At the recent New England Economic Partnership conference, economists from around the region discussed the outlook for this part of the country. As it has been for the last several years, the economic forecast was tempered: the region is expected to experience slow growth and slow recovery over the next four years.
During the recession, New England lost five percent of its jobs and the region as a whole is unlikely to return to pre-recession employment levels until 2015. Among the six states, Connecticut entered the recession late and has been slow to recover after losing more than 117,000 jobs. To date, the state has recovered 42 percent of the private sector jobs and 32 percent of the overall jobs lost. The state's unemployment rate has remained below the nation's average, and is projected to fall to 6.6 percent in 2016. Given the state's concentration of financial services jobs, there has been a significant impact from the restructuring of the financial services industry, with a loss of 12,700 jobs in that sector alone. Connecticut is also predicted to be affected by proposed cuts in federal defense spending.
Since the beginning of the recession, New England has fared better than other regions. The region's overall unemployment rate has remained below the national average and is expected to remain so for the next three years. The weakness in our housing markets, while significant, does not touch the crippling declines seen in other regions. However, job growth in New England remains weak and there is significant uncertainty in the regional economic outlook.
Much of this uncertainty derives from external factors. New England's prosperity is obviously intertwined with the rest of the nation. To the degree the national picture dims, our region is likely to mirror those developments. And, perhaps to a greater degree than other parts of the country, Europe's influence is significant — the European Union has traditionally been an important trade partner and investor for New England. Given the factors we cannot control, it is important to look at those elements in the economic mix that we can address. In any recession, there is dislocation and realignment of the labor market with the emerging employment opportunities. In this recession, we see a significant disconnect between the types of new jobs being created and the skills those seeking employment. Around New England, employers in many industries have job openings, but simply cannot find qualified employees.
Among the top sectors for growth are computer and mathematical occupations, along with health care support occupations. In these sectors, jobs are emerging that require highly skilled labor — and often different skills than in past decades. Our economy is shifting toward occupations which require science, math, engineering and technology — the so-called STEM fields — and our workforce isn't keeping pace. We must redouble our efforts in educational reform to expose students to STEM skills early and often, and ensure that they join the workforce equipped with advanced skills.
There is also a "skills gap" for employers needing workers with specific job skills, such as advanced manufacturing techniques. Precision manufacturing technology becomes more sophisticated every day, and so do the skills needed to work in this sector. We need to do more to equip the existing labor force and the next generation of workers with sophisticated mid-level skills needed in the emerging manufacturing sector.
Since 1990, the number of workers with any postsecondary education has been growing more slowly that in other parts of the country. In particular, the region faces a shortage of workers with education beyond a high school diploma, but short of a bachelor's degree. Many of the jobs in growing sectors, such as healthcare, will require just this mix — some 40 percent of future job openings. It is vital that our New England's educational institutions recognize this and align their offerings accordingly.
Skilled workers are the catalyst to transform New England's long-term economic prospects. Our region's economic recovery will depend in large measure on the alignment between the skills of available workers and the emerging job opportunities. With slow growth projected for the next few years, and significant external economic risks we cannot control, enhancing the skills of our labor force will pay huge dividends.
James T. Brett is the president and CEO of The New England Council, the nation's oldest regional business association. Dr. Edward J. Deak is a professor of economics at Fairfield University and Connecticut model manager for the New England Economic Partnership.