The state's 7.6 percent unemployment rate is a deeply misleading statistic that hides "profound structural weakness" in the economy, according to an analysis by University of Connecticut economists.
Connecticut officials have trumpeted small drops in jobless rate since 2009, but the real reason for the improvement is that more than 64,000 people have dropped out of the labor force over that period, researchers at the school's Connecticut Center of Economic Analysis said in a report released Monday.
If those people who simply gave up on looking for work since the second quarter of 2010 were still included in the divisor of the unemployment equation, the state's seasonally unadjusted rate would be 10.7 percent, according to the report.
In the face of the dilemma of excess workforce capacity, the economists recommend that the state accelerate $6.5 billion in major capital projects to infuse its economy with jobs.
The report also recommends releasing unused tax credits that some companies have earned but not expended to support private sector capital projects.
Many of the gains over the past few years have been the result of part-time workers becoming full-time workers. Full-time equivalents are up 43,000 over that period.
That employers prefer to work with incumbents rather than hire new personnel is not great news for the long-term unemployed, many of whom now face the expiration of their unemployment checks at the end of the month.
Workforce participation increased slightly in the most recent fiscal quarter, which could be a good sign. But the loss of unemployment benefits and the state's reliance on its manufacturing sector, which is losing jobs as it gains in productivity, could hurt any potential gains, the report said.
Even the state's business grant and loan programs, such as "Fast Five," are likely not enough to stem projected budget deficits from becoming a reality in the next two years.
Those projections, the report said, reveal how much must still be done to fix the problem
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