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(Off-Session) LCC Advocacy Update: October, 2021

Thank you to this week’s sponsor of our Advocacy Update:

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October 26, 2021

The legislative session is only two and a half months away and our advocacy team is preparing to represent you best. If you have policy areas of concern in the coming session, feel free to connect with our advocacy team by either scheduling a time or reaching out to our Government Affairs Manager, Austin Davis, at [email protected]. Want to support our advocacy efforts? We are looking for advocacy update sponsors! Reach out to [email protected] for more information.

In this Update; 

Save the Dates! Connect with Policy Makers 

We look forward to providing you access to policymakers four times between now and the end of March! Please mark these dates in your calendar and stand by for additional details! 

  • LCC Legislative Reception – December 16th from 4:00 to 5:30 – Virtual 
  • LCC’s Legislative Breakfast Series Sponsored by New England Federal Credit Union 
    • January 31st – 8:00 – 9:15 a.m. (virtual))  
    • February 14th – 8:00 – 9:15 (virtual)
    • March 14th – 8:00 -9:30 (planned in-person)

Special thanks to the sponsor of our Legislative Breakfast Series:

Unemployment Insurance Study Committee

The Unemployment Insurance Study Committee has now met twice. Their first meeting was somewhat derailed by a decision by U.S. DOL to not allow an enhanced UI benefit that the Legislature passed last session. They have since moved on to more of the committee’s charge. 

The crux of most of the discussion comes down to a frustrating realization that most policy changes are restricted to those which can be programmed into the archaic mainframe computer our Department of Labor uses. The Committee explored adjusting some of the few possible variables, the maximum and minimum benefits of the program, as these are already adjusted on an annual basis. The discussion creates some concerns around creating benefits that may induce entry, or encourage employees to separate from the workforce, as the minimum benefit discussed in many cases could be higher than wages made during employment. 

The Committee also discussed the issue of reimbursable employers which are typically nonprofit employers who don’t contribute to the UI Trust Fund with taxes and instead are responsible for paying any claimant benefits at a dollar-for-dollar amount in the case of a claim. This creates a higher level of liability than the employers that pay taxes to the trust fund (contributing employers), however, they are not handling the carrying cost of the UI system and at the same time, the contributing employer will need to deal with this as an increase in experience rating if they have claims. 

An issue which is troubling for both reimbursable and contributing employers alike is that of the separating employer (also referred to by some as trailing, subsequent, or other various terms) in which an employee might voluntarily leave employment with your business and then shortly into their next employment is put on the UI system by the subsequent employer. Because your business, the employer they voluntarily separated from, has most of that employee’s wage history, you will see those claims on your account despite the context of the separation as it pertains to you. 

This issue is more pronounced in reimbursable employers because there are fewer restraints on the amount in claims which will be charged to your account and you will be surprised to be paying the benefits at a dollar-for-dollar amount of an employee you never expected to pay benefits for. The Committee explored three options to try to mitigate this issue. The committee is also interested in requiring small non-profits (under four employees) to cover employees with nonprofit insurance.  

If you are interested in these issues or feel you may be affected, please reach out to our advocacy team.

Vaccination Guidance and Question 

In September, the White House announced that U.S. DOL will require via OSHA rules that employees of employers with more than 100 employees, as well as federal contractors, to be vaccinated or tested weekly. Last week, OSHA submitted the rule text to the OMB, which means it is relatively close to becoming a reality, however, we are still unsure what that reality looks like. 

Employers understandably have questions. Please take a few minutes to answer a few quick questions from our team and add any other questions you may have. 

Take Our Survey Here 

Legislative Committees, Study Committees, Task Forces Plot Path for Next Session 

There are always out-of-session committees and task force meetings in the time outside of the usual session, however, this year is seeing an unusual amount of activity. Standing legislative committees are making use of the Zoom capabilities to meet outside of the session with multiple committees holding meetings to prepare more for the coming session. 

The Senate Committee on Finance met last week and has plans to meet at least two more times before January to review legislation sent over to them by the House Committee on Ways and Means which they did not have adequate time to dive into given its massive implications. Bills include a tax on internet services (aka cloud tax), changes to corporate tax structure, and the addition of corporate minimum taxes. The Committee is also taking some time to review suggestions from the Tax Structure Commission, though the Chair noted that they expect more proposals on the Commission’s suggestions to move more education funding from property tax base to an income tax base, as well as an attempt at a wealth tax, to be presented by two study committees; the Task Force on the Implementation of the Pupil Weighting Factors Report and the Pension Benefits, Design, and Funding Task Force. The Pupil Weighting Task Force will be holding a public hearing next Friday on their work to date; you can sign up here

The House Energy and Technology Committee heard Friday from the Vermont Climate Council, created under the Global Warming Solutions Act. The Climate Council is expected to issue a draft report with recommendations soon with a final report as early as Thanksgiving, though many of the Council’s working groups have predictably been struggling to come to a consensus around issues such as “carbon neutral” versus “carbon-free” or sourcing from in-state renewables versus out of state renewables. Additionally, the issue of weighing differently action that produces resilience and adaptation to a changing climate has been plaguing discussion; an issue LCC stressed in testimony and advocacy during the legislative process. The Council and Committee are contemplating a “Clean Heat Standard” which functions much like the Renewable Energy Standard we implement on electrical utilities, which requires them to offer incrementally more low-carbon products. 

Among other committees to meet, the House Committee on General Housing and Military Affairs, along with the House Committee on Human Services, heard from a number of witnesses about housing for underserved populations. Later that day, the Scott administration released their plan to address these needs. During testimony, legislators learned that though S.79 was vetoed, the $5 million appropriation for the Vermont Housing Improvement Program (VHIP) existed in the budget and the Administration has been able to access those funds which they believe will help redevelop 140 units for those exiting homelessness. 

Speaker Krowinski and Pro Tem Balint Announce Final Round of “Investing in Vermont’s Future Community Conversations”

House Speaker Jill Krowinski and Senate President Pro Tem Becca Balint announced the final round of community conversations on the once-in-a-lifetime opportunity facing Vermont to make significant investments that will transform and shape the future of our state. These regional discussions will be held virtually. 

  • Washington County Conversation, Thursday, October 28th, 5:30 – 6:30. Register here.
  • Orange County Conversation, Tuesday, November 2th, 5:30 – 6:30. Register here.
  • Chittenden County Conversation, Thursday, November 4th, 5:30 – 6:30. Register here.
  • Orleans County Conversation, Monday, November 8th, 5:30-6:30. Register here.
  • Lamoille County Conversation, Wednesday, November 10th, 5:30 – 6:30. Register here.
  • Final conversation open to anyone across the state, Tuesday, November 16th. Register here.

Burlington Launching Survey on ARPA Usage

Burlington Mayor Miro Weinberger announced the launch of a new public survey seeking community feedback on several projects eligible to be funded using the remaining $15 million of ARPA money. These projects have the opportunity to positively impact Burlington by meeting a number of high-priority goals including public health, racial and economic equity, broadband, and water resources.  The Survey will be available online until November 9: ARPA Action Plan. The next steps for the Economic Recovery team will be hosting a town hall to provide the community with the chance to give additional input.

Vermont Legislative Apportionment Board Recommends Single-Member House Districts 

As a result of the 2020 census, Vermont will soon be undergoing redistricting legislative districts. The Legislative Apportionment Board recently released their recommendations for House districts and produced 150 equally populous single-member districts. Vermont currently has 46 two-member districts and 58 single-member districts. Proponents of the single-member district will point to greater accountability as every member is accountable to only about 4,200 people. Opponents feel that it fractures community cohesion, as communities are split in half by new lines. This was recommended in 2010, however, the legislature rejected it, and will likely do so again when they return next year. Redistricting, even when handled well, is a painful process; these recommendations likely won’t help. 

What do you think? You can see the map for yourself here and submit comments to the LAB here, or to your local Board of Civil Authority. 

What is Happening in the Labor Market? 

The Vermont labor market has contracted by about 7%, or 25,000 workers, exacerbating an already acute workforce shortage that our state faced before the pandemic. So, what is going on? Political parsimony has often resulted in the lazy narratives of “just pay more” versus “people don’t want to work.” If you know LCC analysis or advocacy at all, you know we wouldn’t be satisfied with either explanation. Simply put, everyone is absorbing the multitude of factors in the economy and trying to decide what changes to make for the most optimized economic arrangement. 

People are rethinking their schedules, their work-life balance, their comfort with different risks, and the opportunity cost of being in the workforce. This has been paired with the flexibility to change; this comes from the massive amounts of cash poured into our economy, as evidenced in this chart that was in the New York Times recently, based on analysis by JPMorgan Chase.

LCC ran an analysis specific to Vermont households. In the below graph, we model effective wage replacement for a family of four with two earners based on pre-pandemic wages and on unemployment for the fully eligible time. When considering aid that was available accessible to many households (unemployment, enhanced unemployment, stimulus checks, and the child tax credit), you can see a fairly clear picture of what drove those savings. 

 

Taken as an average over that time period, you can see that folks making less than $24 per hour pre-pandemic can find themselves receiving remuneration greater than their jobs, even after accounting for the marginal propensity to consume (spend marginally more money when one has more money) as seen in the below graph. 

Based on this analysis, we expect a high amount of savings in households with many implications on the labor market. It likely means that households are in a comfortable position to do a couple of things we’re hearing reported:

  • Change of career or job: in August, 3.9 million people in the U.S. left their jobs, however, they weren’t necessarily moving out of the workforce; instead, they were taking new jobs. This creates a great deal of friction and uncertainty in the labor market. 
  • Retirement: some people have left the job market completely as the last year has created more stress, risk, or uncertainty. 
  • Leaving for childcare? Even when considering the marginal propensity to consume, savings for the incomes listed above can be anywhere up to $25,000. When you consider that that family might easily spend that much on childcare in a year, combined with the increases in wages we’ve seen, it’s likely that many households might instead decide to have one earner leave the workforce to care for their children. In a recent Joint Economic Committee report, 83% of parents reported severe issues with finding affordable, high-quality childcare and 13% reported that it resulted in them reducing participation in the workforce. 

So, when should the labor market get back to normal? Well, it likely won’t for all the reasons we listed above. Barring any additional assistance, it’s likely many households will see an economic advantage to returning to full workforce participation at the beginning of 2022. Still, barriers to childcare, possibly alleviated by the Build Back Better package currently under consideration in Congress, will likely plague participation rates.

The long and the short; 

  • expect fewer people for quite some time. Post-holiday-season you’ll see people entering the workforce, however; 
  • Many people won’t be returning or are going to be looking for very different jobs when they come back, so; 
  • Start thinking about how you can do more with fewer people by automating, streamlining, or other efforts. 
  • Advocate for policies that encourage workforce participation such as childcare policies in which a person is not worse off for more participation. 

Congress Inches Ever So Slowly Towards Infrastructure Bills; What to Worry About 

Covering the plan in this update is not entirely worth it because it is changing by the movement, and there is plenty of coverage out there. What we are going to quickly focus on are instances in which sliming the package, as the White House suggested this week, to $1.75 to $1.9 trillion size would affect things that are already counted on. 

  • The Employee Retention Tax Credit could be ended early: as one of the potential pay-fors for the package, lawmakers are considering an early end to the Employee Retention Credit which could be problematic for businesses who’ve budgeted to realize that credit in Q4. The language in the infrastructure bill, as passed by the Senate, would make the credit effective to the end of September instead of December. You can read more here.   
  • Child Tax Credit Scaled Back: Along with other items on the cutting room floor, the Child Tax Credit is likely to be scaled back greatly in the bill moving forward and only extended for one year. It was thought that it would likely remain permanent, especially because many GOP members backed the credit. As you can see in the graph created by LCC’s team below, this credit, along with other dramatic expansions over the last 80 weeks, dramatically helped Vermonters afford childcare and for many households amounted to upwards of a 14% raise.
  • Childcare could get worse before it gets better: a recent article by a left-leaning think tank, the People’s Policy Project, pointed out that the design of the multi-billion dollar child care program would negatively affect any household making more than median household income for the first three years of the program, raising their cost of childcare by upwards of $13,000. LCC did a similar analysis and found that this disparity would likely be worse for Vermonters when accounting for Vermont-specific data. The problem with the legislation is that improvements to the childcare system, which would increase the cost of childcare, are relatively instantaneous while the subsidies phase in between 2022 and 2025.

More broadly, it looks as if both sides have agreed that tuition-free community college is likely out, though the Biden administration has vowed to pursue that through executive Pell grant expansion. Paid family and medical leave are being negotiated to be four weeks rather than 12 weeks. State and Local Tax (SALT) deductions are still unclear.

Concerned or need to learn more about anything in this newsletter? Email our team at [email protected].

We look forward to working with you.
Sincerely, 
The Lake Champlain Chamber Advocacy Team