain bipartisan support in 2022, according to State Sen. Joan Hartley (D-Waterbury), who co-chairs the Commerce Committee.
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State Senator Joan Hartley.
“This proposal to help expand apprenticeship programs is something we strongly support,” she said. “It was taken out of committee for three years and passed by both houses, but was vetoed by [former Gov. Dannel P.] Malloy. Lamont backs him up. I hope he can cross the finish line this time.
Allowing small and medium-sized manufacturers to access the apprenticeship tax credit would cost the state about $1.4 million a year, according to the AABC.
Senate Republican Leader Kevin Kelly, who represents Monroe, Shelton, Seymour and Stratford, said he sees bipartisanship on the labor shortage issue “in expanding learning incentives , seeking to streamline the mental health licensing and collaboration process.”