Does Montpelier have its priorities straight?
Much focus lately, both from our politicians and our media, has been on IBM, the potential sale of its Essex facility and the question of what will happen to its 4000 employees. The Greater Burlington Industrial Corporation (GBIC) has proposed, among other measures, making a $4.5 million cash payment -- the entire newly formed Enterprise Investment Fund -- to either IBM or the plant's buyer to keep jobs here in Vermont.
Eyebrows also raised when we learned Kurig Green Mountain decided to open its new cold-pod factory in Atlanta, Georgia -- home of new partner (and large and growing shareholder) Coca Cola -- and not in Vermont despite years of encouragement and investment by the state through the Vermont Employment Growth Incentive Program to expand here.
These are certainly important developments deserving of attention, but another story that got less press and deserves more consideration is the decision of Burlington's Benway's Taxi to close its doors after 30 years, laying off approximately 70 employees after the July Fourth weekend. The company's owner, Wanda Robar, blamed new health care laws, burdensome regulations and the generally high cost of doing business in Vermont as the reasons for shutting down.
A story that got little, if any, attention was the closing of the iconic West Danville General Store after over 100 years of operation. Weybridge General Store owner, Doug Tschorn of Arlington, stated that he might be next after Vermont's increase in the minimum wage goes into effect. Tschorn explained, "We're a small family business. We've had the store for 30 years, and it was so much easier to operate in the past than it is today because of the pressures from the state."
While a number of companies have made headlines recently because they are moving out Vermont, such as Kennametal, Huber & Suhner, Energizer, Plasan Composites, these are companies with a national or international footprint. Their decisions are based on global as well as local factors. Benway's, general stores, and other similar small businesses, however, are Vermont grown, Vermont based, and state policy has a great deal to do with their fate.
While 70 employees doesn't sound like much next to 4,000, there are a lot more Benway-like companies in Vermont than IBMs. A recent report by the Small Business Association noted that 59 percent of Vermonters are employed by small businesses as compared to 49 percent nationally. That's 156,750 of our friends, neighbors and relatives, a number nearly 40 times the size of IBM in Essex. There are over 60,000 sole proprietorships in Vermont. So, if our economic environment is showing signs of failure for the Mom and Pop operations of Vermont, we really ought to take note and take action. They are the real backbone of our economy, not to mention the true Vermont brand. When you think "Vermont" do you think IBM, or do you think locally produced Maple Syrup purchased at a small general store?
CNBC just released its latest ratings for the Best States for Business, and Vermont scored an overall 42nd, a ten state drop from our 32nd place ranking in 2013. Many organizations publish such ratings, and Vermont is regularly found in the bottom ten, but CNBC's ranking formula is pretty sophisticated, and it is one Vermont has done comparatively well on over the past five years (ranking mostly in the 30s rather than the 40s).
CNBC tabulates their rankings based on 56 input measures within ten weighted categories: Cost of Doing Business (VT-41), Economy (VT-23), Infrastructure & Transportation (VT-49), Workforce (VT-50), Quality of Life (VT-2), Technology & Innovation (VT-37), Business Friendliness (VT-31), Education (VT-2), Cost of Living (VT-40), and Access to Capital (VT-31).
Vermont's most positive attributes appeal to individuals and families -- a stellar lifestyle, and good schools for kids. Our most negative characteristics -- poor infrastructure and inadequate workforce -- are deal breakers for large multi-national corporations, and there's not a lot we can do in the short term about either on the scale an IBM is looking for. In light of this, policies dumping millions on large multinational corporations while punishing small Mom and Pop operations with higher minimum wage requirements, higher property taxes, and threats of things like mandatory paid sick leave, and a very high (as much as 18 percent) payroll tax to pay for single payer healthcare appear backwards.
Vermont's priority should be to enact policies that will help keep the small scale businesses we have here growing and thriving. Second, we should be putting policies in place that will attract 4000 good paying jobs spread across hundreds of small businesses rather than a few big ones. Boston, New York and Montreal are filled with high-paying, low-environmental-impact, small-scale firms in finance, software, law, communications, design, entertainment, etc. Let's start asking what we have to do to get them here.
Rob Roper is president of the Ethan Allen Institute.
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