200 Teens Kick Off Cyber-Challenge 2011 at Connecticut Science Center

Yearlong project brings Connecticut students, corporations together; builds critical thinking, teamwork, technology skills

By Lesia Winiarskyj

He might have had a great fall, but this time no one had to put Humpty together again.

That’s because Humpty Dumpty, a foam and cardboard contraption with a chicken egg and two packing peanuts carefully taped inside, survived a 100-foot drop with three anxious teens—and a few dozen of their friends—cheering him on.

The girls—and the egg-drop competition—were part of a daylong kickoff of the CBIA Education Foundation’s Cyber-Challenge 2011, a yearlong project designed to get young people excited about science and technology.

On Your Marks…

Held on Sept. 27 at the Connecticut Science Center in Hartford, the event drew nearly 200 freshmen from New Britain High School, East Hartford High School, and Waterbury’s Wilby High School. Together with their teachers, the kids spent the day mixing, mingling, and exploring the exhibits—and, of course, creating and testing out vessels that could keep an egg intact after being dropped from the building’s sixth-floor bridge. The event marked the start of Cyber-Challenge’s second year.

Throughout the school year, students from all three high schools will rely on academic, interpersonal, and multimedia skills to solve real-world industry problems. Working in teams, they’ll answer complex questions posed by four of Connecticut’s leading businesses. Questions center on health care, energy conservation, aerospace, and other issues, and industry representatives will serve as coaches and judges for the project.

Participating companies are Northeast Utilities, General Electric, United Technologies Corp., and Pfizer. Each has developed a set of questions that will require students to work collaboratively, use social media and wikis for peer-to-peer information sharing, and capitalize on video and animation to showcase their findings. Students will present their final projects at a statewide event in May 2011 at the Connecticut Science Center.

Get Set…

“By supporting projects that build young people’s interest and proficiency in STEM [science, technology, engineering, and math] subjects, and by aligning classroom learning with real-world issues,” says Judy Resnick, “Cyber-Challenge addresses concerns about the growing demand for and projected shortage of workers with strong STEM skills. It also prepares today’s ninth-graders for rigorous Advanced Placement courses offered to juniors and seniors at their schools.” Resnick is executive director of CBIA’s Education Foundation.

Cyber-Challenge is funded by the National Science Foundation’s Innovative Technology Experiences for Students and Teachers (ITEST) grant, administered by CBIA in collaboration with the Connecticut Science Center, the Connecticut Community Colleges’ College of Technology Regional Center for Next Generation Manufacturing, and EASTCONN, a public, nonprofit agency that serves the educational needs of schools, organizations, communities, and individuals in northeastern Connecticut.

For updates on CBIA’s education and workforce development programs, visit cbia.com/edf.

Lesia Winiarskyj is a writer-editor at CBIA. She can be reached at lesia.winiarskyj@cbia.com.

Workers’ Comp Insurance Rates to Go Up in 2011

Rising wage replacement, medical costs driving increase

By Bill DeRosa

Many employers will pay higher workers’ compensation insurance premiums in 2011. The Connecticut Insurance Department has approved an overall increase of 5.8% for policies purchased in the normal or voluntary market and an increase of 7.0% for assigned risk policies. Costs for self-insured companies will likely increase as well, since their costs generally mirror those for insured businesses.

The rate changes were proposed by the National Council on Compensation Insurance Inc. (NCCI), which analyzes and recommends workers’ comp rates for insurers in more than 40 states.

The new rates are “pure premium” rates, which do not include costs associated with administration, premium taxes, and other expenses—nor do they take companies’ claims experience into consideration. Rates will take effect for policies as they are purchased or renewed on or after Jan. 1, 2011.

Here’s how the new rates for the voluntary market break down by industry.*

• Manufacturing +6.1%

• Contracting +4.4%

• Office & Clerical +0.1%

• Goods & Services +7.1%

• Miscellaneous +10.6%

• Overall +5.8%

*A breakdown for the assigned risk market was not available at press time.

What’s Behind the Increase?

“We’re seeing an increase in wage replacement costs in all of the states,” says Laura Backus Hall, CPCU, state relations executive at NCCI. Wage replacement and medical coverage are the two components of the workers’ compensation benefit.

“When we determine rates,” says Hall, “we’re pulling out a snapshot of experience in time. In the experience period we’re using for this rate filing, we’re definitely noticing the increase in wage replacement costs per case, so that’s one of the bigger drivers of this current filing.”

She explains that one of the reasons for the increase in wage replacement costs is Connecticut’s aging workforce. (According to a report by the Connecticut Commission on Aging, our state has the nation’s seventh oldest workforce.)

“Typically, wage replacement benefits for an injured older worker are higher because [those workers] are more experienced and they’re making more money,” says Hall.

Other factors in this year’s overall rate increases are rising medical costs and the fact that the decline in claims frequency we’ve seen over the past several years is slowing. Previously, that decline has helped to offset the effect of rising wage replacement and medical costs.

“Claims frequency is still going down in Connecticut,” says Hall, “but not by as much. It’s not offsetting the increases in the other two components as much as it has in the past.”

The good news, she says, is that an overall 5.8% increase in the voluntary market doesn’t necessarily mean any one company’s premium is going to go up.

“It really has a lot to do with an employer’s claims experience, so I wouldn’t call this doom and gloom. If you’re looking at the big picture, [rate] changes have been pretty stable over the past decade.”

Each year, CBIA’s surveys of its members show that workers’ comp costs are among their biggest concerns.

To learn more, contact Kia Murrell at 860.244.1931 or kia.murrell@cbia.com.  

Bill DeRosa is editor of CBIA News. He can be reached at bill.derosa@cbia.com.

National Economy Recovering, Still on Shaky Ground

Speaking at CBIA's 195th annual meeting in Hartford, Mark Zandi, chief economist at Moody's Analytics, tells attendees that 2012 will see a significant upswing in economic growth.

Leading economist says potential for double-dip ‘uncomfortably high’ until 2012

By Bill DeRosa

If the national economy can make it through the next six to 12 months without sliding back into recession, we should see a return to much more solid growth in 2012 and 2013. But that’s a big if says Mark Zandi, chief economist at Moody’s Analytics and cofounder of Moody’s Economy.com.

More than 450 business leaders listened intently as Zandi outlined his short- and mid-term economic forecast at CBIA’s 195th annual meeting in Hartford.

Europe’s Troubles Felt Here

At a 2% annualized rate, economic growth as measured by GDP is tracking well below its estimated potential, said Zandi, not fast enough to “grow jobs or even forestall further unemployment increases.” The likely result is that unemployment will get worse—edging back into the double digits—before it gets better.

One reason for the lower-than-expected growth rate is the debt crisis in Europe, which drove the stock market down by 15% last spring and early summer.

“The European debt crisis sideswiped us,” said Zandi, explaining that businesses and households are sensitive to fluctuations in the stock market; they are less likely to engage in economic activity when the market is sending negative signals and people see their nest eggs shrinking.

Zandi also attributed sluggish growth to the end of federal stimulus programs, which, he says, were critical in ending the recession because they “brought an end to the freefall.”

Near Term: Touch and Go

“The next six to nine to 12 months are going to be uncomfortable,” said Zandi, pointing to the overall fragility of the economy. “We’ve got some issues to work through.” In fact, he puts the odds of a double-dip in the coming months at one in three.

One cause for concern is that hiring is at a record low rate, primarily, said Zandi, because business-formation rates are also at a record low, and “business formation is critical to hiring.” Tight credit, he said, is also responsible for companies’ unwillingness to engage in any significant hiring.

He also cited a persistent lack of consumer and small-business confidence and the mortgage foreclosure crisis as reasons economic growth won’t pick up until 2012. He expects home prices to decline further, which will make it more difficult for small businesses to get financing, because many small-business owners put their homes up for collateral. As home prices continue to drop, said Zandi, small businesses will “have difficulty getting credit, and the job machine won’t get going.”

Mid-Term Prospects Brighter

If the economy can get through 2011 without a major hit, Zandi is much more optimistic about the prospects for a return to robust growth and lower unemployment. He forecasts a 5% growth rate as measured by GDP in 2012 and does not see inflation becoming a major problem.

Zandi’s optimism is grounded in several factors, among them the Federal Reserve’s planned purchase of $600 billion in Treasury bonds by June 2011 (announced last month) in an effort to lower long-term interest rates and stimulate economic activity. Zandi believes that the Fed’s move will result in a measurable increase in GDP and new jobs.

He also noted that because businesses have done a “marvelous job reducing their cost structures,” large and midsize firms are now highly profitable, and their balance sheets are strong.

“It’s no longer a question of whether businesses can expand, but are they willing,” said Zandi. He predicted that once one CEO in each major industry decides to change focus from cutting costs to increasing revenue, others will follow and business expansion and hiring will ensue.

Zandi also believes that the trend among households to deleverage or reduce their debt loads, is making strong progress and is cause for optimism.

“We’re righting the wrongs that got us into this mess,” he said. “Household liabilities have fallen by about $1 trillion over the last two years.” Once the deleveraging process is complete, consumers will begin spending again, in part, due to the pent-up demand that has been developing during the deleveraging process.

A Question of Confidence

“If my optimistic perspective on the outlook will come to pass, a number of different working assumptions have to hold,” said Zandi. “The first is that we have to continue to make a reasonably graceful transition from an economy led by consumers to an economy that’s led by exports and business investment. I think we’re up to this challenge.”

Zandi predicts that we’ll continue to export the goods that we already export—including aerospace, machine tools, pharmaceuticals, and agricultural products. But we’ll also need to export services—accounting, legal, management consulting, engineering, architectural, and others—all of which, he said, we do extremely well.

“These services embody what is our nation’s competitive advantage,” said Zandi. “It’s our highly skilled and educated workforce, and nowhere is that more obvious than in the state of Connecticut.”

The other working assumption Zandi believes will have to hold for the economy to come back is that Washington and state governments will address their fiscal crises.

“You’re going to say, ‘Oh, we’re doomed,’” Zandi quipped, “but I think just the opposite…If there’s a problem anywhere in the world, global investors come to invest in the United States, because they know that when push comes to shove, we always figure out what to do, and we do it.

“Everyone has confidence that we’ll do it, except perhaps ourselves. But I think we will be able to get it together. Our [fiscal] problems aren’t quite as daunting as you think they are…and there are some pretty straightforward things you can do both on the spending side and on the tax side to get it together and make sure that my optimistic outlook for the U.S. economy comes to pass.”

Closer to Home

During a brief question-and-answer session, an attendee asked Zandi for his thoughts on how to close Connecticut’s massive budget deficits and reduce billions in unfunded liabilities. Zandi offered three broad recommendations. First, he called upon policymakers to be bold, “to be extremely aggressive with respect to the fiscal situation.”

He also suggested that fiscal matters are going to turn out “much better than anticipated” and that the state will get a lot of help from the revenue side when the economy picks up in 2012.

Zandi cautioned, however, that when that upswing occurs, the inclination will be to not address the big problem—the approximately $60 billion in unfunded liabilities for state employee health and retirement benefits. He said that in 2012 and 2013, when the state’s revenue stream has improved and the economy is better, that’s the time to tackle the unfunded liabilities.

Zandi was also optimistic in response to a question about the decline in manufacturing in Connecticut. If you survived the recession, he said, “you will have the wind at your back,” because emerging economies all over the world will want to buy what you produce.

He warned, however, that there’s no guarantee that manufacturing firms will choose Connecticut over other states as a place to locate or expand, which is why any solutions to the state’s fiscal problems should focus more on reducing government spending rather than raising taxes.

Bill DeRosa is editor of CBIA News. He can be reached at bill.derosa@cbia.com.