Slow jobs recovery sends workers out of CT

PHOTO | CNN The top position sought by in-state employers struggling to fill jobs in Connecticut is registered nurses.

Fred Carstensen, director of the Connecticut Center for Economic Analysis, UConn

Write a Comment

By mid-2016, Connecticut should recover all the jobs lost in the Great Recession.

Based on upticks this year in hiring and a positive outlook heading into next year, the state in the next 12 months will likely gain back all the 119,000 jobs shed during the economic downturn of 2008 to 2010.

That's the good news.

The bad news: That timetable would make Connecticut one of the last states in the nation to recover its job losses.

Making matters worse: The slow recovery has forced some workers to flee the state, creating personnel shortages in several key industries including health care and finance.

“We are really behind the eight-ball here in Connecticut,” said Donald Klepper-Smith, a New Haven economist.

“Connecticut has had steady improvement but not very strong improvement,” added Fred Carstensen, director of the Connecticut Center for Economic Analysis at UConn. “We have far more people who are now working outside of Connecticut.”

Jobs recovery

By July, Connecticut had recovered 102,000 — or 85.7 percent — of the jobs lost during the Great Recession, according to a labor market report from the state Department of Labor, which was released on Aug. 20.

The news was even better for the private sector, which recovered 97 percent of the 111,600 jobs lost in the recession, according to the DOL. The private sector will have to continue driving the jobs recovery, since the positions shed by state and local governments likely won't return in the immediate future because of continued budget restraints, Carstensen said.

With the Connecticut jobs recovery now 65 months old and adding an average of 1,569 jobs per month, the state seems poised to complete its recovery sometime next year, Klepper-Smith said.

Still, that will come two years after the U.S. economy returned to its pre-recession jobs level, Klepper-Smith said. The national jobs recovery is now at 145 percent.

Having Connecticut so far behind the rest of the nation hurts the economy in the long run, Klepper-Smith said. Jobs and companies will be attracted to higher-growth markets.

Connecticut is only one of 12 states that hasn't fully recovered all its job losses from the Great Recession, according to U.S. Bureau of Labor Statistics data through July. The summer started with 15 states having that dubious distinction but Maine, Wisconsin and Wyoming all achieved full jobs recovery over the last two months.

Connecticut's recovery continues to be hampered by an unfriendly business environment, Klepper-Smith said. The latest example is the state's adoption of an unitary reporting tax that forces businesses to pay taxes on profits they make in other states.

This constantly shifting tax structure makes it difficult for companies to consistently know what their operating expenses are going to be, Klepper-Smith said. This, along with other issues like the regulatory environment, make businesses seek out more stable states.

“It is sort of like watching an accident unfold in slow motion,” Klepper-Smith said.

Economic recovery

While the jobs recovery has been painfully slow, Connecticut's economic output — measured by its gross domestic product — recovered from pre-recession levels in 2012, according to the U.S. Bureau of Economic Analysis.

Before the economy went south, Connecticut's GDP in 2007 was $235 billion. While the economy stayed below that level for three years, it hit $240 billion in 2012 and grew to $253 billion by the end of last year.

Even though this is a positive improvement, the GDP grew only 0.6 percent last year, which was less than half the national GDP growth.

Part of the reason for this slow growth — which leads to, among other things, lower state revenue collections and an unstable tax environment — is the lack of the jobs recovery, Carstensen said.

The problem hasn't been Connecticut residents finding jobs; it is Connecticut residents finding in-state jobs, Carstensen added.

When looking at employment statistics, the number of Connecticut residents with a job is the highest it has ever been since DOL started keeping track in 1982. In June, 1.809 million state residents had a job, which is a 2 percent improvement over the number of residents employed at the start of the Great Recession.

More residents, though, are taking jobs in New York, Massachusetts, New Jersey and Rhode Island, so they aren't contributing fully to the Connecticut economic recovery, Carstensen said.

Jobs holes

With more talent working out of state, the Connecticut economy has vacancies in several skill positions.

Connecticut employers are looking to fill more than 40,000 vacancies, with registered nurses leading the way as the most needed position, according to a new DOL survey.

Other major job vacancies include healthcare practitioners (3,815), business and financial operators (3,523), computer and mathematical jobs (3,402), and architecture and engineering positions (2,434).

If these and other key positions were filled, the state's economy would be running stronger, which could lead to a quicker jobs recovery and more robust growth, Carstensen said. Instead, the skilled workers employers now need went looking elsewhere when the jobs they wanted weren't in Connecticut.

“Here, in Connecticut, we are king of a snail's pace [recovery],” Carstensen said. “I don't find much here to be encouraged about.”