Northern neighbor outshines Connecticut economy
STAMFORD — One state lost 5,200 jobs last month; the other gained 5,100. One state’s unemployment rate persistently hovers above the U.S. average; another has it more than a full percentage point below the national number.
Comparisons of Connecticut’s tepid jobs recovery and Massachusetts’ hot growth highlight the former state’s economic predicament. While Connecticut has experienced a noticeable turnaround since the last recession, many other states, including Massachusetts, are outpacing Connecticut with their own rebounds. The scrutiny of Connecticut’s performance reveals its weaknesses and also points to potential paths to a true revival.
“The important thing for everybody to understand is we have our future in our own hands,” said Pete Gioia, economist for the Connecticut Business and Industry Association. “We have tremendous potential for growth in manufacturing, a tremendous financial services and tremendous bioscience base, and a second-to-none existing workforce. But because we don’t have policy act together, we limit our potential.”
A long recovery
Connecticut has staked out a protracted and fitful recovery since its downturn ended in February 2010.
The state has now recovered about 91,000 positions, or 76 percent of the approximately 119,000 jobs that were lost in the state during its 2008 to 2010 recession. The recovery has been producing an average of about 1,150 jobs per month since February 2010.
While the health of the state’s economy has improved in the past half-decade, its rebound looks feeble compared with many other states. Since the end of the national recession, Connecticut has increased its number of jobs by about 4 percent, according to federal Bureau of Labor Statistics. That ranks 45th among all states, ahead of only Louisiana, New Mexico, Maine, West Virginia and Wyoming.
“We obviously suffered greatly through the worst recession since World War II,” said Patrick Flaherty, assistant director of research and information for the state Department of Labor. “As we’ve been coming out of that global financial collapse, we’ve seen some real restructuring in major institutions, including hospitals, state government and insurance companies.”
In comparison, Massachusetts has grown its employment rolls by about 12 percent since the end of the U.S. recession, placing it 15th among the states.
Recent numbers don’t look auspicious for Connecticut, either. While the state has added some 5,000 jobs since the beginning of the year, it has recorded losses the past three months. At the current rate, Connecticut’s employment total likely would not hit its prerecession level until late 2017, according to Flaherty.
In contrast, Massachusetts has raised its employment levels for three straight months.
Connecticut’s unemployment rate now stands at 5.4 percent, compared with 3.6 percent in Massachusetts. The national average is 5.0 percent.
Connecticut’s sputtering growth can be attributed in large part to hesitance among businesses about investing more in the state, Gioia said.
"They don’t feel comfortable putting some investments in Connecticut because they’re concerned about our fiscal future, business costs and a seemingly business-unfriendly attitude from policymakers,” Gioia said.
A number of entrepreneurs, meanwhile, express frustration that the state has not done enough in their view to support small-business growth. Gov. Dannel P. Malloy often touts as a significant achievement the launch of the Small Business Express Program, which has given state financial support to some 1,500 firms in the past four years.
But the amount of backing is not satisfactory to a number of executives who said that they see an overemphasis on incentives to large corporations.
“The economy is faltering again on the job-market side, and there is no reason to believe it will get any better anytime soon,” said David Lewis, founder and CEO of Operations Inc., a Norwalk-based HR outsourcing and consulting practice. “There’s nothing in place that suggests we’re going to see any growth. There’s nothing new or no meaningful new approaches that are in place or on the horizon.”
State officials have said that they are focused on small businesses, but that investments in programs to attract and keep major corporate players like NBC Sports and Bridgewater Associates are also critical to the state’s ability to compete with the likes of Massachusetts. At the beginning of October, the state announced that Henkel Corp. would relocate its laundry and home care and beauty care headquarters from Arizona to Stamford, supported by a 10-year $20 million low-interest loan from the state.
“When an international company of Henkel’s stature decides to relocate to our state, expand its operations and create hundreds of new jobs, it sends a message to the rest of the world that Connecticut is serious about working with companies to grow, generate capital investment and strengthen our economy for the residents of our state,” Gov. Dannel P. Malloy said in a statement.
Situated between New York City and Boston — but without a big city of its own — Connecticut has become more vulnerable in recent years to corporate relocations to major cities in other states. GE’s announcement earlier this year that it would relocate its headquarters from Fairfield to Boston — a city with a population more than 10 times the size of its former home — epitomized the trend.
“It looks like we’re sort of at a disadvantage with a suburban lifestyle and suburban office parks, which just doesn’t seem to be where it’s at,” Flaherty said. “New Jersey is suffering even more, as they’re between Philly and New York. You would think being between two growing places would be an asset for both Connecticut and New Jersey. We just haven’t figured out how to take advantage of that.”
Despite the state’s travails, both policymakers and business leaders said the state has the ability to produce vigorous growth.
Policy experts and business leaders also see a need for the state to do more to develop skillsets needed for the contemporary workforce.
“Cybersecurity, regulatory compliance, procurement and data science — those are some pockets where companies struggle to find the right person,” said Heather Ziegler, professional-services firm Deloitte’s Stamford managing partner and deputy strategic risk leader. “That skills gap is an important one to focus on, and the big employers need to do a little more to close that gap.”
Connecticut companies are paying more attention to the need to create more supply for in-demand positions. Stamford-based Synchrony Financial announced earlier this month that it would invest $2.2 million in new cybersecurity initiatives at the University of Connecticut.
Connecticut could also compete better with Massachusetts, especially Boston, by improving its mass transit infrastructure, said Joe McGee, vice president of public policy for The Business Council of Fairfield County and co-chairman of the state’s Commission on Economic Competitiveness. He cites the promise of connecting the insurance hub of Hartford with the bioscience nexus of New Haven.
“By linking the strengths of those two cities together, we can become a national leader and a major player in the country,” McGee said. “These are Connecticut resources less than 50 miles apart, and we need to see them as part of our enormous ability to grow health-innovation programs.”
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