Workplace Mandates Driving Businesses to Invest in Automation

State lawmakers should review the results of a new survey of Connecticut businesses before enacting more costly proposals like a minimum wage hike or paid family and medical leave.
Amid growing concerns that state policies will further increase the cost of doing business in Connecticut, more employers are investing in automation.
Those concerns are only magnified by new workplace mandate proposals under consideration by the General Assembly.
HB 6208, the minimum wage bill, and SB 1 and HB 6212, the paid FMLA proposals, remain on the legislative calendar awaiting action before the June 7 session deadline.
HB 6208 increases the minimum wage to $15 per hour by 2022, then calls for automatic increases thereafter, tied to cost of living increases.
Proponents are more likely to seek a smaller increase—to $11 or $12 per hour.

Paid FMLA’s Hefty Price Tag

The nonpartisan Office of Fiscal Analysis estimates the paid FMLA program proposed by SB 1 and HB 6212 will cost taxpayers about $13.6 million the first year, and about $18 million each subsequent year.
Employee wages will be deducted by an as yet unknown percentage, entitling employees to up to 12 weeks of paid leave each year—at 100% of their salary capped at $1,000 per week—for their own or a family member’s illness.
Employers will be responsible for continuing to provide nonwage benefits, and taxpayers will be on the hook for $13 million in startup costs and $18 million in ongoing costs.

In addition, the state needs to hire at least 120 new employees to run the program.
The minimum wage hike and paid FMLA proposals have something in common: They will, without question, increase the cost of hiring and employing people in Connecticut.
This couldn't come at a worse time in terms of Connecticut's economic recovery.

Investing in Automation

The 2017 CBIA/Farmington Bank 1st Quarter Economic and Credit Availability Survey found that 27% of respondents invested in labor-saving devices, such as robots or kiosks, and that 30% plan such investments in the coming year.
In other words, Connecticut businesses have reached the point where they are looking for alternatives to hiring.
Why invest in robots rather than jobs?
Of the respondents, 23% said they believed state policy proposals will drive up business costs.
Another 17% said labor costs in Connecticut were already too expensive, and 10% answered that credit was available at good terms and machines were relatively cheap.
And 32% said skilled workers were not available or difficult to find.
Connecticut's skilled worker shortage is a separate problem, although the state's high cost of living is certainly a contributing factor.
Lawmakers should be cautious about voting for any proposals that increase the cost of hiring workers.
The last thing Connecticut's sluggish economy needs is more bad news. In the coming weeks, lawmakers must avoid any legislation that increases business costs.

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For more information, contact CBIA's Eric Gjede (860.480.1784) | @egjede