Why jobs numbers matter

Greg Bordonaro

Business leaders, policymakers and others were stunned recently when Connecticut labor officials announced that a major revision had cut in half the true number of jobs the state's economy added in 2018.

It turns out Connecticut added a measly 10,000 jobs last year, compared to an original estimate of nearly 20,000.

The major swing was a result of the annual benchmark revision process conducted by the Bureau of Labor Statistics, which uses a much more accurate method in counting jobs than the state Department of Labor's surveys.

So, do these numbers matter? I'd argue yes, in a significant way.

While Connecticut's labor reports may not move the stock market like national jobs' numbers, they are a litmus test for the strength of the state's economic performance and could impact policy decisions, especially if lawmakers get a false sense that the economy is performing much better than it actually is.

For example, we were told on Jan. 17 that preliminary data showed Connecticut added 19,900 jobs in 2018, a strong (for this state at least) 1.2 percent growth rate.

That news broke at the start of the 2019 legislative session, where many lawmakers, particularly Democrats and those in the House's progressive caucus, are acting like we are in the middle of a boom period, proposing measure after measure that would raise the costs of doing business and living in this state.

Whether it's increasing the minimum wage, broadening the sales tax, adopting a mandatory paid family medical leave program or establishing statewide tolls, there is no shortage of cost-raising proposals being bandied about in Hartford.

More accurate jobs data in January might have changed some of the dialogue on these issues — although that could just be wishful thinking.

The truth is Connecticut's growth since the Great Recession still lags far behind the nation's, so we should be backing policies that support private-sector growth, not hinder it.

Yet, the refrain out of the state Capitol seems to be that happy days are here again. Folks, they are not, and we actually face the dim reality of another recession on the horizon.

We can talk about economic fairness all we want, but there are no policies lawmakers can enact to force businesses to invest in this state. Instead, we simply give them more reasons to move their money elsewhere.

Currently, United Technologies Corp., one of our state's largest employers, is in the process of breaking up into three separate companies, leaving its future here uncertain.

I can tell you conversations are happening as to the location of its future headquarters, and it's a real possibility the state of Florida, where the company already has a strong presence, could become the new home to subsidiaries Carrier and Otis.

Policymakers should pay attention.

Another reason jobs numbers are important is because they inform our state's economic projections. When any governor delivers a budget proposal, it is based on economic assumptions that help project expected revenues in the years ahead.

Bad data can lead to bad budget projections, which can lead to deficits and further fiscal crisis. Economists on several occasions accused Gov. Dannel P. Malloy of using growth rates that were too rosy. And they were right.

Gov. Ned Lamont's two-year, $43 billion budget proposal isn't overly bullish but it too may have overestimated. For example, Lamont's budget projects the overall state economy will grow 1.5 percent this year and next, and 1.2 percent in 2021. It also predicts personal income in the state will grow over 3 percent for each of the next five years.

Given that many economists are predicting a recession this year or next, it's hard to see how those projections will hold up.

Numbers don't lie, unless, of course, they are false numbers. The Bureau of Labor Statistics handed Connecticut a harsh dose of reality.

State lawmakers ought to wake up to it.