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Top 10 Massachusetts Business Stories of 2011

Posted on December 29, 2011

A year of tornadoes, tropical-storm floods and freak Halloween snow provided the perfect metaphor for the year in business 2011 in Massachusetts.

Top 10 Massachusetts Business StoriesLike the weather, the most serious issues for Bay State employers originated somewhere else and were largely beyond the control of business and state government – from the European sovereign debt crisis to the political paralysis in Washington over resolving the deficit. The commonwealth often resembled the resilient residents of western and central Massachusetts, buffeted by repeated storms and then quietly getting back to the business of maintaining a still-fragile economic recovery.

Massachusetts certainly faced its own set of contentious issues in 2011, including the continued crisis in health care costs and a dysfunctional energy regulatory structure that threatened to raise electricity bills by $4 billion. But most of the economic bad weather swirled around the commonwealth rather than within its borders.

What were the top 10 stories to affect Massachusetts employers in 2011?

1. The Massachusetts economy outperforms the rest of the nation.

High-value sectors such as advanced manufacturing, biosciences and information technology continued to insulate Massachusetts from the worst damage of the Great Recession. The Massachusetts unemployment rate hit a three year low of 7 percent in November as employers added 5,000 jobs. The Bay State jobless rate stood well below the 8.6 percent national rate last month while state economic output grew twice as fast that for the rest of the country.

2. Market forces move to contain soaring health insurance premiums.

Fundamental shifts in the market for health care raised the possibility of controlling the rising health insurance premiums that have inhibited economic growth in Massachusetts for more than a decade. As a consensus emerged about the need to change the method by which employers and consumers pay for health care, insurers began to offer tiered and limited network products that offered 12 percent discounts for customers who sought care in high-quality community facilities. New player Steward Health Care System rocked the market in September by announcing at the AIM Executive Forum a limited network insurance offering that promised discounts of up to 30 percent.

3. Massachusetts Supreme Judicial Court upholds state approval of National Grid power agreement with Cape Wind.

The Massachusetts Supreme Judicial Court (SJC) on Wednesday upheld the commonwealth’s approval of a power-sales agreement between National Grid and Cape Wind that will require thousands of employers to pay the highest power price ever negotiated in Massachusetts. The ruling rejected arguments by Associated Industries of Massachusetts that the power sales agreement violates state law by forcing employers in Grid’s service territory to pay for Cape Wind power even if they do not use it.

4. European debt problems and pending U.S. budget cuts imperil key industries in Massachusetts.

The same Massachusetts innovation economy that was well positioned to ride out the Great Recession finds itself uniquely vulnerable to the debt and deficit crises unfolding on both sides of the Atlantic. Not only would an austerity-driven European recession harm a key export market for Massachusetts companies, but the failure by the Congressional “super-committee” to agree on budget reductions in the United States threatens to trigger deep cuts to bedrock Bay State industries such as defense and health care that depend upon federal funding.

5. Employers throughout Massachusetts cope with unprecedented natural disasters.

If the balky economy was not enough, Massachusetts employers were forced to cope with weather catastrophes ranging from snow-based roof collapses, to a series of destructive tornadoes to flooding from Tropical Storm Irene to extended power outages caused by the heavy October snowstorm. The storms left employers to figure out complicated insurance claims, federal disaster declarations and employment law issues ranging from how to pay workers to recovery of records.

6. Massachusetts lawmakers respond to anemic recovery by taking steps to improve the business economy.

At least part of the commonwealth’s ability to outperform other states stemmed from the fact that the Legislature and Governor Deval Patrick embraced the idea that the only way to solve the commonwealth’s long-term fiscal issues is through economic expansion and job growth.  Policymakers again balanced the state budget without a tax increase, left intact a three-year drop in corporate excise taxes from 9.5 to 8 percent and froze Unemployment Insurance rates in a move that left more than $400 million in the private sector.

7. Cities and towns win the ability to save money by changing the benefit design of their health insurance plans.

The Legislature passed, and Governor Patrick signed, a bill giving financially struggling cities and towns control over the design of employee health insurance benefits. The change, passed over fierce opposition from labor unions, is already paying dividends – state officials reported this month that four municipalities that have taken advantage of the new law will see premium reductions of $9.9 million and employees of those communities will see $8.4 million in premium and benefit savings.

8. The National Labor Relations Board changes the rules governing union elections and requires employers to post notices informing workers of their right to join a union.

A deeply divided National Labor Relations Board continued to tilt the labor-relations playing field toward unions on November 30 when it adopted regulations that limit the ability of employers to appeal eligibility and other issues prior to a union representation election. The board separately passed a rule that will require private-sector employers whose workplaces fall under the National Labor Relations Act to post an employee rights notice where other workplace notices are typically posted, including Internet or Intranet sites.

9. Massachusetts adopts strict evaluation standards for teachers.

The Massachusetts Board of Elementary and Secondary Education adopted new statewide teacher-evaluation regulations that place significant emphasis on student outcomes. The employer community endorsed the regulation because reliable teacher evaluation is a key element of maintaining an education system capable of supporting the growth of the Massachusetts economy.

10. Commonwealth authorizes casino gambling

Massachusetts lawmakers ended years of debate by authorizing the construction of three resort casinos and one slots-only facility. Supporters believe that gaming will generate hundreds of millions of dollars worth of investment, while critics say the economic benefits and job-creation potential of casinos have been oversold.