INTRO TEXT organized labor may represent just over 14 percent of the Massachusetts workforce, but unions showed last year that they still have plenty of juice on Beacon Hill. Despite talk of a business-backed move to rein in unemployment insurance costs to employers, the state AFL-CIO and its legislative allies beat back House Speaker Sal DiMasi’s late-in-the-year effort to nix a scheduled increase in the unemployment insurance payments companies make to the state.
The assessment per employee increases each year, according to the unemployment insurance statute, unless the Legislature moves to freeze it. Business leaders have long complained about the unemployment insurance payments, which they say contribute to high business costs and stifle job growth.
DiMasi, who this year stepped into the role of employer’s most prominent champion on Beacon Hill, proposed the rate freeze in a late September speech to the Associated Industries of Massachusetts, dangling what business groups said was $153 million in savings. The issue went underground for several weeks, but unions were busy weighing in with their opposition, hoping to run out the clock until Thanksgiving, after which employers would have to wait until the new year and a new window of only a few weeks before invoices went out, bearing additional charges of roughly $40 per employee.
“It was a late entry from the business community to try to sneak through the freeze,” says AFL-CIO president Robert Haynes, who calls the corporate groups behind the movement “short-sighted” in the face of a potential recession. “These people don’t have a clue, they just don’t want to pay any taxes,” he says.
Business leaders pointed to projections from the state Division of Unemployment Assistance that showed canceling the scheduled increase would cost the $1.12 billion unemployment trust fund $56 million over the next year, but that the fund balance would replace that amount over time.
In pressing legislators with letters and meetings, however, unions were able to frame the debate as one of fiscal responsibility, arguing that allowing the rate increase to take effect would ensure that the fund stays ruddy despite any downturn. Any retreat from the statutorily required schedule, they said, would imperil the trust and could force employers to pay more in the long run.
That argument, business officials said, ignored the state’s option of accessing short-term federal loans to make payments, if necessary, while the fund was recapitalized. No employer would sign off on a meager short-term savings if it translated into a big hit later on, they insisted. Business leaders say a series of suspensions of scheduled unemployment insurance increases in the 1990s helped goose the economy into the job creation boom that lasted into the first part of this decade. The Associated Industries of Massachusetts bombarded lawmakers with over 1,000 letters last fall urging a similar freeze, but to no avail.
The duel came down to the final, confused days of the 2007 legislative calendar, when lobbyists swarmed the State House and lawmakers hustled to make sure their priorities made it to the front burner. In the end, DiMasi backed off, frustrating employers and allowing labor to claim victory and depart the field. Politically, the showdown played out largely as a business-versus-labor proxy contest, with the Speaker pressing the business cause and Senate President Therese Murray and Gov. Deval Patrick registering less quietly against the freeze — if in no other public way than refusing to back DiMasi as the session clock expired.
“He realized there was no sense in having a big, full-scale battle in the last week of the session, I presume,” Haynes says of DiMasi.
For his part, Paul Guzzi, president of the Greater Boston Chamber of Commerce, sounds a note of frustration over the failure thus far to hold off the increase. “When you look at where the state is in terms of job creation, this is the time to try to remove obstacles, not to add obstacles for employers in the state,” he says.
With a small window open until early February, pro-freeze groups hold out hope their “UI” move could emerge as a bargaining chip during the 2008 session’s opening weeks. But unemployment insurance is a top priority for both sides, and Haynes says the only discussion he wants to see would focus more broadly on the trust’s structure and administrative formula.
Guzzi acknowledges that the business community has work to do in order to have any chance of winning out. “You need agreement at a minimum between the Senate and the House, and preferably between all three leaders, and my understanding is that we’re just not there yet,” he says.
Jim O’Sullivan is a reporter for State House News Service.
