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May 25, 2012

Protect Employers Who Value Workers

by at 9:23 pm.

This popped up on Facebook, from Councilor Lorrey:

I will be on Warren Shaw’s radio show on WCAP at 7 am tomorrow. The discussion will center around my motion to have the proper department (law dept.) report on the feasibility of drafting a home rule petition to exclude out of state companies from being the successful bidder based solely on being the lowest bidder.

This topic was covered in the last City Council meeting (2:01:16).

I want to commend C.Lorrey for starting this converstation, locally. It would serve us well for it to find it’s way, through our delegation, to Beacon Hill. A quick Google of “resident bidder preference” & “reciprocity” will clearify any confusion that this doesn’t have a shot of passing in Boston. This sort of thing is growing across America, state by state.

Why?

Because some states value workers, thus “encouraging” the business community to invest in them. Other states, don’t.

If you own a business in a state that requires your employees to be professionally licensed, safety trained; insured for health, unemployment and disability, your cost of business will be higher than one that does not. If your state has good schools, homes with value, public safety services, taxes are higher. As the saying goes, good things don’t come cheap.

If work is bid out to companies that live in states that have lower median incomes, don’t value their workers and generally coerce worker to race to the bottom against other workers; then cost for the project is lower. The project cost is depressed on the backs of the workers and their qualilty of life.

Currently, companies from states like KY & TN are sending crews to build small ,private retail projects. These crews will spend over a year living in a hotel. IN A HOTEL and it is still cheaper. We have crews coming in from NH. The “NH Advantage” is a disadvantage to local firms. What should we do?

We should not mimic those states that seek to devalue labor. We do NOT want to race to the bottom. Let’s listen to what C.Lorrey and others have to offer on this issue.

3 Responses to “Protect Employers Who Value Workers”

  1. Joe S. Says:

    The State must consider tax policy that looks at the whole picture - not only the business itself, but also its employees. Businesses whose employees are also paying taxes through both income and sales taxes should have a preference in public contracts. Similarly, the City should provide a preference to a company that pays real estate taxes to bolster City revenue.

    The challenge is to properly reflect those contributions so that preferences do not overly compensate and lead to inefficiency and costs which exceed the benefits.

    One question would be is how does the State enforce individual tax collections for out-of-state workers and the sales tax for equipment used in state when the equipment was purchased out-of-state without tax?

  2. Corey Erickson Says:

    A very good motion. Your observation reguarding out of state workers is a good one and doesnt just include small private & retail. Some of our largest contractors who have built and maintained recent municipal projects have provided almost zero local $ benefit. I have worked at most of the large scale city efforts involving water, sewer, paving, LHS’s last renovation, the bridges, JamPlan, citywide elevated & buried utility projects and almost every one was done with out of state/city - employer/employees. How can a project, for example- a seasonal Trolley line… benefit Lowell if our only tangable interest is in constructing it, and we then employ a company and employees from Malden or Vermont? There should be local requirements, options or preference in place for city projects, including employment… yes, the PD too.

  3. Eleanor Rigby Says:

    While the motion was made with good intensions it could, if approved by the legislature, put up a Out of Staters Need Not Apply sign for Lowell contracts.

    Regarding the ‘unfair’ advantage of no income tax for NH employees giving NH companies the edge, that is actually not true unless those companies and employees are violating Massachusetts Tax Law. Here is a portion of FAQ from the Mass DOR site regarding just that issue:

    “3. What is Massachusetts source income for nonresidents?

    The term “Massachusetts source income” is used to describe the types of income which are taxable to nonresidents. A nonresident is only subject to tax on items of income derived from or effectively connected with:

    •any trade or business, including any employment carried on by the taxpayer in Massachusetts, regardless of the year in which that income is actually received by the taxpayer and regardless of the taxpayer’s residence or domicile in the year it is received;
    •the participation in any lottery or wagering transaction in Massachusetts; or
    •the ownership of any interest in real or tangible personal property located in Massachusetts.
    Some examples of the types of income taxable to a nonresident include:

    •compensation for personal services performed in Massachusetts, including but not limited to wages, salaries, tips, bonuses, commissions, fees, and other compensation which relate to activities carried on in Massachusetts, regardless of where the compensation is paid;…”

    So if the council wants to level the playing field between out-of-state and in-state bidders then municipalities shoould be required to file a “1099″ (or whatever it may be called) with DOR for all contract bids awarded and it would be up to DOR to require the companies to file the appropriate document listing out of state workers that earned income on the Massachusetts job.

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