The State Senate has approved a bill that makes the manufacturing apprenticeship tax credit available to pass-through entities.
Currently, the credit is only available to businesses that are subject to the corporate income tax. The extension would benefit small- and mid-sized manufacturers by offsetting the cost of training new employees and apprentices, according to state Sen. Joan Hartley (D-Waterbury), who is co-chair of the Commerce Committee.
In its existing form, the manufacturing apprenticeship tax credit only can be applied to the corporation tax, which means that pass-through companies including S-corporations and limited liability companies are ineligible.
Smaller manufacturers say training apprentices can reduce business productivity because it forces them to divert employees’ time. Bloomfield-based Back East Brewing LLC submitted written testimony in favor of the bill on March 1, saying the benefit would help cover the costs of training new employees.
“Not only does taking on an apprentice mean I have to cover the cost and wages of the person, but I also must account for the lost productivity of their mentor,” the brewery’s testimony says. “In an environment where there is a huge labor shortage, pulling someone away from their job to train someone is becoming increasingly less feasible.”
Senate Bill 98 received support from the Connecticut Business and Industry Association, which has made addressing the workforce shortage a top priority.
Ashley Zane, government affairs associate for the CBIA, said it would not only help businesses, but workers by making livable wages “accessible to anyone regardless of socioeconomic status, gender, age and race.” For example, a machinist in Connecticut can make about $56,100 per year, not including overtime, benefits and other forms of compensation, along with minimal or no student debt.
The Waterbury Regional Chamber also supported the bill.
“Our state’s major defense contractors are seeking to hire thousands of workers to meet production needs over the next decade or more,” said Joseph Violette, director of public policy and economic development for the Waterbury Regional Chamber in written testimony submitted March 1. “Unfortunately, Connecticut continues to have a shortage.”
The credit would allow pass-through entities to reduce their personal income or business entity tax liability, putting them on “a more level playing field with larger manufacturing companies who can afford to train new apprentices, and potentially retain them as employees,” according to Hartley.
In Connecticut, 55% of manufacturers surveyed said they experienced difficulty finding workers in 2021, according to a report from the CBIA. The report also found that 36% of manufacturers cited a lack of necessary skills or experience among applicants as contributing to hiring difficulties.
The bill will advance to the House of Representatives for consideration.
