Governor Scott recently took some heat from the media over a statement he made following the announcement by Energizer that they would be closing their Bennington plant and moving its operations to Wisconsin. The governor said:
“This decision [by Energizer] is an unfortunate example of why those of us in Montpelier need to work together to make Vermont a more affordable place to do business and make sure our policies help businesses thrive rather than creating unique burdens and barriers to growth that make us less competitive with other states.”
What’s wrong with that? The working together part or the making Vermont affordable part? Shouldn’t we want to help rather than harm our local businesses and be competitive with other states? But the criticism was that there is “no evidence” that Vermont’s business climate was the reason for Energizer’s departure.
Really? The Tax Foundation recently rated Vermont’s business climate as 44th in the nation. CNBC rated us 40th. Rich States Poor States rated our economic outlook as 49th. These ratings are not unique and, while imperfect studies to be sure, when they all reach essentially the same conclusion it should spark at least a little attention.
When businesses decide to lay off and/or relocate, they have no incentive to alienate local politicians by flat out stating, “You stink.” It’s much more diplomatic to adopt the old breakup line, “It’s not you, it’s me.” But we all know who it really is. It’s you. At that point, you can choose to start combing your hair, brushing your teeth, and bathing regularly, or you can cling desperately to the lie and wonder why you can’t get a date for Saturday night.
Unfortunately, our legislature seems inclined not only to believe the lie, but to double down on their bad economic hygiene. Adding a new payroll tax (Paid Family Leave), and all the added paperwork that will come with that, isn’t an attractive prospect for businesses. Nor is artificially increasing the cost of labor with a $15 minimum wage. (It’s worth noting that Wisconsin, where Energizer decamped for, has a $7.25 minimum wage.) Raising the cost of energy and regulatory uncertainty through the Global Warming Solutions Act, and raising the cost of motor fuel through the Transportation Climate Initiative aren’t helpful ideas either. And, given that one of the biggest issues companies have in Vermont is a lack of affordable housing for their employees, making housing construction even more difficult and costly with new Act 250 environmental regulations would be just another kick in the shins.
While there are many factors that contribute to a company’s decision to relocate, certainly the business climate in the state where it is currently doing business is a factor. In any competitive market place businesses will close and move and in some cases, even in most, there is little the state can do about it on the individual business level. The important thing is that the state creates the kind of dynamic economic environment that encourages, in general, new businesses to start or move in and grow at a faster pace than they close up or leave.
Following Energizer’s announcement we learned that Marvell Technology Group, after purchasing a division of Essex-based Global Foundries, laid off 78 employees, and Seven Days published an article, Hire Anxiety, about significant layoffs occurring at MyWebGrocer, Dealer.com, and Social Sentinel. All of these companies have operations in other states. Why is it that we so often hear of businesses consolidating and moving their Vermont jobs to other states, but rarely if ever do we hear the opposite?
Additionally, the grocery store chain Hannaford just announced it was giving up on plans to open a store in Hinesburg following a decade long battle with zoning, stormwater permits, Act 250 regulations, and a legal battle that went all the way to the Vermont Supreme Court with still no resolution to their issues. How many potential endeavors witness this kind of outcome and don’t even bother to try setting up in Vermont?
The governor’s statement was right on target. This is, truly, a problem we need to fix.
– Rob Roper is president of the Ethan Allen Institute.