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The Massachusetts Legislature last week passed and sent to Governor Maura Healey a $561 million tax-relief bill that represents a step toward ensuring that the commonwealth remains competitive for employers and affordable for the people who live and work here. 

AIM has been lobbying for the bill since Governor Healey introduced the tax-relief debate in a speech to the association in January. 

July 27 | AIM Testimony to conference committee: An Act to improve the Commonwealth’s competitiveness, affordability, and equity

June 30 | AIM Testimony to conference committee: An Act to improve the Commonwealth’s competitiveness, affordability, and equity

AIM Testimony in Support of Tax Relief as part of the FY24 budget debate

The legislation, like all major initiatives, reflects compromise and negotiation but addresses several tax issues where Massachusetts has been an outlier among the 50 states.

Those issues include a reduction in the short-term capital gains tax from 12 percent to 8.5 percent and the doubling of the estate tax threshold from $1 million to $2 million.  A tax credit would offset the so-called cliff effect of the estate tax, in which an entire estate is taxed once it hits the threshold, not just the amount over it.

Another change aimed at businesses would overhaul how Massachusetts calculates taxes owed by multistate companies. Currently, the apportionment system factors in property, payroll and sales, and the bill would replace that with a simplified version that uses only a company’s sales.

AIM and its 3,400 member employers commend and thank the Massachusetts Legislature for coming to agreement on a bill that will benefit a wide range of people and businesses throughout the commonwealth. We respectfully urge Governor Healey, who filed her own tax-reform bill in March and who has been a partner with AIM, to sign the consensus legislation. 

Brooke Thomson, the President of AIM, called the changes “pro-growth policies.”

“At a time when the cost of living in Massachusetts exceeds that of most other states, this package wisely identifies ways to help cut costs for working families, support our businesses, boost housing supply, and address outliers in the tax code. Reducing the short-term capital gains rate was one of AIM’s top priorities for the legislative session, and we strongly support this, and other necessary reforms included in the bill,” Thomson said.

AIM President Brooke Thomson Comments on Tax-Relief Bill.

At the same time, it’s important to recognize that the tax bill alone will not solve all the cost and competitiveness challenges that threaten the economic health of the commonwealth. Massachusetts may have an enviable infrastructure of technology, life sciences, advanced manufacturing, health and other industries, but we remain vulnerable to its prohibitive cost structure and complex regulatory environment.

We must continue to work with the governor and the Legislature to ensure that state policies, and the tax code in particular, support the continued role of Massachusetts as a global center of business and commerce. Out team at AIM looks forward to continuing to partner with policymakers to do just that.

AIM will provide details of the tax bill and what it may mean to your business in an AIM Alert this week. I invite you to contact Sam Larson, Vice President of Government Affairs, slarson@aimnet.org, with questions and comments.

Massachusetts is trying to transform a humanitarian crisis into an economic opportunity, but the commonwealth needs the help of the federal government to make it happen.

That’s why AIM last week joined 20 other Massachusetts business groups in supporting Governor Maura Healey’s request that the federal government expedite work permits for thousands of migrant families currently being housed in the state’s shelter system. In a letter to Homeland Security Secretary Alejandro Mayorkas, the business groups urged the government to accelerate the processing of work authorizations and to allow for provisional work authorizations while the administrative process moves forward.

The Biden Administration took a first step toward responding to those concerns Wednesday when it announced the expansion of a form of humanitarian relief to Venezuelans already in the United States, making hundreds of thousands more people eligible for work permits. Governor Healey said last week that the federal government should extend Temporary Protected Status to Haitian and Central American migrants who have arrived more recently and take additional steps to accelerate work-permit approvals.

The business community’s letter cited a recent AIM survey showing that 74 percent of Massachusetts employers have job vacancies, including many who report that vacancies represent more than 10 percent of their work forces. The letter argues that it is “critical to these families, our communities, and our economy that these migrants are allowed to work as quickly as possible.”

Similar pleas have been issued by Attorney General Andrea Campbell and the entire Massachusetts Congressional delegation.

There are currently some 6,500 families in the state’s shelter system, and these numbers will continue to grow as it is estimated that more than 1,000 additional families could seek shelter per month.

“…(D) due to circumstances outside their control, these new arrivals are unable to work to support themselves and their families and free themselves from a shelter system in crisis. While the unemployment rate remains low in Massachusetts, employers continue to look for workers and cite the inability to find talent to fill open jobs as a top concern for economic growth and competitiveness,” said the letter, which was signed on behalf of AIM by President Brooke Thomson.

“As representatives of the business community, we also add our voices in support of additional federal funding to address this crisis and other changes to federal immigration policy that would both mitigate the current crisis while simultaneously addressing workforce shortages in the Commonwealth,” 

We have the rare opportunity to turn a challenge into an opportunity. We have employers who need workers and migrant families who need an opportunity to leave the shelter system. Let’s not let bureaucracy stand in the way of finding a solution.

Massachusetts desperately needs 200,000 new housing units. It’s an issue with significant implications for AIM members because soaring prices and limited availability are driving some of our best and brightest employees to decamp for less expensive regions of the country.

Many of those regions are thriving because they are leaving everyone else in the dust on housing construction.

A recent listing of large, medium and small US metro areas building the most housing includes no regions in Massachusetts or in New England. The large metro areas building the most housing units are Austin, Texas; Raleigh, North Carolina; and Nashville, Tennessee. The fastest growing mid-sized markets are Greeley, Colorado, and Provo, Utah.

At the state level, Utah, Idaho and Colorado, along with Sun Belt destinations like Texas and Florida, lead the U.S. in the rate of new housing development.

The person charged with addressing the housing issue in Massachusetts is former Worcester City Manager and state senator Edward Augustus, who in May became secretary of the newly formed Executive Office of Housing and Livable Communities. He is keenly aware of the need to increase housing supply throughout the commonwealth.

Secretary Augustus said last week that the Healey administration is considering a menu of housing policies, including encouraging the creation of accessory dwelling units, creating seasonal designations for communities affected by summer tourism, establishing a commission on the future of senior housing and upgrading existing housing stock to make it more accessible for people with disabilities.

AIM members will have the opportunity to hear directly from the housing secretary on October 5 when Secretary Augustus will headline a Commonwealth Conversation at Putnam Investments in Boston. This is a conversation for any employer who has heard a valued employee say: “I love working for this company, but my family can’t afford a house here.”

REGISTER FOR COMMONWEALTH CONVERSATION

Housing is a complex issue. It touches everything from the migrant crisis in Massachusetts to transportation to permitting and land use. In many cases, it defines the character of the communities in which we live.

The creation of an Executive Office of Housing and Livable Communities and the appointment of Secretary Augustus are laudable first steps. Now, It’s time for all of us to roll up our sleeves and help him out.

Gus Faucher, senior vice president and chief economist of PNC Financial Services Group, will keynote a sold-out AIM economic outlook forum next week that is sure to touch on the persistent workforce challenges faced by Massachusetts employers. Having just celebrated Labor Day 2023, no single issue remains more prevalent for AIM members than the task of finding employees with the skills needed to grow their businesses.

The story of how this event became reality underscores the unique way AIM is able to work with its sponsors and members – in this case, PNC Bank – to address key issues that affect the growth of the Massachusetts economy.

Discussions about the event began earlier in the year, soon after I used my State of Massachusetts Business Address to say that the Massachusetts economy is sailing into a profound demographic shift combined with a fundamental change in the way people approach work. The result is an economy that could leave employers gasping for workers at the very time that the commonwealth seeks to solidify its role as a global center of innovation, commerce, and technology.

Saskia Epstein, PNC’s Boston-based Senior Vice President of Client and Community Relations, has been focused on many of the same issues. The company’s signature philanthropic initiative PNC Grow Up Great is an early childhood education program designed to give children a good start in life and allow them to participate in the commonwealth’s economic growth. PNC and AIM are both members of the Massachusetts Business Coalition for Early Childhood Education and Care, advocating for investments in childcare as an economic driver.

Saskia had conversations about a potential event with Brooke Thomson – then Executive Vice President of Government Affairs at AIM, now President of the organization – and Stephanie Swanson, who succeeded Brooke as head of Government Affairs. PNC secured Gus Faucher to speak, and the event was set up at WBUR’s CitySpace in Boston.

The date of the event is significant because September 14 is the 257th day of the year when PNC shines a spotlight on Project 257®: Accelerating Women’s Financial Equality. Launched in 2021, Project 257® is designed to help close the 257-year economic gender gap identified in the World Economic Forum’s 2020 Global Gender Gap Report. Based on that report, it would take 257 years for women to catch up to men economically if more wasn’t done to accelerate progress. Central to this work is the passion and dedication of PNC’s more than 50 designated Women’s Business Development Market Champions in each of PNC’s coast-to-coast Regional President markets and its 5,000 PNC-Certified Women’s Business Advocates (WBAs).

Gus Faucher serves as the principal spokesperson on all economic issues for PNC. He is frequently cited in international, national, and regional media outlets including The Wall Street Journal. He has appeared on ABC World News, CBS Evening News, NBC Nightly News, and Nightly Business Report, and is regularly featured on CNBC.

Faucher noted recently in a mid-year Economic and Investment Outlook that the US economy, though resilient, faces headwinds as inflation continues to run higher than the Federal Reserve’s target of 2 percent.

He believes that the significant rise in interest rates over the last few months will move the economy into a recession starting in early 2024. He expects this downturn to be mild, however, given that consumer balance sheets are generally in good shape, which means consumers may be less inclined to cut back on spending. Employers in the current tight labor market are likely to be reluctant to lay off workers, which may also contribute to limiting a downturn in consumer spending.

At the same time, PNC’s latest semi-annual survey of small and mid-sized businesses, which concluded Aug. 9, shows that business owner optimism about the outlook for their own business in the next six months has reached a 21-year high amid strong expectations for sales, profits, and demand.

Thursday’s economic outlook discussion will also include insights from a distinguished panel of Massachusetts business and government leaders – Yvonne Hao, Secretary of Economic Development; Nicole Obi, President and CEO of the Black Economic Council of Massachusetts; and Donna Levin, CEO of the Arthur M. Blank School of Entrepreneurial Leadership. The discussion will be moderated by WBUR radio host Tiziana Dearing.

The economic future of Massachusetts will require equal measures of business competitiveness and an affordable/workable environment for our employees who live and work here. We look forward to hearing from Gus Faucher, Secretary Hao, and our guests about the best way to strike that balance.

By John Regan, CEO, and Brooke Thomson, President

It’s time for tax relief in Massachusetts. 

Governor Maura Healey has proposed it. Both chambers of the Massachusetts Legislature have approved a version of it. The business community and citizens of Massachusetts deserve it to ensure that the commonwealth remains competitive for employers and affordable for the people who live and work here. 

A House-Senate conference committee continues to negotiate over exactly what the final bill will be. But at a time when 10 competing states have lowered their personal income tax rates in a bid to attract business and talent, Massachusetts cannot afford to fall behind in the race to maintain its status as a global center of commerce. 

Governor Healey initiated the 2023 tax relief conversation during a speech to AIM members and friends at our January Executive Forum. This association has since worked diligently, both publicly and privately, in support of measures to ease the tax burden on businesses of all sizes and on our fellow citizens:

July 27 | AIM Testimony to conference committee: An Act to improve the Commonwealth’s competitiveness, affordability, and equity

June 30 | AIM Testimony to conference committee: An Act to improve the Commonwealth’s competitiveness, affordability, and equity

AIM Testimony in Support of Tax Relief as part of the FY24 budget debate

Massachusetts may have an enviable infrastructure of technology, life sciences, advanced manufacturing, health, and other industries, but the commonwealth remains vulnerable to its prohibitive cost structure and complex regulatory environment. The number of people leaving Massachusetts is at a 30-year high, with 110,000 residents picking up stakes and moving to other states between April 1, 2020 and July 1, 2022. The outflow of people, exacerbated by the shift toward remote work, is one reason that AIM member employers continue to struggle to find the workers they need to grow. 

An AIM survey taken this summer revealed that 74 percent of employers currently have vacancies. Thirty-five of the 196 companies that participated said the vacancies comprised 10 percent or more of their workforce. 

We know AIM members are still struggling with workforce shortages and have challenges hiring qualified candidates. One of the simplest ways to solve this problem is to provide immediate tax incentives to keep workers in Massachusetts – including through increased housing production – and avoid a further drain of our talent pool.   

The state can comfortably afford these necessary reforms. A final version of tax relief legislation that pulls from the governor, House, and Senate proposals can be balanced and sensible, and it can provide relief to individuals and support for businesses as economic engines that exist throughout our state. Policymakers have already accounted for the fiscal impact of the tax cuts in the state budget they passed in July, and the revenue retained by keeping businesses and working families in the Commonwealth will far outpace the moderate revenue cuts. 

AIM supports tax relief and urges the Legislature to move a compromise bill to the governor’s desk as soon as possible. We strongly encourage our members to contact their local elected officials to advocate for the swift passage of tax relief that simply cannot wait.  

At a time when women still make up only 8 percent of top leadership positions at the 75 largest Massachusetts companies, AIM’s HR Solutions unit is going the extra mile to support female CEOs and supervisors.

How? By creating two courses exclusively for women.

The C-Suite Circle for Women will give female business owners and chief executives the opportunity to develop best management practices and establish networks with other women running successful companies. The program will start with a one-hour virtual meet-and-greet in September.  October, November, and December will include focused training sessions with learning objectives, and January, February, and March will provide mastermind sessions where the participants can discuss real-life situations and gain insight from each other.

“A growing number of female CEOs have expressed interest in creating a community exclusively for women to discuss the unique challenges they face in managing companies, managing people, and managing expectations,” said Kyle Pardo, Executive Vice President of AIM HR Solutions.

Separately, the popular Supervisor Essentials course will have a session exclusively for women starting in March 2024. Female supervisors often face unique challenges, such as navigating gender bias and stereotypes, while striving to establish their authority in traditionally male-dominated industries. They may also grapple with the expectations of balancing leadership roles with societal norms for having difficult conversations.

Our female-focused supervisor course is designed to equip those supervisors and managers with the skills and knowledge they need to succeed in today’s workplace. With topics ranging from workplace conflict and communication skills to performance appraisals and problem-solving, the program covers everything you need to know to lead your team effectively.

Both sessions are consistent with this association’s commitment to ensuring that the widest possible group of people share in the economic prosperity of the Commonwealth. That commitment also includes our Pink Slip initiative to bring women and caregivers back into the workforce and the AIM Business Connect program that is connecting members to companies owned or managed by women and people of color.

For more information, please review the AIM HR Solutions Learning and Development catalog.

It was heartening to read a recent Boston Globe profile of Bill and Joyce Cummings, two people who exemplify the best of the Massachusetts business community.

Bill is the founder of Cummings Properties, an AIM member company that owns more than 11 million square feet of office and other commercial buildings in eastern Massachusetts. He and his wife, Joyce, working through the Cummings Foundation, have established an extraordinary, perhaps unprecedented, legacy of philanthropy in Massachusetts. The foundation has donated $102 million during the past 12 months alone to hundreds of Massachusetts organizations working in human services, education, health care, and social justice.

Their gifts over the years have included transformational donations of $12.5 million to what was then the Benjamin Franklin Institute of Technology, $10 million to Salem State University, and $50 million to the Paul Farmer Collaborative. The donation to what is now Franklin Cummings Tech, also an AIM member, allowed the school to raise an additional $15 million as it plans to build a new campus on Roxbury.

It was that sort of philanthropy that prompted this association to honor Bill and Joyce with the AIM Vision Award in 2018. Bill spoke to hundreds of AIM members at our annual meeting about the importance of businesspeople supporting organizations in their communities. He also autographed copies of his memoir, Starting Small and Making It Big: An Entrepreneur’s Journey to Billion-Dollar Philanthropist.

Bill and Joyce in 2011 became the first people in Massachusetts to sign the “Giving Pledge,” launched by Bill and Melinda Gates and Warren Buffett to encourage billionaires to give away at least half of their wealth.

Melinda Gates, said, “My friend Bill Cummings writes that he rejects the phrase ‘give until it hurts’ because he and his wife, Joyce, think the better advice is to ‘give until it feels good.’ It’s a fitting observation from a man whose extraordinary business success is matched only by his commitment to lifting up those around him.”

Bill told The Globe: “I don’t want to just stop working, but neither do I want to work to just accumulate money … What else are you going to do with it? Our kids have more than they need. … It’s the opportunity to do things to continue to make a difference.”

Few people continue to make more of a difference than Bill and Joyce Cummings.

Massachusetts businesses and other taxpayers will have to wait a little longer for relief.

The Legislature last week approved and sent to Governor Maura Healey a $56.2 billion budget for Fiscal Year 2024. But a legislative conference committee continued to debate a package of tax-reform measures that, for most of the year, had been attached at the hip to the budget.

The tax changes are expected to be debated after the Legislature returns from its August holiday. The budget passed last week sets aside $581 million for tax cuts.

Senate Ways and Means Chairman Michael Rodrigues said the state will have to live with “a hole in the budget” while details of the tax plan are hammered out.

AIM supports parts of the House of Representatives’ proposals for tax reforms, a version that would reduce the tax on long-term capital gains from 12 percent to 5 percent over two years and raise the threshold for the estate tax from $1 million to $2 million. Massachusetts is one of just 12 states with an estate tax.

Both plans in the legislature would also increase the child tax credit, double a state tax credit that low-income seniors may claim on their property taxes or rent to $2,400 and increase a state tax deduction for all renters from $3,000 to $4,000.

Meaningful tax relief is essential to making Massachusetts competitive for business and affordable for the people who live and work here. Business costs and the cost of living remain prohibitive in a commonwealth that has seen both companies and tens of thousands of people relocate to other states.

The 3,400 members of AIM look forward to the final tax reform bill.

Editor’s note: Associated Industries of Massachusetts Chief Executive Officer John Regan spoke recently on Comcast Newsmakers about the elements required to strengthen the Massachusetts economy. Regan told host Nathan O’Leary that the commonwealth must address the twin challenges of competitiveness and affordability to ensure that Massachusetts will have the people it needs to thrive in the future.

Watch the Video

One of my favorite things to do each month is to read the comments provided by Massachusetts employers who participate in AIM’s monthly Business Confidence Index survey.

These comments offer a valuable window into the mindset of Massachusetts job creators as the economy moves through a tumultuous period.

The BCI remained flat during June amid the blur of a resilient economy, stubborn inflation, and a pause by the Federal Reserve. The Index gained 0.1 point to 49.7, just below the 50 mark that separates optimistic from pessimistic outlooks.

The clearest takeaway from the employer comments is that the Federal Reserve’s 18-month campaign to tame inflation has so far not thrown the economy into a recession nor has it significantly affected a persistently tight labor market.

“Our primary problem remains attracting qualified staff members,” wrote one employer in the retail/wholesale industry.

“Inflation continues to rise faster than the economy can absorb it and there continues to be a lack of qualified employees,” said another company in the health-care business.

A third employer added: “Tight labor market is continuing amid strong construction demand through 2023 into 2024.”

The struggle to find workers should come as no surprise. The unemployment rate in Massachusetts dropped to 2.8 percent in May, significantly less than the 4 percent benchmark traditionally considered full employment. Meanwhile, average hourly earnings across the country grew at a hefty 4.4 percent pace in June as companies offered more money to get the people they needed.

One employer noted the exodus of thousands of Massachusetts residents in recent years and said the commonwealth must create an environment in which workers can afford to remain here.

“I am very concerned about the affordability of housing for middle-class employees and young families.  Our political leadership has done little to improve the situation … Create incentives/remove disincentives for companies to stay in Massachusetts. The New Hampshire border is not that far away. With remote work being encouraged and a lower tax state nearby, anyone thinking about expanding their business has to consider a move over the border,” the employer wrote.

The bottom line is that the economy appears to have shrugged off higher interest rates to an extent few expected. Even better, last week’s report that inflation has abated to 3 percent provides fresh evidence that an economic soft landing for Massachusetts employers remains within reach.

The 114th NAACP annual convention set to take place in Boston from July 26-August 1 will provide the city and the entire commonwealth an opportunity to showcase their commitment to inclusive economic growth and social justice.

Associated Industries of Massachusetts plans to support the convention as part of our ongoing effort to ensure that everyone shares in the economic prosperity of the Commonwealth.

The convention will mark the first time in four decades that the nation’s oldest civil rights organization has held its annual gathering in Boston. It is an event that will be charged with immediacy in the wake of the US Supreme Court decision two weeks ago striking down affirmative action in college admissions.

The convention will focus on the theme of “Thriving Together,” and will bring national policymakers and community leaders together to “celebrate the Black community’s collective power,” according to the NAACP.

The convention will also feature the annual Afro-Academic, Cultural, Technological, and Scientific Olympics (ACT-SO), which awards Black students around the country for achievements in the humanities, business, science, and performing arts; the Cinematic Shorts Competition; and the Spingarn Freedom Fund Awards Dinner honoring Hazel Dukes, a civil rights activist and former NAACP president. Former Secretary of State Hillary Clinton will present Dukes with the Spingarn Medal, the association’s highest honor.

“The attention, the energy of this convention will forever leave its mark on the infrastructure, the community building, and the determination of Boston to be a city that leads the way,” Boston Mayor Michelle Wu said at a preview event on June 26.

The mayor is asking businesses to consider providing financial support to help delegates with the high cost of traveling to Boston and staying here. Companies interested in participating may contact AIM President Brooke Thomson (bthomson@aimnet.org) or me (jregan@aimnet.org).

AIM and its 3,400 members believe the NAACP convention reinforces our own goal of ensuring that business remains a force for good in Massachusetts and creates an economy that leaves no one behind. The association has in recent years launched several initiatives to make that goal a reality, including AIM Business Connect, which brings together businesses owned or operated by people of color with fellow AIM members seeking to diversify their supply spend; and Pink Slip, an effort to help employers develop policies to attract back to the workforce the large numbers of women and caregivers who left during the COVID-19 pandemic.

We welcome the NAACP to Boston and wish the organization the best on its 2023 annual convention. We hope the business community will join us in participating.

The retail sector in 2023 embodies all the contradictions of the broader US and global economies.

On the one hand, retail sales in the US unexpectedly rose 0.3% month-over-month in May, following a 0.4% increase in April, and beating forecasts of a 0.1% decline. The data signaled that consumer spending remains resilient, despite higher inflation and interest rates. Book-store chain Barnes and Noble even announced this month that it plans to open new stores in Wareham and Natick.

On the other hand, anyone who has shopped recently for a toaster, or a new pair of socks knows that the retail shakeout has left a dwindling menu of options for shoppers. Sears? Nope. Kmart? Long gone. Bed, Bath and Beyond? Get there before the doors close. Christmas Tree Shops? Closing two stores on its home territory of the Cape.

There is no question that retailers face a challenging environment three years after the COVID-19 created an existential threat to many stores. Inflation and rising interest rates continue to erode the purchasing power of consumers. Severe labor shortages (the Massachusetts unemployment rate dropped to 2.8 percent last month) have left retailers curtailing hours and struggling to serve customers with skeleton crews. 

E-commerce is also a factor, though it is increasingly difficult to separate online-only sales from Internet sales generated by Wal-Mart, Home Depot and other large bricks-and-mortar chains. E-commerce sales in the first quarter of 2023 accounted for 15.1 percent of total sales compared to 14.80% last quarter and 14.50% last year. This is higher than the long-term average of 6.08%.

The biggest increases in last month’s retail report were seen in sales of building materials and garden equipment (2.2%) and motor vehicles and parts (1.4%). The purchases were also higher at food services and drinking places (0.4%); general merchandise stores (0.4%); furniture stores (0.4%); food and beverages stores (0.3%); sporting goods, hobby, musical instrument, & bookstores (0.3%); and electronics and appliances (0.2%). Sales were flat at health, personal care, and clothing stores and fell 2.6% at gasoline stations and 1% at miscellaneous store retailers. 

The resilience of retail sales in the face of uncertain economic conditions is certainly good news, but the long-term restructuring of malls and downtown shopping areas will continue to change the economic landscape in Massachusetts.

In the meantime, anyone know where I can buy a good pair of socks?

Change has the unique power to focus our thinking simultaneously on the past and the future.

That was certainly the case for me last week when the AIM Board of Directors approved a leadership transition plan under which I will step down as President and CEO of AIM at the end of the year. My departure, and the elevation of Brooke Thomson first to president and then to CEO, was in the planning stages for months, but the public announcement evoked a flood of thoughts about where this incredible organization has been and the bright future that awaits it.

AIM has been my professional home for more than 20 years. I could not be prouder of what our team has accomplished both with, and on behalf of, our members.  Collectively, we have advocated for policies and investments that assure the commonwealth remains competitive in a global marketplace and we have given companies the tools necessary to be employers of choice.

With the support of a gracious Board of Directors, we have bolstered AIM’s position as the state’s pre-eminent business advocacy and service organization, served as a voice for the employer community, expanded the award-winning AIM HR Solutions business, built a comprehensive team with the skills necessary to support AIM’s member organizations, and made AIM a leader on diversity.

It would be impossible to reflect on my years as President without referencing two global events that ultimately became touchpoints for making AIM into a new type of business association.

The first, of course, was the unprecedented COVID-19 pandemic and resulting economic shock that took place in the spring of 2020. I told our board of directors at the time that I kept searching my desk for the manual on economic survival in global pandemics, but there was none. There was, in fact, no manual for anything that happened during the next three years.

But my enduring take-away from COVID is not the crisis itself but the heroic response that AIM mounted to help Massachusetts employers comprehend the incomprehensible and find ways to survive. Confined to home offices throughout Massachusetts, the AIM staff rallied employers on everything from defining an essential business to making much-needed personal protective equipment to navigating potential mask/vaccine mandates to bringing women back to the workplace to resuming in-person activities.

It was an effort that involved every sector of the statewide business association – government affairs, AIM HR Solutions, A.I.M. Mutual Insurance Company, membership and marketing. We went from answering a dozen or so member calls a day to several hundred. AIM staff members pulled all-nighters to get members the information they needed in what I can only describe as a remarkably gutsy effort that forever redefined the relationship between this association and its members.

The second global event was the racial awakening that followed the murder of George Floyd in Minneapolis on May 25, 2020. The tragedy manifested historical racial and ethnic disparities in the United States along with the shameful economic wealth gap that continues to prevent many of our fellow Massachusetts citizens from sharing in the prosperity of economic growth.

We at AIM realized that the world of tomorrow cannot look like the world of today.

The association issued nine commitments on June 13, 2020, to address racial inequality, including one to support individuals of color in business, particularly by encouraging the formation and continued success of businesses they own. That commitment gave rise to AIM Business Connect, the association’s successful initiative to match businesses owned or managed by people to color with fellow AIM members seeking to diversify their supply spends. AIM Business Connect, and a related partnership with the Boston Impact Initiative, are working to ensure that the full variety of Massachusetts businesses and business owners have access to the commonwealth’s economic prosperity.

AIM has emerged from all of this as an association with growing membership, solid financials and a clear vision that business is a force for positive change to ensure a better life for everyone. That vision will burn brightly with Brooke Thomson, a force of nature who believes that everything we do at AIM should be grounded in the advancement and support of our members and customers throughout the state. Brooke is equally comfortable speaking to a small manufacturer in the Berkshires and Governor Maura Healey and she will continue to bring those parties together for the benefit of the commonwealth.

All this is heady stuff for a kid from Dorchester who went to Boston Latin. Given that background, I’m left with the old Latin adage:

Tempora mutantur, nos et mutamur in illis – Times are changed; we also are changed with them.

Associated Industries of Massachusetts will join with our fellow citizens next Monday to celebrate Juneteenth, commemorating the day in 1865 that the last enslaved people held in Galveston, Texas, learned of their freedom, two years after President Abraham Lincoln issued the Emancipation Proclamation.

The day is both an historical observance and an opportunity to reflect on the accomplishments of people of color here in Massachusetts and throughout the nation. AIM, as an organization committed to diversity, equity and inclusion, celebrates the day as a reminder of the importance of creating an economy that provides opportunity for all the citizens of Massachusetts.

Because Juneteenth is still a relatively new federal holiday, many companies are looking to find appropriate ways to observe the day.

Here at AIM, we plan to gather virtually for an open discussion led by our staff DE&I Council on the video: Legacy of Courage: Black Changemakers in Massachusetts Past, Present, and Future. The DE&I Council is a dynamic group of AIM staff members working to ensure that our organization meets its ambitious goals to ensure that everyone is welcomed and affirmed throughout the organization.

AIM member companies are planning a variety of celebrations including lunch-and-learn programs, virtual gatherings, service projects and donations to organizations that promote equity and social justice.

Several companies will use the observance as “a day of reflection and to celebrate Black communities, particularly in the neighborhoods where they live and work.”

Perhaps the best way to mark Juneteenth is to support Black-owned businesses in your community and throughout Massachusetts. The AIM Business Connect initiative allows members to contact scores of Black-owned companies that provide everything from transportation to event planning to laboratory supplies.

Juneteenth was first recognized as a federal holiday in 2021, when President Joe Biden signed the Juneteenth National Independence Day Act into law after the efforts of Lula Briggs Galloway, Opal Lee, and others. Former Governor Charlie Baker signed the law making Juneteenth a holiday in Massachusetts in July 2020.

The number of workers quitting their jobs has returned to pre-pandemic levels, a sign of hope for employers amid an otherwise stubbornly tight labor market.

The US Bureau of Labor Statistics reported last week that 3.8 million Americans walked out the door in April. The 2.4 percent “quits” rate is just one-tenth of a percentage point higher than it was at the dawn of the pandemic in February 2020 and about the same as the rate for 2019.

Even leisure and hospitality workers — once the poster child for the quits boom — are returning to pre-pandemic norms. Axios reports that the quits rate in this segment hit 4.6% in April — close to the January 2020 rate of 4.4%, and well below the peak 5.8% last summer.

“We are pretty much back to a strong, robust labor market, but one that is no longer overheating,” says Julia Pollak, an economist at ZipRecruiter.

That’s the good news.

The sobering news is that the same government Job Openings and Labor Turnover Survey found that the number of job openings nationally increased by 358,000 to 10.1 million. Job openings increased in retail trade (+209,000); health care and social assistance (+185,000); and transportation, warehousing, and utilities (+154,000).

Hires slightly outpaced separations, 6.1 million to 5.7 million.

In Massachusetts, the unemployment rate dropped from 3.5 to 3.3 percent during April as jobs were created across education, health services, information and business services. Massachusetts employers have created a respectable 99,100 jobs during the past 12 months.

The conclusion appears to be that while 10 interest-rate increases from the Federal Reserve have yet to change the fundamentals of the employment market, it may have changed worker attitudes about their ability to find new jobs.

Kyle Pardo, Executive Vice President of AIM HR Solutions, which works with hundreds of AIM members, believes that job applicants are still in the driver’s seat in terms of wanting remote/hybrid work and being able to work for companies in other states.  At the same time, Kyle says layoffs at several high-profile technology companies may be encouraging employees to stay put rather than being the newest person hired at another organization.

The danger, of course, is that a tight labor market drives up wages and fuels inflation. It will be interesting to see how the Fed reacts to these numbers when it meets later this month.

President Joe Biden and US House Speaker Kevin McCarthy did the right thing Saturday in reaching an agreement in principle to raise the nation’s debt ceiling, limit federal spending and avert a potentially catastrophic US default.

It’s now time for Congress to do the same.

Support from both Democrats and Republicans will be needed to win congressional approval before a June 5 deadline. Both the president and the speaker face the challenge of shepherding their compromise through objections from the left and right flanks of their parties.

The House of Representatives is due to vote on the agreement later today.

“The agreement represents a compromise, which means not everyone gets what they want,” President Biden said in a statement late Saturday night. “That’s the responsibility of governing.”

Central to the package is a two-year budget deal that would hold spending flat for 2024 and impose limits for 2025 in exchange for raising the debt limit for two years, pushing the volatile political issue past the next presidential election. The deal holds nondefense spending in 2024 at roughly its 2023 level and increases it by 1 percent in 2025, in part by redirecting funding from other programs. The agreement would protect the military and entitlements like Social Security and Medicare from spending cuts imposed on other parts of government.

About $10 billion out of the $80 billion that Mr. Biden previously secured to help the Internal Revenue Service would be cut.

New work requirements would be imposed on some recipients of government aid, including food stamps and the Temporary Assistance for Needy Families program. Among other things, the agreement would limit how long people under 54 without children could receive food stamps, although those limits would expire in 2030 unless renewed by Congress. 

Some of the billions of dollars left over from the Covid-19 pandemic relief package passed shortly after Mr. Biden took office would be clawed back.

And the agreement puts in place changes in the National Environmental Policy Act that will designate “a single lead agency” to develop economic reviews, in hopes of streamlining the process.

The United States runs a budget deficit, which means it does not take in enough money through taxes and other revenue to fund its operations (the government has run a deficit averaging nearly $1 trillion every year since 2001). As a result, the country sells Treasury debt to finance its operations — using borrowed money to fund military salaries, retiree benefits and interest payments to bondholders who own U.S. debt.

The debt ceiling debate is not about whether the US should spend money in the future but whether the nation should pay its bills for money already spent. Since 1960 Congress has increased the ceiling seventy-eight times, most recently in 2021. Forty-nine of these increases were implemented under Republican presidents, and twenty-nine were under Democratic presidents. 

The nation bumped up against its $31.4 trillion debt limit in January. The Treasury Department has been able to keep the country paying its bills for by undertaking what it calls “extraordinary measures.” 

Economists warn that the nation risks a financial crisis, potential default and other immediate economic pain if lawmakers do not raise the limit before the Treasury Department exhausts its ability to buy more time.

That in itself should be enough to persuade Congress to do the right thing.

Editor’s note – An editing error last week resulted in the misspelling of the name of AIM Vice Chair Gregory Buscone. Mr. Buscone was re-elected to both the Board of Directors and Executive Committee.

The AIM membership met virtually last Thursday to elect leaders of the association and approve modernizing the documents and procedures we use to govern AIM.

Patricia Begrowicz, President of Onyx Specialty Papers in South Lee, won re-election to a second, one-year term as Chair of the AIM Board of Directors. Gregory Buscone, Executive Vice President and Senior Commercial Banking Officer at Eastern Bank in Boston was elected Vice Chair, while Donna Latson Gittens, Principal and Founder of MORE Advertising in Watertown, was re-elected as Clerk of the Corporation.

Members re-elected eight members of the Board of Directors (approximately one-third of the board stands for election each year):

• Mr. Busconi
• John Doucette, Executive Vice President, Head of Commercial Banking/MA  M&T Bank
• Joanne Hilferty, President and CEO Morgan Memorial Goodwill Industries, Boston
• James McCarthy, President and CEO, R.H. White Companies, Auburn
• Torrance Childs, Executive Vice President, Silicon Valley Bank, Boston
• Christa Hagearty, President and CEO, Dependable Cleaners, Quincy
• Krina Patel, Senior Director/Head of U.S. State & Local Government Affairs, Biogen, Cambridge
• Anthony Samuels, President and CEO, DRB Facility Services, Boston

Four new members of the board were also elected:

• Annemarie Abdo, Vice President of Human Resources, Catania Oils, Ayer
• Daniel Kenary, CEO and Co-Founder, Mass Bay Brewing Company, Inc., Boston
• Jeevan Ramapriya, Managing Director – Public Policy and Government Affairs, State Street Corporation, Boston
• Elaine Shannon, Lead Site Executive, Takeda, Lexington

Three people were elected to the board as Special Emeritus members in recognition of their many years of contributions to AIM:

• Peter Chase
• William Blanker
• Samuel Cabot

Separately, members approved revised association by-laws that assure AIM’s governance: (1) complies with Massachusetts nonprofit corporation law and nonprofit/association governance best practices; (2) reflects current operating practices and expectations; and (3) is sufficiently flexible to accommodate future requirements without major revision.

All these steps underscore AIM’s commitment to transparency, good governance and representing the best interests of its 3,400 members. Thank you to all of our members for your continued and steadfast support of the statewide business association.

I am proud to report two highlights from last week that underscore AIM’s commitment to remaining engaged in policymaking conversations and providing a strong voice for the business community wherever key decisions are made. 

First, AIM’s Executive Vice President of Government Affairs, Brooke Thomson, testified before the Legislature’s Joint Committee on Labor and Workforce Development in favor of pay equity and wage transparency measures. Second, AIM’s Commonwealth Conversation featured a keynote address from Senate President Karen Spilka (D – Ashland) the day after the Senate Ways & Means Committee fiscal year 2024 budget was revealed.

Each touchpoint with the Legislature demonstrates a mutual understanding between lawmakers and the business community that we must work together to increase the attractiveness and competitiveness of Massachusetts’ economy – a goal we must approach with a balanced understanding of future outcomes and current needs. 

The wage equity and pay transparency measures (S.1181 and S.1191, respectively) would require employers to provide salary range information on job postings and create a mechanism through which the state can publish aggregate industry-level compensation data through information businesses already report to the federal government. 

AIM spoke in support of these bills before the committee because our Government Affairs team has worked with lawmakers and members since last session to find language that would allow the state to pursue our shared diversity, equity, and inclusion goals while shielding businesses from additional administrative burdens and unfair scrutiny derived from individual state-level reporting requirements.

As Brooke voiced in her testimony, “We know that by paying our workforce fairly, we will secure the best talent. AIM’s compromise creates a less costly and burdensome way for businesses to provide information that will be used not to shame employers, but instead to help find solutions to get us to equity.” 

The salary disclosure measures help employers save time on the front end of the hiring process by weeding out candidates who do not wish to pursue the position further upon receiving compensation information.

In 2023, white women earn 77 cents for every dollar earned by white men; Asian American, Native Hawaiian and Pacific Islander women are paid 75 cents; Black women are paid 64 cents; Latina women are paid 54 cents; and Native American women are paid 51 cents.

The numbers in Massachusetts are: Women (on average) earn 81 cents for every dollar earned by men. Black women earn 57 cents; Latina women, 51 cents; Native American women, 59 cents; and Asian and Pacific Islander women, 66 cents.

Business has a role to play in addressing these discrepancies, and our support of these measures indicates that AIM understands the realities that face our residents and our economy today. Rather than turning away from them we are leaning into the conversation and finding room for effective compromise.

AIM’s Brooke Thomson talks wage equity on Radio Boston

What does the sudden drop in Massachusetts tax collections during April tell us about the economy? Plenty, but the picture is nuanced.

The state announced last Wednesday that preliminary revenue collections for April totaled $4.782 billion, 31.2% less than in April 2022, and 23.1% below expectations. The drop shifted the year-to-date performance from about $870 million in the black to, by one measure, $703 million in the red.

The details are slightly less apocalyptic. 

Much of the decline reflected a decrease in collections of capital-gains taxes and the use of credits by pass-through entities. Capital-gains taxes are notoriously volatile and difficult to predict. This is why most capital-gains revenue is relegated to the state’s rainy-day fund. A downturn in that revenue source should not affect state spending. 

Corporate and business tax collections were also down, ending the month 3.0% less than April 2022.

At the same time, sales-and-use tax collections and meals-tax collections both increased over April a year ago.

The smart minds on the AIM Board of Economic Advisors believe the decline in capital-gains tax reflects turbulence in the global financial markets from 2022 rather than any inherent weakness in the Massachusetts economy. Stock and bond markets have taken a beating in the last 18 months, so sales are at lower prices than they were several years ago. In addition, the window for initial public offerings has been effectively closed, hence fewer private-market transactions generating smaller gains.

Smaller bonuses in the financial services industry, a key employer in Massachusetts, may also be part of the decline.

Another factor may be the new Massachusetts income surtax, though the Board of Economic Advisors is divided on this. Anecdotal evidence from accountants and others suggests that some people may have timed the receipt of certain capital gains income so that it landed in 2022 to avoid the tax.

No one should be surprised that the economy is slowing with the Federal Reserve having boosted interest rates at the fastest pace in 40 years. But there are far too many anomalies in the April tax numbers to make any definitive judgements about where the commonwealth is headed.

Governor Maura Healey spoke to the AIM Executive Forum in January and outlined an aggressive agenda to make Massachusetts more competitive and affordable.

This Thursday, Lt. Governor Kim Driscoll will return to AIM to update the business community on the administration’s progress toward that goal. The Lieutenant Governor will give the keynote remarks at the

AIM Annual Meeting from 7-10 am at the Seaport Hotel in Boston. The speaking program begins at 8:00 am with networking both before and after the program.

The Healey/Driscoll administration made good on its pledge to AIM in January to introduce meaningful tax reform. The governor in February unveiled a proposal that would use credits to eliminate the estate tax for estates valued up to $3 million and reduce the tax rate on short-term capital gains to 5% from 12%. (Those two elements were also included in a tax plan passed by the House of Representatives, though the House version would increase the estate tax threshold from $1 million to $2 million.)

Lt. Governor Kim Driscoll is the former Mayor of Salem, where she turned deficits and a declining bond rating into record budget surpluses. She strengthened city services, revitalized Salem’s downtown, led a vast improvement in Salem’s k-12 schools, reformed city pensions and health insurance programs and brought transparency to City Hall. 

As Lt. Governor, Ms. Driscoll has taken on the high-profile role of overseeing the administration’s approach to housing development. Her municipal experience and relationships with municipal leaders have been key as the administration works with cities and towns to ease the housing shortage that affects so many of our employees.

The Lieutenant Governor will be among a group of elected officials to address the AIM Annual Meeting. We also expect Boston Mayor Michelle Wu, US House Minority Whip Katherine Clark and US Representative James McGovern to provide comments.

How far must an employer go to accommodate the religious beliefs of a worker?

That was the question before the United States Supreme Court last week in the case of an evangelical Christian man who resigned from the US Postal Service instead of being forced to work Sundays. The outcome may well affect private employers covered by provisions of the 1964 Civil Rights Act requiring them to “reasonably accommodate” a worker’s “religious observance or practice without undue hardship on the conduct of the employer’s business.”

Gerald Groff joined the Postal Service in 2012 as a rural carrier associate whose job involved filling in when full-time staff weren’t available. Beginning in 2013, however, the Postal Service began contracting with Amazon.com, Inc. to deliver packages on Sunday, an arrangement that by 2016 was implemented at the Lancaster, Pa., service hub where Mr. Groff worked.

Mr. Goff refused to work on the Sunday Sabbath, quit his job and sued the Postal Service for religious discrimination.

Supreme Court Justices who heard the case on Tuesday appeared ready to compromise by clarifying, but not overturning, a 1977 precedent to balance the interests of employees and employers. The precedent, Trans World Airlines v. Hardison, said an employer need not take steps that exact more than a “de minimis cost,” without defining exactly what de minimis cost means.

Equal Employment Opportunity Commission (EEOC) guidance notes that some costs are less than the de minimum standard – for example, the cost of re-arranging schedules and recording substitutions for payroll purposes, or infrequent or temporary payment of premium wages (such as overtime) while a more permanent accommodation is sought.

On the other hand, courts have found undue hardship where the accommodation diminishes efficiency in other jobs, infringes on other employees’ job rights or benefits, impairs workplace safety, or causes coworkers to carry the accommodated employee’s share of potentially hazardous or burdensome work.

Justice Neil Gorsuch said, “that de minimis can’t be the test.” Instead, he said, “substantial costs” at least “in some abstract level is common ground.” The solicitor general who represented the government during arguments was open to the idea, with some caveats.

Trying to determine the difference between “de minimis cost” and “substantial cost” would represent a major change for employers seeking to maintain operations while respecting the religious beliefs and practices of employees. Much will depend on how the courts interpret Justice Gorsuch’s “abstract level” of what substantial means.

In any case, our colleagues at AIM HR Solutions will no doubt be busy once the decision comes down in July.

One of the most gratifying aspects of an organization like AIM is the ability to gather employers from throughout Massachusetts to celebrate the role business plays in creating economic opportunity for the people of the Commonwealth.

We plan to do just that on May 4 from 7-10 am at the Seaport Hotel in Boston as AIM conducts its first in-person annual meeting since 2019. The meeting will feature keynote remarks by Lt. Governor Kim Driscoll, and presentation of three awards – the 2023 Vision Award to R.H. White Companies, the 2023 Latimer Award to Boston Impact Initiative and the 2023 Gould Award to two educational institutions that will be announced next week.

AIM will also honor current and previous recipients of the Richard Lord Leadership Scholarships, which are donated by the association each year to outstanding students in the School of Management at the University of Massachusetts, Boston. The students and alumni who have earned the scholarship range from Army veterans to children of single-parent households who have excelled academically while supporting themselves through college.

We invite you to join us and hundreds of other Massachusetts business leaders for the most vibrant networking event of the year. While you’re there, browse product displays from companies involved in the AIM Business Connect supplier diversity initiative.

AIM members will gather again on May 10 as Senate President Karen Spilka (D-Ashland) speaks at a timely Commonwealth Conversation two weeks before the Senate releases its proposed state budget for Fiscal Year 2024. AIM has the unique ability to bring business leaders together with elected officials, so you won’t want to miss the discussion as Senate President Spilka returns to AIM.

On May 18, AIM members will meet virtually from 8:30-9:30 am to elect directors of the association and vote on some important governance matters. AIM is your association. Your presence at the Special Meeting will ensure support for maintaining governance practices that are transparent, efficient and compliant with Massachusetts law governing not-for-profit organizations.

If you are the Designated Representative to AIM from your company, please register here for the May 18 Special Meeting.

The final May gathering on May 23 takes us back to the public policy side as Massachusetts Secretary of Health and Human Services Kate Walsh speaks to members about healthcare costs and the healthcare market in the wake of the pandemic. Details will be available shortly.

It’s all part of empowering our members with the information, education and resources needed to successfully navigate a fast-paced complex business world. We look forward to seeing you.

In the world of supplier diversity, small is beautiful.

Consider this: Several AIM staff members had a conversation at the March 29 AIM Executive Forum with a large company frustrated by being unable to find a minority-owned supplier to bid on an extraordinarily complex product input. The AIM team suggested that the company might look instead at smaller contracts such as facility upkeep, information technology, or marketing swag that would provide a better opportunity to mostly small companies operated by people of color.

It’s an approach we have used successfully at AIM Business Connect, our initiative to connect minority-owned and run businesses with companies that want to diversify their purchasing spend. AIM Business Connect has brought together 56 suppliers and 33 buyers that have concluded more than a dozen contracts – many of them modest and consistent with the scope and reach of small businesses.

Quincy Miller, President of Eastern Bank, sounded the same “start small” theme a year ago at another AIM Executive Forum.

Mr. Miller offered three key lessons from Eastern’s successful efforts to make its procurement inclusive:

• Be willing to break up contracts. Taking a single contract and breaking it into three contracts creates opportunity for new partnerships.
• Be willing to pay more so small suppliers can service contracts profitably. Companies might consider paying an additional 10,15 or 20 percent – though not 75 percent – to diversify their vendor base.
• Be willing to do business with someone you don’t know and ensure that purchasing executives feel comfortable taking a chance with a new supplier.

Betty Francisco, Chief Executive Officer of the Boston Impact Initiative, urges companies to review the financial terms of contracts to improve access for the mostly smaller minority startup companies in which she invests. She agrees that CEOs committed to diversity must communicate that priority throughout their organizations.

“Commitment is at the top. Execution is in the middle,” Ms. Francisco said.

And, think small.

Should workers worry that robots and artificial intelligence, including generative AI such as ChatGPT, will take their jobs?

After all, robots are already working as security guards, window washers, assembly line workers restaurant servers and pharmacists. Large language models (LLMs) may soon be able to do many white-collar jobs throughout the service sector.

A World Economic Forum report predicts that, by 2025, machines could displace about 85 million jobs — but create 97 million new roles “more adapted to the new division of (labor) between humans, machines and algorithms.”

Not everyone is persuaded.

“I’m not optimistic that just the simple process of workers getting displaced from some jobs and doing other ones is going to be enough,” Daron Acemoglu, a professor and labor economist at the Massachusetts Institute of Technology, tells Axios.

Meanwhile, more than 1,000 technology leaders and researchers, including Elon Musk, last week urged artificial intelligence labs to pause development of the most advanced systems, warning in an open letter that A.I. tools present “profound risks to society and humanity.” Others who signed the letter include Steve Wozniak, a co-founder of Apple; Andrew Yang, an entrepreneur and a 2020 presidential candidate; and Rachel Bronson, the president of the Bulletin of the Atomic Scientists, which sets the Doomsday Clock.

Artificial Intelligence (AI) has the potential to both eliminate jobs and create new ones. The impact of AI on employment will depend on various factors such as the type of jobs, industries, and the level of automation.

On the one hand, AI can automate certain tasks and processes that were previously done by humans, leading to job displacement. For example, jobs in the manufacturing, transportation, and customer service sectors may be vulnerable to automation.

On the other hand, AI can also create new jobs and industries. The development and deployment of AI require skills such as data analysis, machine learning, and programming, which can lead to job opportunities in those areas. Additionally, AI can create new markets and industries, such as personalized healthcare, virtual assistants, and autonomous vehicles, which can generate new jobs.

Overall, the impact of AI on employment is complex and depends on several factors. While it may eliminate some jobs, it has the potential to create new ones, and it will likely change the nature of work, requiring individuals to adapt their skills and knowledge to remain relevant in the job market.

AI can be used by business executives to improve decision-making, streamline operations, and gain insights into their customers and market trends. AI technologies, such as machine learning, natural language processing, and predictive analytics, can help executives automate repetitive tasks, identify patterns in data, and make data-driven decisions.

Oh, and much of this column was written by ChatGPT. Gulp.

The near-term future of the US economy is being played out amid a fascinating dance between inflation and disruptions in the banking system.

Federal Reserve Board Chair Jerome Powell acknowledged on Wednesday that the recent collapse of Silicon Valley Bank and Signature Bank will influence Fed decisions on rate increases moving forward.

The degree to which the bank disruptions could constrain lending and thus slow the economy remains “rule-of-thumb guesswork” according to the Fed Chair, but he acknowledged “it could easily have a significant macroeconomic effect.”

“In assessing the need for further hikes, we’ll be focused on incoming data and the evolving outlook, and in particular on our assessment of the actual and expected effects of credit tightening,” Powell said at a news conference.

Powell’s comments came after the Fed increased interest rates by another quarter percentage point, a move that brought the benchmark federal funds rate to its highest level since 2007. The Fed has boosted rates nine consecutive times as it seeks to reduce the current inflation rate of 6 percent to a target of 2 percent.

But the Fed also signaled that the upheaval in the banking system, which included the takeover of Credit Suisse by rival UBS two Sundays ago, could prompt the central bank to end its rate hikes sooner than expected. Economists at Goldman Sachs estimate that the effect of credit tightening could be equivalent to the slowdown prompted by one or two Fed rate increases.

By making it harder for consumers to access credit to buy houses or cars, or make other big purchases, the issues could weigh on demand, allowing the Fed to adjust interest rates less drastically.

“Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation,” the Fed’s policy committee said in its post-meeting statement. “The extent of these effects is uncertain.”

At the same time, continued price increases are weighing on family budgets, and there is a risk that a long period of quick inflation could make price increases a more permanent feature of the American economy.

Interest-rate increases and credit instability are both sobering prospects for Massachusetts employers. Lines of credit become more expensive, capital investment slows and companies in interest-sensitive sectors such as housing become vulnerable. AIM members have so far shown a muted reaction to rate increases – the AIM Business Confidence Index has remained in optimistic territory – but the challenges of moderating inflation in an uncertain financial environment are real and bear watching.

Associated Industries of Massachusetts annually makes diversity, equity and inclusion the focal point of its March Executive Forum, which this year will highlight economic inclusion on March 29 with a panel of leaders including state Economic Affairs Secretary Yvonne Hao.

Secretary Hao will be joined on the program by three distinguished AIM members who will discuss the benefits of a well-planned supplier diversity program – Anthony Samuels of DRB Inc., Dr. Aisha Francis of Benjamin Franklin Cummings Institute of Technology, and Keith Wang of Point32Health.

The new Secretary of Economic Development will be making her third connection to AIM members – she accompanied Governor Maura Healey on a tour of member companies Analog Devices and 88 Acres back in January and also attended the January Executive Forum. Secretary Hao has more than 25 years of executive business experience as a senior executive, including as Co-founder, Advisor, and Managing Director at investment firm Cove Hill Partners and as an Operating Partner at Pillar Ventures.

The event will also highlight the success that AIM Business Connect and other supplier diversity initiatives have had in broadening economic opportunity to the full range of Massachusetts businesses.
AIM Business Connect links BIPOC, women-owned, and other minority led businesses with opportunities at member companies looking to diversify their supply chain spending and support minority business development.

Some 56 suppliers and 33 buyers have concluded more than a dozen contracts with one another through AIM Business Connect. The initiative has also established partnerships with organizations such as Amplify Latinx, the Black Economic Development Council of Massachusetts, the state Supplier Diversity Office, the LGBTQ Chamber of Commerce, the Boston Impact Initiative and the Greater New England Minority Supplier Diversity Council.

In a broader sense, AIM Business Connect is a driver of economic empowerment for companies throughout the Commonwealth. AIM brings its full statewide scope, connections and commitment to creating economic opportunity for all the citizens of Massachusetts to this expansive undertaking.

Diversifying the supplier base is an economic imperative that helps everyone. And that’s why we believe it makes sense for every AIM member to participate in AIM Business Connect.

Minority business enterprises contribute to America’s economy by generating economic output, creating and maintaining jobs, and generating tax revenue.  According to the U.S. Commerce Department, there are more than 396,000 Black- and Hispanic-owned companies with at least one paid employee.  These companies have 3.3 million workers and generate more than $483.5 billion in revenue.

The Executive Forum will take place from 8-10 am at Microsoft New England in Cambridge.  We invite you to join this important conversation.

Associated Industries of Massachusetts is committed to maintaining governance practices that are transparent, efficient and compliant with Massachusetts law governing not-for-profit organizations.

That commitment to good governance grows out of a deep dedication to our customers and the determination that this association will operate in a manner that reflects the deep trust that our 3,500 member companies place in us.

I am therefore pleased to notify all members that the AIM Board of Directors and AIM’s Director Members will meet on March 24 to consider and vote on updated and revised Articles of Organization and By-Laws for the statewide business association. If approved by the Board and Director Members, the proposed revised By-Laws will be brought to the Employer Members for a vote at the May 4 AIM Annual Meeting.

The revisions are the work of an Ad-Hoc Governance Committee led by led by Immediate Past Board Chair Joanne Hilferty. The committee is comprised of AIM directors Trish Canavan, Leslie Greis, John Lynch, and Jim McGaugh, with support from Eleanor Evans of the Nonprofit Practice Group at the law firm of Hemenway & Barnes LLP, an AIM member company.

The good news is that AIM, under both Ms. Hilferty and current Board Chair Patricia Begrowicz, has already updated its governance best practices in a manner that encourages engagement among the widest possible variety of members. These practices bring new ideas and perspectives to the AIM Board of Directors and guide our public policy agenda during a time of unprecedented economic complexity.

The revised Articles of Organization and By-Laws will assure that AIM’s governance:

• complies with Massachusetts nonprofit corporation law and nonprofit/association governance best practices;
• reflects current operating practices and expectations; and
• is sufficiently flexible to accommodate future requirements without major revision.

Thank you for your continued support of AIM and the community of Massachusetts employers.

Business confidence remained essentially flat during February as employers attempted to gauge whether inflation, recession, growth or labor shortages would dominate the Massachusetts economy in 2023.

The Associated Industries of Massachusetts Business Confidence Index (BCI) gained 0.3 points to 53.5 last month, halting a two-month slide. The confidence level was 3.2 points lower than a year ago but still in optimistic territory.

Employer sentiment continues to be driven by a swirl of often contradictory economic signals. Leading indicators suggest that economic growth will decelerate during 2023, yet the state and national economies continue to exhibit a strong labor market, low unemployment, and a persistently high rate of inflation.

In January, the Federal Reserve’s preferred inflation gauge rose at its fastest monthly pace since June, a sign that price pressures remain entrenched in the U.S. economy to a degree that could lead the Fed to keep raising interest rates well into this year.

“The personal consumption expenditures price index rose 0.6% month-on-month and 5.4% year-on-year (y/y) in January. While that is down from a rate of 7.0% y/y in June 2022, inflation is still far above the Fed’s 2% target,” said Sara L. Johnson, Chair of the AIM Board of Economic Advisors.  “The persistent shortage of workers across virtually all industries is maintaining upward pressure on wages and services prices.”

Participants in the Business Confidence Index Survey reflected the often-contradictory signals being given off by the economy.

“We see labor shortages, inflation, and industrial inventory de-stocking following last year’s supply chain panic- buying behavior,” wrote one manufacturing company owner.

Another company commented: “Work is steady. New projects were slower the last six months of 2022, but have picked up significantly in the beginning of 2023.”

Learn More

Business Confidence Index

Housing is essential to the success of the Massachusetts economy.

The twin issues of housing cost and availability inhibit our employees from establishing roots here in the Commonwealth. In fact, housing is one of the primary reasons that Massachusetts suffered the fifth largest outmigration of people – including thousands of skilled workers – between July 2021 and July 2022.

The issue is having a direct effect on the operations of Massachusetts companies. Employers in every sector of the economy have stories about offering a job to a candidate from another part of the country only to have that candidate turn down the offer because she or he can’t afford housing. Several employers in high-cost areas have gone so far as to buy or rent motels to provide workers a place to stay.

It’s no surprise that Massachusetts is, by far, the largest housing market in New England. The commonwealth includes almost 3 million housing units, almost twice the number that exist in Connecticut. Thirty-seven percent of housing units in Massachusetts are rentals; 62.4 percent are occupied by owners.

Start here: Zillow puts the typical home value in the United States at $354,649. The typical home value in Massachusetts is $611,819. The average ratio of mortgage payments to median income in the United States is 30.7 percent, while the same ratio is 43.25 percent in Massachusetts. (New York is 33.6 percent; New Jersey, 31.3 percent; New Hampshire 31.3 percent.)

Rents are also expensive in Massachusetts. Median gross rents in the commonwealth are $1,429 per month, well above the national figure of $1,163. One-quarter of Massachusetts renters pay more than 50 percent of their household income in rent.

The numbers are orders-of-magnitude higher in Great Boston and other high-cost regions.

The bottom line is that Massachusetts is not producing enough housing to support economic growth. While Massachusetts developed more housing than other New England states from 2010-2021 (6.1 percent), that pace fell well below that of the 7.4 percent increase for the nation as a whole.

AIM supports accelerating the development of new housing to moderate the cost our employees must pay to buy or rent homes and establish roots. We are particularly supportive of housing developments located near mass transit to address the commonwealth’s persistent transportation gridlock. And AIM backs Governor Maura Healey’s plans to establish a cabinet-level housing position.

Employers clearly understand that home is a central element of work.

Editor’s note – The following is excerpted from the 2023 State of Massachusetts Business Address delivered last Tuesday.

What if you created an economy and no one came?

Companies across Massachusetts are urgently seeking workers. Consider Takeda, the state’s largest life sciences employer, which is actively working to fill more than 500 open jobs at all skill levels and locations in Massachusetts – and not just jobs for researchers and scientists.

Or Catania Oils in Ayer, which faces similar staffing challenges. Catania is a rapidly growing packager and processor of plant-based cooking oils that recently added a 52,000 square foot building expansion.  The company runs a three-shift operation and securing labor continues to be a problem. Finding the right skills level for machine operators and maintenance personnel has been “quite challenging” and the

company has been unable to secure talent for some key roles.

There are a multitude of statistics about the state of the Massachusetts work force, but here are the two you need to know.

• The Massachusetts Department of Economic Research projects that the number of jobs in the commonwealth will grow by 21 percent by 2030.
• Meanwhile, the Massachusetts work force will grow by just 1.5 percent by 2030.

The workforce challenges looming over the Massachusetts economy are dire and immediate. The commonwealth is sailing into a demographic “bomb cyclone,” accelerated by COVID-driven fundamental changes in the way people approach work, that could leave employers gasping for workers at the very time that the commonwealth seeks to solidify its role as a global center of innovation, commerce and technology.

These challenges exist separate and apart from the ebb and flow of short-term economic cycles. The labor shortage persists even at a time when the nation’s economy stands on the brink of a slowdown.

Watch the Full State of Massachusetts Business Address

Listen to Commentary/Coverage on Bloomberg Bay State Business (10:46)

The owner of a small retail store on Cape Cod was recently asked why she decided to close a second shop in a neighboring town – “Just couldn’t find anyone to work.”

The manager of an automobile quick-lube facility recently came out to tell lined-up customers that the shop would not open for another hour due to lack of staffing.

An assisted-living facility in the western part of the state has closed an entire wing of its beautiful facility – plenty of residents, no workers.

There are hundreds of similar stories across Massachusetts every day. The persistent, structural shortage of workers is affecting businesses and consumers alike. Companies across all industries, from biotechnology to retail, from manufacturing to higher education, remain unable to fill positions with qualified candidates.

Employers have grown accustomed to holding job fairs at which one or two people show up. They are spending an increasing share of their marketing budgets on attracting employees instead of selling their products or services. It has become a zero-sum game in which companies take workers from other companies in a persistent tug-of-war with a limited pool of employees.

Why are workers in short supply? And what can employers do about it?

AIM hopes to provide some answers tomorrow at 10 am when the association holds its eighth annual State of Massachusetts Business address and discussion. The virtual event will look at the causes of the labor-market imbalance and potential solutions that business leaders and elected officials might pursue together. 

We will be joined by several AIM-member companies who are using determination and innovation to become employers of choice. They include James Byman, Partner, Audit Services, RSM US LLP; Annemarie Abdo, Vice President of Human Resources, Catania Oils; and Erin Birmingham, Head of Talent Acquisition, United States Business Unit, at Takeda. 

Join us for some practical approaches to the most pervasive challenge facing Massachusetts employers today.

The first meeting between President Joe Biden and House Speaker Kevin McCarthy offered a sliver of hope but no substantive progress on a debt-ceiling standoff that could potentially spark an economic crisis later this year.

The new Speaker said he saw potential “common ground” on the debt ceiling issue after meeting with the President for an hour on Wednesday. Mr. McCarthy said he and the president agreed to address the debt limit in a “responsible” way and that they are not discussing cutting Social Security or Medicare, as some Republican lawmakers have pushed.

The fear, however, is that the debt ceiling will become part of the ongoing partisan trench warfare that produced similar showdowns in 2011 and 2013.

The nation bumped up against its $31.4 trillion debt limit last month.

The Treasury Department is able to keep the country paying its bills for now by undertaking what it calls “extraordinary measures.” Treasury officials estimate those measures will enable the government to keep paying federal workers, Medicare providers, federal contractors, investors who hold U.S. debt and other recipients of federal dollars at least until early June.

But economists warn that the nation risks a financial crisis, potential default and other immediate economic pain if lawmakers do not raise the limit before the Treasury Department exhausts its ability to buy more time.

The United States runs a budget deficit, which means it does not take in enough money through taxes and other revenue to fund its operations (the government has run a deficit averaging nearly $1 trillion every year since 2001). As a result, the country sells Treasury debt to finance its operations.

House Republicans say they will not raise the borrowing limit unless President Biden agrees to deep spending reductions moving forward. The President and Congressional Democrats say they want a “clean” increase and will not negotiate conditions.

The debate is not about whether the US should spend money in the future but whether the nation should pay its bills for money already spent. Since 1960 Congress has increased the ceiling seventy-eight times, most recently in 2021. Forty-nine of these increases were implemented under Republican presidents, and twenty-nine were under Democratic presidents.

There are many appropriate topics for political negotiation, but the nation’s ability to pay its debts is not one of them. The current situation calls for bipartisan leadership that will not roil and already uncertain economy.

Last week was an extraordinary one here at AIM as the new governor of Massachusetts and the employer community rolled up their sleeves and began the hard work of ensuring that the commonwealth remains a place where people want to live, work and run a business.

The process started on Tuesday when Governor Maura Healey, Secretary of Economic Affairs Yvonne Hao and Secretary of Workforce Development Lauren Jones toured two AIM member companies – Analog Devices in Wilmington and 88 Acres bakery in Dorchester. Executives of both businesses talked with the new administration about everything from business costs to innovative approaches to attracting and retaining workers.

The governor said that keeping workers in Massachusetts is a priority.

“As your governor, I want you to go visit Texas, I want you to go spend time in the Carolinas, you can go to Florida, but I want you here,” Healey said. “I want you working here, I want you growing families here, right? I want you to build your careers here. I know Massachusetts is in competition right now with a few other places,” she said.

I was struck during the visits that AIM truly represents all types of employers – from a global maker of semiconductors like Analog with thousands of employees to a growing family food business like 88 Acres with fewer than 100 workers.

The interaction continued Thursday morning as the governor keynoted the AIM Executive Forum before an audience of more than 500 business leaders at the Boston Marriott Newton Hotel. Governor Healey had spoken during her campaign and her inaugural address about working as a partner with business to build the economic future of the commonwealth. Thursday’s gathering was a great way to begin.

The governor referenced her visits to Analog and 88 Acres to make the point that she wants to create an environment that will encourage the growth of similar companies in the future.

“This is a new moment, and we know we need to do more,” she said.

“Doing more” will include addressing the high cost and limited supply of housing in Massachusetts, creating a team to aggressively seek federal funding for infrastructure and other needs and easing the tax burden.

“We know that the tax burden is part of the equation for companies and employees deciding to stay here in Massachusetts, to come to Massachusetts, to leave Massachusetts, and we are making that a part of our discussions right now as we think about what we need to do to be as competitive as we can be,” Governor Healey told the audience.

The governor underscored the serious nature of her outreach to the business community by bringing with her Hao, Jones and other senior administration officials who spent the better part of an hour after the speech discussing issues with AIM members. Ms. Healey even made an unscheduled visit to the AIM Board of Directors meeting, where she held a private meeting to talk about the economy.

None of this means that AIM and the governor will agree on every issue. It does, however, signal a willingness on the part of the new administration to take seriously the concerns of business and to work collaboratively to foster economic growth that benefits everyone in Massachusetts.

AIM has outlined during the past several weeks its vision for the future of the Massachusetts economy. It’s a vision based on ensuring that the state is an attractive place to locate, live, start a business, pursue a career, raise a family, and invest in the community.

We now get to hear from the new governor of Massachusetts about her vision for a strong Massachusetts economy at a time when shifting patterns of work have changed all the rules of economic and workforce development.

Governor Maura Healey will deliver her first formal remarks to the business community on Thursday when she keynotes the AIM Executive Forum at the Boston Marriott Newton. More than 450 business leaders from throughout the state and members of the governor’s new administration are expected to attend.

Governor Healey spoke during her campaign and her inaugural address about working as a partner with business to build the economic future of the Commonwealth. She and Lieutenant Governor Kim Driscoll say they will emphasize the challenge of making Massachusetts more affordable and growing the state’s economic competitiveness by prioritizing housing, transportation, job training and child care. 

AIM and its 3,400 members look forward to Governor Healey’s comments and remain committed to working with the new administration to build a Massachusetts economy that creates opportunity and prosperity for all the citizens of the Commonwealth. At a time when Washington remains at a partisan standoff about the debt ceiling and other issues, we value the opportunity to collaborate with the governor and the legislature on the many challenges facing business at the dawn of 2023.

I invite you to join the conversation.

CEO’s note – The year 2023 brings a new Massachusetts governor, a new session of the state Legislature and new challenges for AIM as we continue to represent the interests of Massachusetts employers. What are the overarching objectives of the business community for the new year and which issues will be priorities?
 
AIM is publishing a weekly series of articles outlining the organization’s public-policy agenda for 2023 and beyond. Today’s installment, written by AIM Vice President of Government Affairs Sam Larson, looks at housing and transportation as constituent elements of the quality of life needed to keep people here in Massachusetts.

AIM is your association, so please feel free to contact me at jregan@aimnet.org with your comments and suggestions.

By Sam Larson

Massachusetts has spent decades making strategic investments in its economy. World-class colleges, universities and health-care facilities have made the commonwealth a hub of investment and innovation. 

These investments will all be for naught, however, if no one can afford to live here. The rising cost of housing in the state and demographic shifts have led to a property market that threatens the economic stability of the state. 

As AIM promotes its theme of advancing the commonwealth’s attractiveness and competitiveness, it is important to examine housing and transportation as quality-of-life issues that are pushing workers out of the state.

Massachusetts was identified as one of “most moved from states” for the third straight year according to United Van Lines, which tracks outward migration. Cost of living and quality of life were overwhelming factors in pushing working-age families out of the state. The primary reason behind those moves is that the median home price in Massachusetts rose from $285,000 in 2011 to $510,000 in 2021, an increase that has far exceeded the rate of inflation. 

According to MassInc, the state’s working age, college-educated population will fall by 192,000 residents by 2030, a 10% drop over current levels. A talented workforce has long been the commonwealth’s calling card and competitive edge against states with better tax incentives. However, this key advantage is eroding quickly as skilled workers choose to live in states where their dollar buys them a better home and more affordable way of life.  

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CEO’s note – The year 2023 brings a new Massachusetts governor, a new session of the state Legislature and new challenges for AIM as we continue to represent the interests of Massachusetts employers. What are the overarching objectives of the business community for the new year and which issues will be priorities?

AIM is publishing a weekly series of articles outlining the organization’s public-policy agenda for 2023 and beyond. Today’s installment, written by AIM Executive Vice President of Marketing Karen Wallace, looks at diversity, equity and inclusion – the imperative to include the full range of Massachusetts residents and businesses into the commonwealth’s economic future.

AIM is your association, so please feel free to contact me at jregan@aimnet.org with your comments and suggestions.

By Karen Wallace

Massachusetts has historically been in the vanguard of movements to provide equality and respect to all citizens. The commonwealth was among the first to embrace universal health care, same-sex marriage, and most recently, the first women LGBTQ governor.

But the commonwealth has been slower to embrace diversity, equity and inclusion. Much work remains to be done to ensure that all businesses and citizens can share in the economic prosperity of Massachusetts.

Consider the following:

• Minority-owned and managed businesses continue to remain at the bottom when it comes to lucrative business contracts. Minority-owned businesses were awarded only 3 percent of state government contracts in 2021, and Black and Brown businesses received the smallest share of those contracts.
• Hispanics and Blacks continue to reside at low end of a yawning economic wealth gap. Massachusetts, the second wealthiest state in the country, suffers the sixth largest racial wealth gap in the U.S.
• Women in Massachusetts still earn an average of 81 cents for every dollar that men make.  The gap is even larger for female Black Indigenous People of Color (BIPOC)—Native American women earn 59 cents for every dollar that a White male earns. Black women earn 57 cents and Latino women earn 51 cents.
• In Boston, a large share of LGBTQ+ youth of color are unemployed (33%), unstably housed (16%) and food insecure (31%).

CEO’s note – The year 2023 will bring a new Massachusetts governor, a new session of the state Legislature and new challenges for AIM as we continue to represent the interests of Massachusetts employers. What are the overarching objectives of the business community for the new year and which issues will be priorities?

AIM is publishing a weekly series of articles outlining the organization’s public-policy agenda for 2023 and beyond. Today’s installment, written by AIM Vice President of Government Affairs Vasundhra Sangar, looks at the changing nature of work and the need to give care-givers the opportunity to remain on the job.

AIM is your association, so please feel free to contact me at jregan@aimnet.org with your comments and suggestions.

By Vasundhra Sangar

No one could have predicted the difficulties of establishing a “new normal” in the workplace after COVID-19’s economic shutdowns. It has now been almost three full years since those shutdowns forced people out of the traditional office, prioritized remote work and forever integrated professional and home lives.

As AIM continues its theme of advancing the commonwealth’s attractiveness and competitiveness, it is fitting to turn back to one of the pandemic’s most immediate economic impacts – the mass exodus from the workforce of caregivers whose roles have traditionally been filled by women and women of color. By October 2020, the female workforce in the country had dropped down to levels from the 1980s, meaning that COVID withered an entire generation of progress for women in a matter of months.

The issue became an immediate crisis early in the pandemic because of remote schooling and increased demands for child care. But COVID ultimately affected all levels and types of caregiving, including employees caring for elderly relatives. Millions of American workers with the responsibility to care for children or elders ended up leaving their jobs, underscoring the fragile infrastructure supporting caregivers that continues to keep many of them off the job even today.

In a nationwide survey conducted by Care.com, The Future of Benefits 2022, 48% of respondents cited the desire for better child-care or senior-care benefits as the primary reason for leaving a job, and 47% reported they left because they were struggling with child-care or senior-care challenges. The US Census Bureau’s Summer 2022 household survey indicated that over 1.6 million Americans supervised one or more children while simultaneously working, and another 1.3 million reported leaving their jobs to care for children. Brookings Institute data reflects parents with minor children make up nearly one third of the entire workforce.