The legislative session began with workers pushing for significant increases to the minimum wage, and companies seeking to reduce their unemployment insurance costs. It ended early Friday with both sides declaring victory.
Minimum wage and unemployment insurance were among the key business issues tackled by the Legislature in an election year session that saw lawmakers consider bills affecting economic development, corporate investment, technology, and the still-lingering effects of the housing bust of the last decade.
“A lot of good things happened this session,” said Jim Klocke, the executive vice president of the Greater Boston Chamber of Commerce.
Minimum wage dominated debate for much of the past year, and not just in Massachusetts. As President Obama pushed Congress to raise the national minimum wage, without success, state legislatures around the country took up the issue.
In June, Governor Deval Patrick signed legislation that makes the Massachusetts minimum wage the highest in the nation. The measure increases the minimum wage to $9 per hour next year, $10 in 2016, and $11 in 2017.
“This was a fairly significant wage increase,” said Noah Berger, president of the left-leaning Massachusetts Budget and Policy Center, which had advocated for higher pay. “We saw a lot of employers recognizing that this would be good for the economy. There was more positive reaction from the business community than we’ve seen before.”
For keeping opposition to wage increases muted, business groups got what they wanted: lower unemployment insurance taxes. Lawmakers froze rates for the insurance at last year’s levels, and lowered them in 2015, 2016, and 2017. The changes could save most Massachusetts companies 25 percent or more on unemployment insurance, the Chamber of Commerce estimates.
Businesses have lobbied to overhaul the state’s unemployment insurance system for years. Massachusetts has the fourth-highest unemployment insurance costs in the country, with companies spending $714 per employee, on average.
“That’s real cost relief,” Klocke said. “We hadn’t seen that in a long time.”
Businesses also won with the expansion of tax breaks for research and development, which passed as part of a broader economic development bill, said Chris Geehern, executive vice president at Associated Industries of Massachusetts, the state’s largest employers group. The legislation should help Massachusetts keep its edge in life sciences, by giving companies more incentive to spend on the research and development that leads to new products, Geehern said.
A recent study by the Pioneer Institute, a nonpartisan but conservative research group, found that between 2007 and 2011, research and development spending among Massachusetts businesses declined by 19.3 percent. If companies don’t invest in finding new projects and improving old ones, they can lose out to competitors, which can hurt job growth and the state economy.
The incentives can also attract and retain more high tech companies to the state, supporters say.
On the technology front, the Legislature decided to leave “noncompete’’ agreements alone. Such agreements prevent workers who leave their jobs from joining rivaloperations or starting new businesses in the same industry for a certain period time, often a year or longer.
Patrick, some local business leaders, and venture capital firms called for lawmakers to bar noncompete agreements, which they say stifle innovation and drive talented engineers and technology workers to California, which doesn’t enforce these contracts.
But traditional industry groups, such as the Chamber of Commerce and AIM, said their members believethat noncompetes help protect their considerable investments in talented workers and intellectual property.
“Ultimately, they’re voluntary contracts between companies and workers, and by and large, they work fine,” Geehern said.
Tom Erickson, the chief executive of Acquia Inc., a Burlington-based digital business, disagreed. He said companies abuse these contracts. Some employers spring them on workers after they start a job and have few options to leave. Others enforce them even after laying off workers, extending periods of unemployment in a fast-changing industry, Erickson said.
“It’s got to change,” he said. “It’s a big, old-company mentality. I’m very disappointed.”
In the final hours of the session, the Legislature also passed a controversial bill that would help homeowners who purchased foreclosed properties. The legislation reduces the amount of time foreclosed homeowners can challenge the legitimacy of a bank seizure and sue for their title from 20 years to about three.
In the wake of the financial crisis, lenders rapidly foreclosed on homeowners and resold their properties. The courts later found problems with the procedures that banks and mortgage companies followed to seize homes, clouding the titles of these properties when they were resold to new owners. As a result, some of these homeowners have struggled to resell their homes and refinance them in recent years.
Activists who work with foreclosed homeowners opposed the bill and said they plan to ask Patrick to veto it.
Several workplace bills failed to gain legislative support this session, including measures to ban bullying at work, mandate paid sick leave, and forbid employers to ask workers for their social media passwords to check their activity on websites such as Facebook.
Business groups said companies sometimes need these passwords if they are conducting workplace investigations, or in the financial world to ensure that workers aren’t violating disclosure rules.