03 Mar Stimulating businesses to leave Wisconsin…
At this time with unemployment rates climbing and incomes being cut, it is more important now than ever that our State Legislature stand on the side of business and do what we can to create new jobs and prevent more businesses from closing their doors, laying off employees, or leaving the state. It is, therefore, deeply disappointing that many of the new legislators who won in last fall’s election, as well as the 2006 election, have decided to make themselves popular by creating new taxes and regulations for businesses. From the least onerous to the most burdensome, the following four provisions are being fast-tracked through the State Legislature.
The State Senate recently passed a $1.10 per hour increase in the minimum wage for general employees which could take effect on June 1, 2009. This new bill raises the minimum wage annually for inflation for the first time in state history and also allows individual cities to increase the minimum wage on their own. Studies show that increases in the minimum wage reduces employment among people paid that amount. This is obvious in that if the cost of gas goes up, people use less gas. If the cost of cigarettes increases, people smoke less, and if the cost of wages goes up, businesses retain fewer workers. We have heard many stories of already financially troubled restaurants, grocery stores, and other retail outlets that have been pushed over the brink and had to go out of business altogether. Just as bad will be the decrease in the number of high school and college kids who will be hired. These first jobs not only provide valuable dollars for young people but also provide invaluable experience. What will happen when so many more 19 to 20 year olds have no job experience? (Click here to access Senate Bill 1)
The second anti-business bill is known as the Wage Lien Bill. Banks give a business or a person a first mortgage because they feel confident that if a customer stops making their payments, they can foreclose and get all or most of their money back. This bill which passed the State Senate recently will give any employee who is not paid their back wages a lien ahead of the bank. This lien would be $10,500 per employee instead of $3,000 per employee under current law. This sounds fine for the employee, but obviously, banks will be less likely to give businesses money to spend or to extend a line of credit to keep businesses going. The Wage Claim Bill will particularly hurt businesses that employ a lot of people. We have already heard stories of companies that cannot get money and will not be going forward with planned expansions. At a time when banks are already very nervous about giving loans, for Wisconsin to become one of the toughest states in the country to get a business loan is crazy. (Click here to access Senate Bill 2
Another bill scheduled for committee hearing in the Senate will greatly stiffen penalties for businesses who are found to have discriminated based on sex, race, age, or criminal record. Unlike current law, these employees will be able to go to circuit court and have a jury trial in which a jury will be able to give punitive damages. These damages in addition to lost wages can be set at whatever a jury determines (i.e. $50,000, $100,000+ per employee, etc.)
Today, most discrimination claims are found without probable cause by a government lawyer who realizes they are just a disgruntled employee who doesn’t understand why they were let go or not hired. Under this bill, any sympathetic jury could side with the employee which will result in many additional lawsuits, attorneys’ fees and businesses forced to settle out of court in order to avoid a foolish jury giving a high reward. We do not know of any other state that has such an anti-business provision as this one. Another disconcerting provision of this Employee Discrimination Bill would allow the Wisconsin Department of Workforce Development to add an additional 10-percent surcharge on any damages recovered which they could keep and add to their own bureaucracy. This would be like giving a police officer an extra 10-percent incentive for every speeding ticket they write! Not only do other states not have such policies in place, but you can be certain they don’t do this in Mexico or China. (Click here to access Senate Bill 20)
As bad as these provisions are, Governor Doyle signed into law a new tax on businesses called Combined Reporting in which a business that loses money on their Wisconsin operations will have to pay tax on their profitable operations in other states. We have already heard of major businesses who have said they cannot expand in Wisconsin or would have to consider closing their Wisconsin facilities because this provision is uniquely bad to our state.
Sadly, many of these provisions were pushed by labor unions who apparently do not realize that businesses do not have a bottomless pit of money. If businesses continue to leave Wisconsin, there will be no private sector jobs left. Wisconsin businesses and companies around the country have repeatedly had stricter environmental, labor, and consumer regulations placed on them over the last 40 years. It is almost inconceivable anyone would think that with our current economy now is the time to add stricter regulation but that is what is going on in Madison. I will continue to fight all of the above, but particularly, if you are a labor union member in need of your paycheck, you should call your union and tell them to maintain a business-friendly climate in Wisconsin. Businesses can only operate if they are making a profit and there are a lot of states and countries who do not have any of the above four provisions. They would readily welcome Wisconsin’s jobs with open arms.