Tuesday, June 28, 2005

Connecticut Worst in Nation in Job Growth

FDIC Data Shows Employment At Early 1990s Level

Connecticut, apparently, never really recovered from the recession of the early 1990s. A lot of us have suspected as much for a long time, but here, at last, is the proof:

Connecticut has the worst job stagnation in the country, with employment only slightly higher now than at the beginning of the 1990s, a federal agency said Tuesday.

The state has lost more than 100,000 manufacturing jobs in the last 15 years and had the lowest growth in its professional and business services sector in New England, according to a report by the Federal Deposit Insurance Corp. ...
FDIC officials said in a conference call that Connecticut's lack of job growth stems from the state's slow population growth and the steady loss of manufacturing jobs.(AP)

Connecticut, as the article correctly notes, relied heavily on the insurance, banking and defense industries for the boom we experienced during the 1980s. The recession of the early 1990s cut deep into those traditional employers, forcing many of them to either cut staff (Aetna), merge with larger companies (Travelers), relocate out of state (pick one) or shut down completely (countless smaller firms). We have, to put it bluntly, not recovered. The looming loss of the sub base will be yet another nail in the coffin of the old economy.

To make matters worse, our population growth is slowing to a crawl, as is traffic through the state. The cost of living is high, here, and the climate can be a little rough for the uninitiated.

So what can be done? What should the government be doing to help? I think a pertinent question is whether or not a government can legislate economic growth, or whether economic cycles happen independently of government. I believe that government actions do have an effect on the economy, but only up to a certain point. That being said, here's what the government can do:

1. Transportation. We need cheap, reliable public transportation linking the major urban and suburban centers of the state. This could take the form of rail lines, river lines, better bus services, busways, or anything else people can think of. Just don't put Amtrak in charge of it. We also need to upgrade the infrastructure of the state's highway system to handle the crushing pressure put on it every day.

2. Education. This is one of our strengths. Connecticut is home to many fine colleges and universities. Unfortunately, our state university system is not up to the standard of, say, Pennsylvania's. We can do better. We can also make sure that students who have the ability to go to college will be able to attend. One idea I keep hearing that I like is akin to the G.I. bill--students who put in a set amount of public service of some sort during college will get an awful lot of financial assistance. The government can also provide technology-heavy job retraining programs for people who are out of work.

3. Encouraging Businesses to Open and Stay. We do a poor job of this, and it isn't just because of taxes. There are other ways to support businesses. We don't have to rely on the old standbys of cutting taxes, keeping wages low and abolishing regulation (the evidence for the efficacy of these plans is spotty and mixed, to say the least). Addressing the pressing need of cities and towns for more state aid will help remove some of the property tax burden on business owners, and streamlining regulations to make business easier while still addressing the concerns the regulations were established for are steps in the right direction. A well-educated workforce and 21st century infrastructure will go a long way towards encouraging and retaining businesses as well.

Lord, I sound like I'm running for something. But there certainly are at least some steps the government can take. After that...? We may have to do the rest on our own, if we want to avoid the fate of so many other regions of the Rust Belt.

To drive home the point about just how much the state has done to spur job growth since the early 1990s, here's something I used to see when I commuted from Enfield to Newington every day back in 2000:

In a cracked and overgrown parking lot by the side of I-91 in Hartford, right near the Colt Building, sat a rusting, abandoned tractor trailer. On the side of it were the words: "The NEW Connecticut: Where JOBS are the 1st Priority!" It had been there for years.

The truck, and the slogan, were relics of the Weicker administration. I doubt that anyone had dusted off either since.

"State's Job Stats Grim." Associated Press 28 June, 2005.


Anonymous said...

Connecticut has much work ahead if we are to become more competitive in attracting and retaining businesses. Certainly the latest Dem/Rell budget further moves us in the wrong direction. Why do Arizona and Florida have robust job markets?? Low taxes!!

Anybody else hear that Blumenthal is set to announce on Friday? I will be a bit surprised if he actually does.

Genghis Conn said...

Hadn't heard that about Blumenthal. I'll be shocked if he does.

Florida and Arizona also attract loads of tourists, are cheaper to live in and have better climates.

Anonymous said...

Farrell on friday is what I hear.

Anonymous said...


Yes, AZ and FL have tourism and nicer weather (AZ is far too hot!) but they also have far lower taxes than CT as a percentage of per capita income. The fact is that unless we reform our tax structure (including prop tax) we will continue to lose our manufactring base and see more service corps leave for cheaper states.

Our strengths were always our proximity to NYC and a well-educated labor force. Those are now less important than they once were as labor mobility is more likely and NYC becomes a bit less important an economic beacon.

Also, the poor condition of our transportation infrastructure is at best shoddy, and not conducive to an overall positive quality of life.

Anonymous said...

The hard work ahead of us begins by first making jobs-- keeping them and creating them-- a priority in the first place would help. The fact that Mortgage Lenders is considering relocating to MA, and taking along 735 jobs and 500 future jobs is a crying shame. These jobs are at risk in part because MA has been quicker to respond and more aggressive in its attempts to secure the company. In fact, a spokesperson was quoted as saying, "The State of Connecticut is very slow in reacting. They see to have a defined process. On the other hand, we were amazed at the speed with which Massachusetts has come to the table." (New Haven Register, 6/24).

Anonymous said...

I wholeheartedly agree with the needs of public transportation, but even if you fixed this (no small task) there are still fundamental problems.

Two things about CT drive away business-- wages and regulations. Our highly unionized state has some of the highest wages ANYWHERE in the world. Why would a company ever come here, even for white collar jobs, when equally compentent people can be found elsewhere for a lower wage?

Second, we have so many taxes and regulations on business that no one would ever choose to move into the state. The only businesses that are starting here are because the people already live here.

Businesses came into Stamford in the 1990's? Why? Because they got big tax breaks and NYC was taxing like crazy before Rudy G.

Fix the transportation, emphasize education. All good stuff. But the high wages are here to stay (no way around it now)...so the best CT can do is be as business-friendly as possible with its taxes and regulation. Without this, a clear I-95/I-91/I-84 and nice UConn won't mean much.

stomv said...

^ I don't buy it.

The arguments that CT is too expensive and has unions and regulations also apply to NY and MA. While those two states aren't 1 and 2 in job growth, they're both very stable, have solid economies, and tremendous wealth.

The standard anti-tax rhetoric is a bunch of crap. Either you (a) provide less services, (b) tax businesses, or (c) tax workers. Ain't no other way. This recent rob Peter (employees) to pay Paul (employers) trend is just foolish.

In the initial post, slow population growth was cited as a negative -- I think in CT's case (low job growth, much traffic) that's a positive. Also, I think that since so much of the CT population lives within a stone's throw of NYC, White Plains, and Providence (and a longer throw to Boston) that considering the job growth in those regions is also relevant. Sure, CT may not be capturing all those taxes, but it's getting some of 'em, and it's citizens are employed somewhere.

Anonymous said...

With respect to Blumenthal, I wouldn't expect an announcement anytime soon. The buzz I've heard is that Lieberman is either going to get a Supreme Court appointment or Gonzales will, and then Lieberman will get AG. If that's the case, then Blumenthal will continue wait -- hoping for what he considers the bigger and more desirable prize.

Ebpie said...

The day George Bush appoints Lieberman to the Supreme Court is the day Michael Moore votes Republican, it ain't gonna happen. Where did the information on Farrell come from? She will most likely run in 2006. I'm surprised she hasn't made it official yet. It will be interesting to see how Rell spins these economic numbers. So far she hasn't had much bad press in the way of the economy. If the Democrats can capitalize on this then this could mark the beginning of the end for the Gov's high approval ratings.

FrankS said...

The FDIC findings expose the true failures of John Rowland as governor and people of his administration. He had more political and economic advantages to address transportation, housing and employment needs, than Weicker and the latest Legislative Special Session highlighted the costs of ignoring the State's transportation systems.

Another view, I agreed with on the State'parks.


Rell needs to more that talk.

Eddie said...

New Jersey is more crowded than Connecticut, and also has high taxes and, um, a corruption problem. But it has biotech and more pharma than we do, and quite a diversity of industries. Massachusetts, at least the Bostonian end, is expensive and horribly crowded, but it's got MIT and all the associated cutting edges. Boston and Princeton have cachet as exciting places. We're more banking and insurance, steady but old-growth and, frankly, not very exciting.

Arizona and Florida have Social Security dollars coming in: "free money" (earned elsewhere) for the local economies. I don't think their situations are very comparable to ours.

Aldon Hynes said...

I find the discussion of tax breaks here a very interesting contrast to the discussion in the Wall Street Journal yesterday, States Pay Steep Price To Attract Industry about the growing backlash against tax incentives to attract business.