Political issues loom large for businesses in 2014
Wage and immigration rules among key issues lawmakers will tackle in the year ahead
National, state, and local lawmakers are back at work, revving up for a busy year of debate over major public policy issues that could have far-reaching effects on the Massachusetts economy and area businesses.
From flawed government computer systems to the performance of Boston’s new mayor here are some major issues that economists and business leaders will closely monitor in 2014:
Democrats would love to make raising the federal minimum wage a major issue in the midterm congressional elections this year. President Obama is pushing a plan to raise the federal rate to $10.10 from $7.25 an hour by 2016, but House Republicans have blocked the proposal.
As a result, the debate has shifted to individual states. Democrats, workers advocates, and many economists argue that increasing the minimum wage would help not only the working poor, but also the broader economy by putting money in the pockets of people likely to spend it. But Republicans and businesses say a higher minimum wage would increase hiring costs and result in fewer jobs.
In Massachusetts, the state Senate has passed a bill that would boost the state’s minimum wage to $11 from $8 an hour by 2016, which would make it the highest in the nation. The Senate bill also would tie future minimum wage increases to inflation.
But House Speaker Robert DeLeo, a Winthrop Democrat, has balked at that plan, saying any increase in the minimum wage should be offset by other measures that would reduce business costs. Specifically, he has linked a wage increase to overhauling the state’s unemployment insurance system.
Overhauling the state’s unemployment insurance system has long been a priority of Massachusetts business leaders, who say eligibility requirements are too lax, benefits too generous, and costs too high compared to other states. In Massachusetts, for example, unemployed workers can collect benefits for 30 weeks, compared with 26 weeks for most states.
DeLeo hasn’t released details on how he would overhaul the system, but Governor Deval Patrick and Senate President Therese Murray, both Democrats, have signaled they’re open to changes. Murray, however, has balked at linking unemployment insurance reforms to the minimum wage.
In Congress, a budget compromise reached at the end of last year didn’t extend jobless benefits for the long-term unemployed. As result, nearly 60,000 Massachusetts residents lost benefits Dec. 28, and tens of thousands more will exhaust benefits this year.
Legislation to extend emergency benefits for another three months has stalled in the Democratic-controlled Senate. Such legislation would likely face a harder time in the Republican-controlled House.
Health care costs remain one of the biggest concerns for businesses in Massachusetts and across the country. Here, hospitals and other providers will come under increased pressure to control expenses this year, as mandated by a sweeping cost containment bill enacted in 2012.
Later this year, the Massachusetts Health Policy Commission will, for the first time, report whether providers achieved the goal of keeping price increases within 3.6 percent last year.
Meanwhile, health care overhaul ran into technical difficulties. Both federal and state governments experienced severe — and highly embarrassing — computer foul-ups that kept people from signing up for health insurance under the Affordable Care Act, also known as ObamaCare.
The federal government plans to jettison the Canadian contractor, CGI Federal, that designed the problem-plagued HealthCare.gov.
In Massachusetts, state officials are struggling to fix their own site, also designed by CGI, by the March 31 deadline for people to select new health plans for 2014. About 124,000 state residents are waiting for those software repairs.
Walsh and the BRA
Boston Mayor Martin J. Walsh, sworn into office Jan. 6, has signaled he plans to be a strong proponent of commercial development.
But Walsh, who takes office amid a building boom in the city, has also vowed tooverhaul the Boston Redevelopment Authority, the often criticized agency that oversees development in Boston.
So far, Walsh has been short on details, although he’s made clear that he wants to make the BRA more transparent and accountable. Among other things, he’s called for a new economic development agency to oversee the BRA and for more accountability to the City Council.
Commercial and high-end residential developers, many of whom have multimillion-dollar projects awaiting approval, will watch closely.
Reacting to a slowly improving economy, the Federal Reserve recently said it would gradually curtail, and ultimately eliminate, its extraordinary purchases of Treasury and mortgage securities, an effort aimed at lowering long-term interest rates to stimulate the economy.
The big question is whether the Fed, under its new leader Janet Yellen, will stick to its tapering strategy if the nation’s employment picture doesn’t improve substantially this year, economists say. Businesses, investors, and consumers will closely monitor whether, and by how much, long-term interest rates might rise.
Average rates for a 30-year-fixed mortgage could hit 5.25 percent by the end of the year, up from the current 4.5 percent, said Mark Zandi, chief economist at Moody’s Analytics, a forecasting firm in West Chester, Pa. “It’s going to be a very important year for lenders and borrowers,” he said.
US House Speaker John Boehner, an Ohio Republican, recently surprised many by announcing that reform of the nation’s immigration system would be a priority this year. But Boehner has said he wants piecemeal changes, not the comprehensive package backed by the Democratic-controlled Senate.
That step-by-step approach would be good enough for the Greater Boston Chamber of Commerce, which has helped organize a coalition of local chambers across the nation to push for immigration reform.
Among other things, the business groups want to double the number of annual H-1B temporary visas for skilled foreign workers and make it easier for foreign science, technology, engineering, and math students to get green cards after they graduate from US colleges.
Business leaders hope compromise legislation on immigration can pass before the November elections.
By the end of the year, Massachusetts residents and businesses should finally see which companies win coveted gambling licenses.
This winter, the Massachusetts Gaming Commission is expected to award a slots-only license to one of three applicants: Cordish Cos. at a site in Leominster; Penn National Gaming Inc. at the old Plainridge Racecourse in Plainville; or Raynham Park in Raynham.
By spring, the commission is also expected to decide whether to award a full gambling resort license to Wynn Resorts of Las Vegas, which wants to build a casino in Everett, or to Mohegan Sun, the Connecticut Indian casino, which hopes to build a casino in Revere, in partnership with Suffolk Downs racetrack.
Boston is demanding that it be designated a “surrounding community,” a status that would make it eligible for money and other benefits designed to mitigate the potential impact on the city from a Revere or Everett casino.
The race for governor
Thought you could get away from campaigns and appeals for political contributions after last year’s mayoral election in Boston and never-ending special elections for the US Senate, Congress, and state Legislature?
Forget about it. The contest to replace Patrick, who isn’t running for a third term, is just getting started.
Five Democrats are vying for their party’s nomination in the September primary: Joseph Avellone, an executive at Parexel; Donald Berwick, a former administrator at the Centers for Medicare and Medicaid Services; Attorney General Martha Coakley; state Treasure Steven Grossman; and Juliette Kayyem, a former assistant secretary at the US Department of Homeland Security and former undersecretary of Homeland Security in Massachusetts.
The Republican nomination is expected to go to Charlie Baker, who lost to Patrick in the 2010 gubernatorial race. Baker is a former Weld and Cellucci administrator and former chief executive of Harvard Pilgrim Health Care.