Ten years ago business and labor got together on what was announced as an historic update to our state’s costly and woefully outdated workers’ compensation system. While significant reforms were made then, a decade’s worth of hindsight has shown that our comp system remains expensive, slow, a costly burden on employers and ill-equipped at serving injured workers. In short, comp is in crisis. With costs reaching more than $10 billion per year, and municipalities shouldering an increasing financial burden, the time to reform comp has come again.
Thankfully, earnest and meaningful discussions are occurring among the interested parties and there is a real chance we could see something done as part of this year’s budget. We believe that significant cost savings can be achieved without impacting wage replacement or medical care for injured workers. In fact, our recommendations would ensure that the most severely injured employees receive the compensation they deserve. Our aim is to fix a system that relies on outdated impairment guidelines as the basis for issuing high payments to employees who are missing little or no time from their jobs. Meanwhile, severely injured workers are at the mercy of a system that stretches out hearings for months and final judgement for years.
The facts are clear; ninety percent of upstate business leaders want to see real, meaningful changes to the workers’ comp system, lawmakers from both sides of the aisle and from both houses are pushing for reform, and all sides recognize changes need to be made.
We’re proud to be a part of a growing coalition made up of more than 200 municipal groups, business organizations and other trade associations and businesses calling for commonsense reforms that will put New York more in line with our fellow states and make our state more competitive.
Reforming workers’ compensation and developing a better system that protects injured workers, while eliminating, outdated, and unnecessary cost drivers, will be a boon for New York State and help spur job creation, foster economic development, and lower property taxes. We urge inclusion of these cost-saving measures in this year’s final enacted budget.
Regular readers of this space will know The Business Council is a big fan of the Commercial Division of the state court system. For a primer on the Commercial Division, please revisit our blog post from February of last year.
At the time of our previous post, the new Chief Judge of New York State, Janet DiFiore, had just been confirmed to the position. Well, we are happy to report that over a year into her tenure, Chief Judge DiFiore has not only retained the state court system’s commitment to the Commercial Division, she has enhanced it.
Just read these quotes from Chief Judge DiFiore in a recent update to the Commercial Division video highlighted in the link above:
- “New York State is the center of finance and commerce for the entire country, and even much of the globe, and along with that world class status comes a world class court — the Commercial Division of the New York State Supreme Court…The Commercial Division is a model for the way we want all of our courts, civil and criminal, to function.”
- “The goal and mission throughout our court system is excellence. It is vitally important for New York to maintain a cost-effective and consistent forum for complex business litigation.”
- “The Commercial Division is a model for the nation. A forum comprised of dedicated, informed judges who are provided with the resources to handle complex business disputes efficiently, effectively, consistently, and above all, fairly. I’m committed to ensuring that the Commercial Division remains a crown jewel in the New York State Court System.”
The video is available on several sites, including the court system’s YouTube channel. A full transcript is available on the court system’s website.
The Empire Center’s Bill Hammond has a terrific OpEd in today’s NY Post that echoes a message we’ve been saying for years: mainly, that New York has a problem with health taxes. From the OpEd:
“The habit hooked the state government 20 years ago this month, when the Health Care Reform Act took effect…
Over the 12 years from 2000 through 2011, lawmakers either hiked the HCRA taxes or created new ones 14 times — causing annual receipts to almost triple. The addiction had taken hold.
Including the nation’s heaviest state tax on cigarettes, HCRA now brings in $5.5 billion per year, making it the third-largest tax in the nation’s highest-taxed state.
Insidiously, the surcharges on health insurance are collected in ways that hide them from public view. Yet they add as much as 6.2 percent to a typical New York City resident’s insurance costs, compounding the pain of high premiums and deductibles.
One of the surcharges, known as the “covered lives assessment,” varies wildly from one part of the state to another. In 2016, it ranged from $10.24 per year in the Utica-Watertown region to $202.82 in New York City, a difference of 1,880 percent.”
The OpEd goes on from there, and we encourage to read it in full: http://nypost.com/2017/01/12/new-york-is-addicted-to-health-taxes/.
The Business Council will release our own legislative agenda next week, and you can be sure we will have more to say on HCRA when we do.
Marsha Gordon, president and CEO of The Business Council of Westchester, and member of our board, wrote an excellent OpEd in the Journal News which highlights the impact of the impending closure of Indian Point Energy Center and recognizes the plant’s owner, Entergy, for their significant contributions to the community.
From the OpEd:
“As we have long stated, the power generated at Indian Point has played a direct role in stabilizing electricity costs in Westchester and the State of New York. We have repeatedly called for the plants to be relicensed, a process that has been unnecessarily dragged out for 15 years and counting. We are disappointed that this lack of action, coupled with the related massive legal costs, has contributed to the decision to shut down the facility.
We recognize that for some members of the community and a number of elected officials, the announcement is good news. Unfortunately, the shutdown poses an entirely new set of questions with no certain answers, including the loss of nearly 1,000 high-paying private-sector jobs and massive tax losses to the local community and school district.
Gov. Cuomo has repeatedly called for the plant’s closure. We wait to learn how he intends to deal with the prospect of increased electric rates, the reliability of electric supply for Westchester, the Hudson Valley region and New York City, and the myriad of environmental and other issues the shutdown inevitably will bring.
We thank Entergy for its generosity and support of countless community groups, non-profit organizations and families across the area. In short, Entergy has consistently displayed the best of corporate citizenship.”
We whole-heartedly agree with the sentiments expressed by Ms. Gordon. Entergy is a longtime and valued member of our own organization, and we look forward to continuing that relationship.
In response to news of the closure, Entergy sent the following message to shareholders, we encourage you to click the link and read it: http://www.bcnys.org/inside/energy/2017/Entergy-Message-to-Stakeholders-Indian-Point.pdf.
For those who are unaware, or simply don’t remember, Richard Katzman was the CEO of Kaz Inc., once a major Columbia County employer. Way back in 2005 Richard Katzman–in a fit of extreme anti-development NIMBY-ism that’s become all too common– cheered when a plan to create a $300 million cement plant in Greenport was blocked by New York’s secretary of state, Randy Daniels. At the time, The Albany Business Review quoted Mr. Katzman as saying he was “delighted” by the decision. Mr. Katzman went on to say, “”My feeling and the feeling of other business people in the community is that this project was so out of scale with the existing mix of businesses and industries in the area that it would seriously hurt the quality of life and therefore hurt all our businesses.”
Mr. Katzman’s joy became all the more ironic when just three years later he announced his company was shutting down it’s manufacturing in Hudson, eliminating 300 jobs along the way. In announcing the closure, Mr. Katzman’s “delight” went away, instead he said this was a “hard decision” and “we’re not the bad guys here.” To add insult to injury, press reports at the time noted that Kaz’ manufacturing activity would be taken over by a Spokane, Washington-based business that “does the majority of its manufacturing in Mexico.”
So, why are we bringing this up now? Well, we couldn’t help but notice that incoming Senate Minority Leader Chuck Schumer held a news conference in Hudson touting a new development plan for the still vacant former Kaz Inc. site. That’s right, nearly a decade later, Mr. Kaz’s property that he was at one time “delighted” to protect, has been left to rot since he moved on to greener pastures. Unfortunately, stories like these are all too common in New York State.
Ginni Rommety, the CEO of IBM (a member of The Business Council) is out with a new opinion piece in the USA Today urging U.S. policy makers to focus on policy decisions that will help prepare today’s youth for tomorrow’s jobs. In the piece, which you can read in full here, Ms. Rometty specifically cites the P-TECH model as one to follow. We here at The Business Council have made no secret of our affinity for this program. If you’re unfamiliar, here is Ms. Rommety’s decription:
“But in many other cases, new collar jobs may not require a traditional college degree. In fact, at a number of IBM’s locations spread across the United States, as many as one-third of employees don’t have a four-year degree. What matters most is that these employees – with jobs such as cloud computing technicians and services delivery specialists – have relevant skills, often obtained through vocational training.
Indeed, skills matter for all of these new positions, even if they are not always acquired in traditional ways. That is why IBM designed a new educational model that many other companies have embraced – six-year public high schools combining a relevant traditional curriculum with necessary skills from community colleges, mentoring and real-world job experience. The first of these schools – called Pathways in Technology Early College High School, or P-TECH – opened five years ago in Brooklyn. It has achieved graduation rates and successful job placement that rival elite private schools, with 35% of students from the first class graduating one to two years ahead of schedule with both high school diplomas and two-year college degrees.
There will soon be 100 schools of this kind. Governors and mayors from across the political spectrum have become champions for this new approach, and at IBM, we have committed to work with states to open at least 20 more P-TECH schools in the next year.”
Ms. Rommety closes by saying that the onus should not fall on lawmakers alone. It is incumbent on stakeholders from across the public and private spectrum to work on developing curriculum and strategies that harness the potential of these “new collar” jobs and ensure our children and grandchildren acquire the skills necessary to fill these needs
A new poll, sponsored by the ride-hailing industry, shows 80 percent of people living outside of New York City support the legalization of services like Uber and Lyft. The poll found support remained consistent across political parties and different regions of the state. Residents of Westchester and Rockland counties had the highest support, approaching 90 percent. In the polling industry, they call those “Mother Theresa” numbers.
Support for ride-hailing has always been high. A Siena poll from earlier this year found nearly 70 percent of all New Yorkers supported legalization.
The Business Council of New York State, and our president, Heather C. Briccetti, have been extremely vocal in our support for the legislation. It was one of our top legislative priorities last year and will remain at the top of our list for 2017. But, what are the chances of it actually passing? That remains to be seen. Governor Cuomo and key members of his staff have been outspoken in their support, and leading members of the state Legislature have also said they would like to see it passed. Unfortunately, certain special interests are opposed to the bill as currently structured.
We remain hopeful the legislation will get approved next year and will do all we can to support its passage. Meanwhile, Uber recently relaunched an online petition aimed at showing the widespread support for ride-hailing. You can sign that petition here.
Earlier this week the Oregon Department of Consumer and Business Services released an analysis of workers’ comp rates across the country. Not surprisingly, New York, with a cost rate of $2.83 per $100 in payroll (almost a dollar more than the median rate), is near the bottom of the pack. In fact, our rate went from the fourth highest in the nation to the third highest.
From the Insurance Journal: “The authors of the report compared each state’s rates to the national median rate of $1.84 per $100 of payroll, which is a drop of less than 1 percent from the $1.85 median in the last report.
Rates ranged from a low of 89 cents in North Dakota to a high of $3.24 in California. California’s rates were 188 percent above the national median, according to the report.
The report is based on methods that put each state’s workers’ comp rates on a comparable basis by using a constant set of risk classifications.
The study used classification codes from the National Council on Compensation Insurance. To control for differences in industry distributions, each state’s rates were weighted by 2010 to 2012 Oregon payroll to obtain an average manual rate for that state.”
While each study of this nature computes costs differently, one thing is for certain, New York’s move from fourth most expensive in the nation to now third at $2.83 per $100 in payroll, paints a picture of a state with an enormously expensive comp system that is unquestionably detrimental to job growth and economic development.
The time for comprehensive workers’ compensation reform in NYS is now!
Have you seen former state Assemblyman and Suffolk County Executive Steve Levy’s OpEd in today’s Times Union?
It should be required reading for all state lawmakers. In the piece Mr. Levy lays out a list of policy initiatives that, if enacted, would reduce state and local government costs; provide the local government mandate relief promised, but never delivered, as part of the real property tax cap; and provide tax relief for employers and residents alike. Taken together, they would greatly improve the business climate of New York State. If many of these look familiar, it’s because we have been talking about them for years.
You can read the full OpEd here, but we’ve included a portion of it below.
- Enact pension reform by installing a 401(k) –type defined contribution pension for new public sector employees, as opposed to the present defined benefit pension, which keeps taxpayers on the hook for a guaranteed rate of return.
- Cap mandatory arbitration awards that have propelled law enforcement salaries over the $200,000 mark.
- Eliminate overtime from being factored into the base of a pension for all employee tiers. This practice has allowed for pensions to be dramatically inflated. Six-figure pensions are now quite common.
- End the Triborough Amendment that provides for automatic step salary increases in the public sector, even after a contract has expired.
- Control Medicaid benefits in New York to levels no greater than required by the federal government. New York taxpayers expend more than a billion dollars above the standards established by the Feds. For instance, while the Feds allow Medicaid to be made available to legal immigrants here more than five years, New York voluntarily waived the five-year threshold.
- End the Wicks Law. This relic from the early 1900s was originally enacted as a way to supposedly counter fraud in the letting of contracts. Instead of allowing the general contractor on public works projects to choose certain sub-contractors, the Wicks Law mandates that the subs be hired through a bidding process outside the control of the general contractor. It has been estimated by numerous budget experts that the law increases by up to 30 percent the cost of constructing public buildings in the state.
- End the Scaffold Law that holds building owners liable for accidents occurring at their construction sites even though they might not have been negligent in any way. Any employee contributory negligence is discounted. New York is the only state that has such absolute liability.
- End disability abuse that allows for some workers to get 3/4 of their pay tax-free if injured on the job. This has resulted in some employees (mostly in law enforcement) getting more staying home than if they are actually working, thereby eroding incentive to get back to work. Also end the “presumption” that heart and lung ailments are necessarily job related.
- End sick day abuse. Some local governments allow for employees to cash out huge amounts of unused sick days upon retirement. Some Long Island police, for example, get 26 sick days a year, and many of those not used can be banked for payment upon retirement. The employee is paid for the day at the salary rate he or she has in the last year of service. This has led to some employees getting severance packages of almost a half-million dollars. The New York City policy for sick days of “use it or lose it” should apply.
- End 20-year retirements. While the idea of allowing “20 years and out” policies in New York may have in the past been palatable, it is hard to justify such a policy with folks living so much longer today. By the time an officer age 23 reaches 83, the taxpayer could be funding one active and three retired officers (through their pensions) for that one position. It is simply unsustainable.
New York’s business community is making strategic investments in education. Businesses can send an important signal about their priorities by supporting the Common Core standards. Employers in every industry sector and every region across the state are showing their support for college and career readiness. In the coming weeks, the Business Council of New York State and the Public Policy Institute of New York State will launch an occasional blog series, “Spotlight on Employer Support for College and Career Readiness,” showcasing our members’ work in their own communities. Are businesses and employers in your region working with educational institutions to increase student achievement and preparedness?
We’d love to hear about it. Please contact our director of communications at firstname.lastname@example.org.
Please click here to read part fourteen.