December 22, 2017
ECONOMIC FORECAST

Workforce development must be top priority in 2018

Connecticut opens 2018 with big opportunities and challenges.

The General Assembly ended a long 2017 legislative session in October with a rare achievement: a two-year budget forged through a bipartisan effort and approved by the vast majority of both parties.

The budget contains a spending cap, borrowing cap, and other reforms designed to help put our state on a path to fiscal stability, although the current budget is showing a projected deficit.

When the 2018 session begins in February, priority No. 1 at the Capitol must be jobs — fostering an environment that encourages employers to create them, train for them, and fill them. It's important to continue the bipartisanship we saw during the recent budget discussions and focus that energy on building the state's workforce.

Through October, Connecticut added just 1,400 jobs year over year. We lost 12,200 jobs from June to October and the state's labor force continues to shrink. We must reverse these trends by growing jobs and increasing the pool of available workers.

On the positive side, we expect a robust year for our mainstay defense contractors and their Connecticut suppliers. However, workforce challenges remain plentiful.

There are thousands of good-paying jobs going unfilled at Connecticut's manufacturers — both large and small — mainly because of an aging and retiring workforce and the lack of a sufficient number of skilled applicants.

We need new policy strategies to fill those jobs, which will create economic activity and new taxpayers. To do that, workforce development must be priority No. 1 in 2018.

This requires a coordinated approach that expands job incentives for companies and reallocates certain educational resources to create more science, technology, engineering and mathematics (STEM) skilled workers from technical high schools, community colleges, and universities. A greater focus on internships and apprenticeships also must be part of the solution.

We must encourage students of all ages to explore STEM careers such as jobs in manufacturing and engineering. Those efforts also must include parents, teachers and school guidance counselors.

We need industry leaders to partner with educators and set up clear paths for those looking to further their education while working full time.

Small, fragmented programs will not solve our workforce challenges. A clear, forward-looking statewide strategy will. This should include educators, policymakers, labor officials and industry leaders.

We also need reforms that create opportunities for formerly incarcerated individuals to re-enter the workforce with education and training that will provide access to careers in areas like manufacturing, transportation and health services.

Despite our workforce challenges, positives from previous forecasts remain and continue to improve: Manufacturing is doing great in defense, aerospace and other areas; financial services continues a modest rebound; risk of recession is lowest in over 20 years; credit availability is excellent; the Fed still supports expansion; housing continues a modest recovery; exports are doing well; stock market performance is outstanding.

When it comes to national and international challenges, there are still risks given active terror organizations and tensions with North Korea, as well as the conflict between Russia and Ukraine, and Saudi Arabia and Iran concerns.

There are also uncertainties with federal tax reform; lower taxes on corporations and pass-through entities will help but a cap on personal income tax deductions could hurt a high-tax state like Connecticut.

With so much out of our control, we as a state must continue to work on what we can control. That means making policy choices that focus on economic growth and workforce development.

Read more forecasts here.

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