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Associated Industries of Massachusetts Established in 1915, Associated Industries of Massachusetts is the largest Associated Industries of Massachusetts Established in 1915, Associated Industries of Massachusetts is the largest nonprofit, nonpartisan association of Massachusetts employers. AIM's mission is to promote the well-being of its members and their employees and the prosperity of the Commonwealth of Massachusetts by: § Improving the economic climate of Massachusetts, § Proactively advocating fair and equitable public policy, § Providing relevant, reliable information and excellent services. © 2010 Associated Industries of Massachusetts

Topics to cover • The State Economy • Survey Says • Healthcare Cost Containment Topics to cover • The State Economy • Survey Says • Healthcare Cost Containment Campaign • Issue Updates • On the Horizon © 2010 Associated Industries of Massachusetts

The State Economy Massachusetts Jobs and Unemployment – January 8. 3% National Unemployment is The State Economy Massachusetts Jobs and Unemployment – January 8. 3% National Unemployment is 9% Executive Office of Labor and Workforce Development © 2010 Associated Industries of Massachusetts

The State Economy AIM Business Confidence Index Dropped Back in February – 51. 2 The State Economy AIM Business Confidence Index Dropped Back in February – 51. 2 "When we hear that the Fortune 500 companies are bringing in record profits, we must bear in mind that Massachusetts is predominantly a small-employer economy. Most of our employment is in smaller companies, and they will have to produce most of the new job creation we hope for. That's why the negative perspectives of small employers, highlighted by these survey results, are of the utmost concern. “Richard C. Lord, President and CEO of AIM and a BEA member. © 2010 Associated Industries of Massachusetts

The State Economy AIM Business Confidence Index -Small Employer Concerns Spike The State Economy AIM Business Confidence Index -Small Employer Concerns Spike "When we talk about high costs of doing business, high employment costs, we're not just talking about the national and global competitiveness of large companies. Health insurance costs are the largest of these costs - and they are especially heavy, and volatile, for small employers. We applaud the Governor and the Legislature for their pledge to address health care costs in a meaningful way. It is incumbent upon policy leaders and policy makers to focus on the whole array of costs, and to tackle those we can bring down. “ Richard C. Lord, President and CEO © 2010 Associated Industries of Massachusetts

Northeast Has Highest Employee Compensation Costs Average cost for wages and salaries and benefits Northeast Has Highest Employee Compensation Costs Average cost for wages and salaries and benefits (per hour) • $31. 63 (Northeast) • $29. 78 (West) • $26. 78 (Midwest) • $24. 83 (South) Wages and salaries • $22. 04 Benefits (life, health and disability insurance; Social Security, workers' compensation and unemployment insurance; and paid leave including vacation, holiday, sick and personal leave benefits. • $9. 59 (30 percent over total employee compensation) United States compensation costs among private industry employers • $27. 75 (average) News Release: http: //www. bls. gov/news. release/ecec. nr 0. htm Sub-Indices: http: //www. bls. gov/news. release/ecec. toc. htm © 2010 Associated Industries of Massachusetts

Massachusetts Has Highest Labor Costs Highlights of Moody’s “Cost of Doing Business Survey” Massachusetts Massachusetts Has Highest Labor Costs Highlights of Moody’s “Cost of Doing Business Survey” Massachusetts - One Of The Highest Cost of Doing Business States • #1 for high cost of labor • #2 (behind Hawaii) for overall high cost of doing business • #3 for high cost of electricity • #26 for state & local taxes Northeast - Remains the highest-cost region in the country to do business • 14% above the national average • All nine of the Northeast states have a business cost index above 100, or the U. S. average • The measurements included for labor costs explicitly includes total compensation including WC, UI and HC. http: //www. economy. com/store/product. asp? pub=11 © 2010 Associated Industries of Massachusetts

Excessive Regulations Costs Thousands of Massachusetts Jobs Highlights of US Chamber Study: • Excessive Excessive Regulations Costs Thousands of Massachusetts Jobs Highlights of US Chamber Study: • Excessive regulation deprives more than 26, 000 jobs and 1, 655 business starts each year • MA is among 15 states to earn a “poor” ranking on labor and employment-law The report attributes Massachusetts’ poor ranking to several factors: • Mandatory treble damages law in Massachusetts • Extensive restrictions on pre-hire background checks; • Wide-ranging state employment discrimination laws beyond federal requirements; • Extensive wage-hour regulation beyond federal requirements; • Presumption against independent-contractor status and aggressive enforcement; • Three-hour reporting pay requirement; • Prevailing and living wage laws; and • Notice payment law that can require severance for change in control. “The Impact of State Employment Policies on Job Growth: A 50 -State Review “ © 2010 Associated Industries of Massachusetts

Case Study: 20 m Nails / 4 Truck Loads = 1 Job Marathon Tool Case Study: 20 m Nails / 4 Truck Loads = 1 Job Marathon Tool - Franklin, MA • Bill and Donna Olson, owners of a small contractor supply company (Nails) • 2006 had $4 million in annual sales and 17 full and part-time workers • Recent uptick in sales – but doesn’t translate into new hires • Why? Cost(s): salary, UI , and other expenses One clerk at $35, 000/year salary • $1, 750 in state UI premiums • $2, 170 in federal payroll taxes • $583 for workers’ compensation insurance • $280 for federal unemployment insurance. • Just salary = sell about 17. 5 million more nails • Add nonwage costs = another 2. 4 million nails Boston Globe -For small businesses, a hesitancy to hire - Added costs can outweigh gains in sales © 2010 Associated Industries of Massachusetts

Case Study: 20 m Nails = 1 Job Marathon Tool - Franklin, MA: “We’re Case Study: 20 m Nails = 1 Job Marathon Tool - Franklin, MA: “We’re treading water instead of sinking. ’’ Quick Story Facts: • Nonwage expenses can total as much as 40% of annual pay in MA • MA has the highest labor costs of any state, according Moody’s Analytics. • Cost of Doing Business index estimates that overall labor costs in MA are 14% above the national average. Direct Impact of Healthcare and High Costs: • Although the company recently started scheduling overtime for the first time. • 2008 faced rising health care costs, the Olsons eliminated health care coverage, offering employees a one-time payment of up to $5, 000. • Laid off workers for the first time. Olsons’ unemployment insurance rates rose after the layoffs, tightening the financial squeeze. • As demand has increased, the Olsons, like many other business owners, have increased the hours of existing employees, rather than take on the costs of hiring new ones. Boston Globe -For small businesses, a hesitancy to hire - Added costs can outweigh gains in sales © 2010 Associated Industries of Massachusetts

Survey Says! © 2010 Associated Industries of Massachusetts Survey Says! © 2010 Associated Industries of Massachusetts

Government Affairs Update Health Care Cost Containment Project Update Our goal is to reduce Government Affairs Update Health Care Cost Containment Project Update Our goal is to reduce the cost of health care for our members and to make AIM the employer voice on health-care policy issues with the administration, lawmakers, stakeholders and the media. • Long term cost containment • Short term cost containment • Municipal Health Care Cost Reform • Health Care Cost Educational Efforts – Spring Events Planned © 2010 Associated Industries of Massachusetts

Government Affairs Update Status of Legislation • Most of the House and Senate bills Government Affairs Update Status of Legislation • Most of the House and Senate bills now in committee • AIM typically monitors 1, 000 bills – hearings will begin shortly • Some new chairs • 21 AIM bills filed, plus negative bills back –Paid sick leave and paid family leave, – UI and workers compensation benefit expansions, – negative tax, electricity and health care © 2010 Associated Industries of Massachusetts

Government Affairs Update Unemployment Insurance Rate Freeze Update • Governor Deval Patrick – Signed Government Affairs Update Unemployment Insurance Rate Freeze Update • Governor Deval Patrick – Signed February – Averts an average 40% jump of $228 per employee – Limits the average increase for Massachusetts employers to 10 percent, or $61 per employee – Keeps more than $400 million in the private sector • Be aware – 50% jump in medical insurance assessments • December to revised estimate of the Trust Fund balance from a negative $302 million to a positive $12. 7 million. © 2010 Associated Industries of Massachusetts

Government Affairs Update On the horizon…. . • Hearings • State Budget • Health Government Affairs Update On the horizon…. . • Hearings • State Budget • Health care cost containment • UI Reform • SJC Rulings © 2010 Associated Industries of Massachusetts

Government Affairs Update • Not competitively bid – 24 cents per k. Wh average Government Affairs Update • Not competitively bid – 24 cents per k. Wh average (power only) – Almost 1 Billion in extra costs over 15 years – Adds almost 0. 25 cents per kwh first yr • Violates law – exceeds 3% of total load – method of distributing above market costs violates Electric Restructuring Act and Green Communities Act • Harms ratepayers who competitively purchase their own power – Costs buried in distribution rate – All NGRID distribution customers will pay, even those on competitive supply ü Competitively bid • • • Received 23 x amount needed Analysis shows 9 -10 cents per k. Wh Almost 100 million BELOW expected power prices ü Complies with law ü Enhances competition ü Reduces cost • May result in net savings to customers © 2010 Associated Industries of Massachusetts

Government Affairs Update Q & A © 2010 Associated Industries of Massachusetts Government Affairs Update Q & A © 2010 Associated Industries of Massachusetts