Last year, the Washington State Legislature passed workers comp reforms over the strong objections of labor unions and made some less divisive unemployment insurance changes. Those changes were critical to avoiding large increases to in workers' comp rates and UI taxes in 2012.
Because of the deep budget crisis in our state, the legislature is foregoing major employment law legislative changes this year. So how do we stack up nationally following those changes?
The U.S. Chamber of Commerce just released it annual 50-state review of each state's employment laws and regulations and assigns states to three categories: Good, Fair or Poor. More on that in a minute.
Lisa Rickard, president of the Chamber's Institute for Legal Reform and head of the Workforce Freedom Initiative, said the study examines each state to determine whether its labor and employment regulatory climate is conducive to job creation and new business formation. The most recent report was issued on Jan. 23.
If all states were to improve their regulatory climate to the levels discussed in the report, the effect would be a one-time boost of 746,462 jobs. Moreover, the rate of new business formation would increase by 12% resulting in the creation of 51,590 new firms each year across the country. In Washington State, the Chamber says 17,847 new jobs would be added and 12,167 new businesses.
However, Washington is ranked as a "POOR" state for labor and employment laws and regulations. There are 15 poorly rated states including California, Oregon, New York, Montana and Nevada. There are 15 states rates as "GOOD!" Included in the best category are South Carolina, Kansas, Oklahoma, Texas and Idaho---all direct competitors for Washington businesses and jobs.
Factors contributing to Washington's poor showing include:
- Numerous labor and employment mandates that exceed federal standards;
- Daily overtime rate on public construction contracts;
- Very high wage ceiling for income subject to unemployment insurance taxes;
- States minimum wage in excess of the federal minimum wage;
- Relatively high number of restrictions on employer inquiries into applicant and employee history; and,
- No right-to-work protections.
More than a decade ago, the Association of Washington Business, Washington Roundtable and Washington Research Council formed the Washington Alliance for a Competitive Economy (WashACE) to address the state's overly stringent regulatory climate.
As part of that effort, WashACE published comparative costs for all 50 states regarding nearly 60 key cost categories. The most glaring disadvantages for Washington are labor and environmental regulations which more than often exceed federal standards.
On the cost side, Washington has the nation's highest minimum wage and workers' compensation benefits paid as WashACE published in the 2012 Competitiveness Redbook. We also have the third highest unemployment insurance assessments on employers and fifth highest unemployment payments.
So while the 2011 Legislature started addressing the costs and impacts of the state's unemployment and workers' compensation, it was put on ice by this year's legislature as they struggle to close a $1.5 billion budget hole. Nevertheless, the problem remains for future legislatures and a new governor to address. Those costs and restrictions will force jobs and business opportunities out of state or offshore which is not what we want for our state's future.
In its conclusion, the U.S. Chamber warns: "While the recession is technically over, millions of Americans are still out of work and the rate of new job creation has remained at historically low levels compared with past periods of economic recovery. Any policies that can reverse this trend should be on the table for discussion"........and immediate ACTION!
Don C. Brunell, President (DonB@AWB.ORG)
