The Sharks are Circling

The U.S. Bureau of Economic Analysis indicated that Connecticut was the only state to experience a decline of .1 percent or 250 million in real gross domestic product in 2012, the worst in the nation. Connecticut’s tax free day, the date one stops working to pay taxes and starts working for themselves – is now May 13, eight days later than last year and the latest in the nation.

“We’re dead last in economic growth and the only state in the nation where the combined total of goods, services and salaries paid shrunk. That is a failure, and that is the result of that different road that the Governor took us down,” said Senate Minority Leader John McKinney.

Many believe that our current financial crisis was mainly due to widespread lack of financial literacy which is almost as important as learning to read and write. A main concept in economic literacy is that the demand for goods can change in response to an increase or decrease in the price of an item. Simply put, the less expensive an item, the more of it is purchased.
Consequently, the more items purchased more taxes are paid and collected on those items.

The same is true for labor. As it becomes more expensive, the cost of hiring an employee goes up, resulting in fewer people getting hired and fewer jobs created. So it stands to reason that the more expensive a state becomes, the less attractive it is. People flee to less taxing states such as Texas or Florida where population and job growth has exploded.

With every incentive package given to Connecticut businesses to stay, more businesses have either closed or left the state. High costs of taxes, labor, workers comp, gas, energy, and real-estate are driving job creators out.

In addition, there is the specter of a national health care program that will penalize companies with 50 employees or more (up to $3,000 per employee) if they offer healthcare that costs employees too much. Connecticut businesses also face a mandatory sick leave mandate which further incentivizes them to reduce payrolls or close.

A Southington man recently wrote to the Hartford Courant on the subject of Governor’s from Texas and South Dakota soliciting our jobs saying, “This is the tip of the iceberg. I personally know three companies that employ 50-plus workers; each company is feeling out Southern states for relocation. Our elected officials have taxed and regulated our existing companies to death. Most that remain here are essentially stuck because of personal reasons (as I am) or because Connecticut is their only customer base. Please, Connecticut, wake up and change our governor and legislature. This dead-end road is finally at its end. Please don’t push us over the cliff.”

Indeed most manufacturers cite Connecticut government’s antibusiness attitude as one of the main reasons they are looking to leave. The high cost of doing business due to taxes and regulation are also major considerations. I can attest to this anti-business rhetoric that is too often heard on the legislature’s Appropriations and Finance Committees. It’s no wonder that other states regularly woo Connecticut residents and businesses.

As one Hartford Courant blogger commented, “the other states can smell blood in the water. Connecticut is anti-business and pro taxes, until it changes, say bye-bye to companies and jobs.”

Another reader writes to the Governor of Texas, “Welcome to Connecticut, which is soon to become the next Detroit.”

And yet another reader states, “Most people who work understand that when you owe lots of money and have less money coming in, you don’t spend more, you spend less, obviously the administration has missed that lesson.”

It is easy to turn a deaf ear and ignore bad news. There is the smell of blood in the water. Whether it is Texas, South Dakota, Florida or New York wooing our job creators, the sharks are circling.

A new attitude of cooperation and approach, with a seat for everyone at the table, is needed if our state is to recover. Instead of saying that you are open for business, you must prove it. Pro-business and pro-profit budgets and policies must be embraced, proposed and passed. I believe in sticking it out and fighting to protect our quality of life and for Connecticut’s economic survival. But it can only happen if the public demands it.