One-third of respondents say initiative will force cuts in hiring and salaries;
nearly half will cut reinvestment
OLYMPIA — Employers say new jobs and reinvestment in business are likely to be the first casualties of a new state income tax if voters approve Initiative 1098 this fall. That’s according to a new survey of employers who belong to the Association of Washington Business, the state’s chamber of commerce.
Employers expect the proposal would result in significant cuts in hiring and reinvestment in their businesses. Overall, 33 percent plan to decrease hiring and salaries and 47 percent expect to decrease reinvestment.
The greatest impact was on businesses with fewer than 500 employees, which provide 56 percent of Washington jobs. A third of these employers reported that they would slow hiring or cut salaries. These small- and medium-sized businesses also planned to make the largest cuts — reducing hiring by an average of 30 percent and salaries and benefits by about 15 percent. In addition to hiring, these employers were most likely to reduce reinvestment in their business, with 47 percent expecting to make cuts.
The smallest businesses – those with 20 or fewer employees — expect to make significant cutbacks. Twenty-seven percent said they would decrease hiring, 29 percent would decrease salaries and benefits, and 39 percent would decrease reinvestments in their businesses in Washington state if I-1098 passes.
In addition to hiring cuts and reduced reinvestment, some employers said they would leave the state entirely. Without being prompted, 16 businesses (1.8 percent of respondents) commented that they planned to leave Washington if voters approve I-1098, and several others said they were considering it.
Given that most job creation comes from small businesses, voters should have big concerns about I-1098, according to AWB President Don Brunell.
“Washington state should be doing everything in its power right now to attract and create new private sector jobs,” said Brunell. “An enormous deterrent to growth like a new state income tax would have the effect of telling companies to go elsewhere.”
Employers reported minimal economic benefit from the proposed B&O and property tax cuts. Fewer than 2 percent of small-business owners believed that the proposal would enable them to expand their businesses through increased hiring or reinvestment.
Approximately 900 employers responded to the online survey, which was conducted from Aug. 3-13. Of those, 79 percent said they oppose I-1098. Brunell believes the strong response indicates the significant economic stakes for employers.
“1098 sends the wrong message at the wrong time. We need to defeat 1098 if we want to start adding jobs and get this economy back on track.”
Formed in 1904, the Association of Washington Business is Washington’s oldest and largest statewide business association, and includes more than 7,000 members representing 650,000 employees. AWB serves as both the state’s chamber of commerce and the manufacturing and technology association. While its membership includes major employers like Boeing, Microsoft and Weyerhaeuser, 90 percent of AWB members employ fewer than 100 people. More than half of AWB’s members employ fewer than 10. For more about AWB, visit http://www.awb.org/.
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