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Virginia business interests see ally in Youngkin. Labor set to play defense

Supplies behind a fence ahead of inauguration at the Virginia State Capitol
Some business interests hope the inauguration of Gov.-elect Glenn Youngkin will lead to a friendlier regulatory environment in Virginia. Labor leaders worry it could reverse two years of gains for workers. (Crixell Matthews/VPM News)

Business groups say they’re looking forward to what some say will be a warmer reception in Richmond after Republican gains in the November election. Lobbyists for some groups are looking to advance an agenda of tax cuts as well as rolling back some policies championed by Democrats in recent years, including statewide COVID safety regulations and further minimum wage increases. Labor leaders, meanwhile, say some of the changes would come at the expense of workers.

Gov.-elect Glenn Youngkin, a former CEO of the private equity firm Carlyle Group, made his private sector experience a central plank of his campaign. Youngkin dismissed Virginia’s strong state revenues, comparatively low unemployment rate, and twice-in-a-row ranking by CNBC as the best state for business, arguing the commonwealth was actually “in a ditch” because of the high cost of living. He vowed to cut taxes, slash red tape and compete to win over big employers. 

“We feel a lot of confidence about how it's going to go because Governor-elect Youngkin comes from a strong business background,” said Beck Stanley, director of government affairs with the Virginia Agribusiness Council.

At an event at the Hampton Roads Chamber last month, Youngkin pledged to begin the process of cutting business regulations by 25% and accelerate the pace of regulatory decisions on his first day in office.

State law requires state regulations to go through an extensive period of public review before they’re considered by a state agency or board. That means Youngkin can’t unilaterally take action on most regulations, according to University of Richmond law professor Carl Tobias.

“If they violate that, then you can sue them and the judge is likely to enjoin that until the process has been followed,” Tobias said.

Still, Youngkin could gradually appoint staffers who share his views to the state’s various boards and agencies.

Macaulay Porter, a spokesperson for Youngkin, declined to say whether he hoped to revisit COVID safety regulations passed by a state board in 2020 and made permanent in January of 2021. Labor groups like the AFL-CIO and Democrats like Gov. Ralph Northam hailed Virginia’s leadership in protecting workers at a time when no other state had comprehensive rules. Some labor advocates, however, say even Virginia's protections failed to protect the most vulnerable workers. Business groups, meanwhile, argue the rules are onerous and unnecessary and prefer looser federal guidelines.

Nicole RIley, Virginia director of the NFIB, which represents around 6,000 small businesses in the General Assembly, argued the regulations should be repealed in favor of looser federal rules and guidelines from the Centers for Disease Control and Prevention.

Riley said her members’ top priority was lowering taxes. She said she’d push lawmakers to allow businesses to avoid taxes on up to $100,000 of federal and state pandemic loans (an idea included in outgoing Gov. Ralph Northam’s budget proposal), double the standard deduction for individuals and create a one year state tax holiday for businesses that earn up to $250,000 in revenue. Youngkin floated all three ideas on the campaign trail.

“A number of the proposals that have been talked about are helpful both to small business owners but also regular working Virginians,” Riley said.

One recent analysis found enacting some of Youngkin’s proposals could cost local and state governments almost $300 million per year in lost revenue used to pay for essential services like education. 

Riley said she would also check whether lawmakers had any appetite to freeze a scheduled minimum wage increase at $11 an hour, which became the new threshold on Jan. 1. She argued businesses needed flexibility to meet their varied labor needs. The state wage is set to rise again to $12 an hour in 2023 before a legislative panel reviews a further increase to $15 an hour. Riley also said a law passed earlier this year adding protections for overtime pay should be reexamined or repealed because looser federal laws were sufficient.

Not all businesses share those priorities against the backdrop of a nationwide labor shortage. One group, Business for a Fair Minimum Wage, represents businesses from Buz and Ned’s Real Barbecue in Richmond to the outdoors retailer Patagonia who back a $15 minimum wage. The group’s vice president, Alissa Barron-Menza, said in a statement that raising the wage would “help businesses hire and retain employees, reducing turnover and increasing productivity.”

Porter declined to say whether Youngkin supported the minimum wage freeze.

All of the legislative proposals would have to pass the state Senate, where Democrats hold a 21-19 majority. Sen. Chap Petersen (D - Fairfax City), who has at times pushed back on labor demands from progressive members, said he expected Democrats would “hold the line” on 99% of the legislation they passed over the last two years.

“Just because the House has flipped control doesn't mean that necessarily we're reopening the door to all these debates,” Petersen said.

Still, Petersen said he planned on introducing a bill raising the standard deduction, a position that aligned him with Youngkin and other Republicans.

Oxfam ranked Virginia as the worst state in the U.S. for workers in 2018. David Broder, president of SEIU Virginia 512, credited Democrats for bumping up that ranking to 24th in the U.S. last year. New pro-labor laws raised the minimum wage, created collective bargaining rights for some public sector employees and added new protections against wage theft.

“I think any attempt to rollback the vital worker protections that we've passed would be bad for our economy and bad politically for those who tried to do so,” Broder said.