Connecticut remains one of the only states in the country that has not recovered from the economic recession that lasted from 2007 to 2009. By May 2014, the United States as a whole had gained back all the jobs it had lost.
But Connecticut still has not, as it lingers behind the country’s average job growth.
According to reports this year from the bureaus of Economic Analysis and Labor Statistics, Connecticut remains the only state since 2010 with negative growth in gross state product, a metric that indicates the total economic production in a state. In the period from 2010 to 2017, New York saw a rise of 11.5 percent in GSP and Massachusetts saw a 14.3 percent rise. Over the same period, Connecticut’s GSP declined by 3.3 percent. The state of Connecticut’s economy has emerged as the central issue in this year’s gubernatorial election, which pits Democrat Ned Lamont SOM ’80 against Republican Bob Stefanowski.
“We’ve only recovered 88 percent of jobs lost in the recession,” said Eric Gedje, the vice president for governmental affairs at the Connecticut Business and Industry Association, the largest business organization in the state. “Other states have done a much better job. Massachusetts has gained back more than 300 percent of their jobs.”
Experts in the field offer a variety of explanations for Connecticut’s ongoing decline. According to reports from the Connecticut Department of Labor, the chemical manufacturing industry added $14.8 billion to the state’s economy from 1997 to 2007 but lost $15.9 billion over the last 10 years. Large firms such as Pfizer, Bayer and Bristol-Myers Squibb have either downsized or left the state altogether.
The financial activities sector — which includes real estate, insurance and finance — has also faced massive losses, contributing $22.6 billion to the Connecticut economy in the decade before the recession, but costing the economy $8.3 billion in the last 10 years, according to the July 2018 issue of the Connecticut Economic Digest.
Jungmin Charles Joo, an associate research analyst at the state Department of Labor, said that these losses in particular “continue to be a drag to the overall job-growth rate.”
Some experts cite Connecticut’s tax increases in 2009, 2011 and 2015 as the central causes of the state’s decline. The state legislature has enacted two of the largest tax increases in Connecticut’s history, according to Gedje. Despite those, he said, the state is collecting less revenue than before the increases.
But Connecticut Business and Industry Association President Joe Brennan hesitated to name one primary cause for the current predicament, arguing that a combination of factors has affected the state’s ability to attract and maintain people and talent.
Brennan also placed blame for the lackluster economic conditions on the state’s inability to deal with its deficit, overall affordability for consumers and threats of future tax increases.
Rather than focusing on governmental policies, others have claimed that Connecticut’s lack of a major city is a source for its economic woes. Since the recession, job growth has been concentrated mostly in large urban areas, like New York City and Boston, while regions like western Massachusetts, upstate New York and Connecticut have fallen behind, according to the Connecticut Economic Digest.
“Younger people are looking for more exciting urban centers than what Connecticut has to offer,” Brennan said. “Big cities are more of a magnet for younger people.”
Yet Matthew Krzyzek, an economist at the state Department of Labor, described the state’s proximity to New York and Boston as “a positive,” saying that commuter rail and other forms of transportation could help improve Connecticut’s economy. Krzyzek added that Connecticut would be in good shape if it found a better way to tap into these urban labor markets.
He also challenged the claim that young people are fleeing Connecticut, citing evidence of a net inflow of people in their 30s, which is a result of the state’s high affordability compared to cities like Boston or New York.
But Connecticut’s future remains unclear. Last year’s employment recovery was the state’s lowest in the past seven years.
And under the current budget, Brennan said, Connecticut’s projected deficit over the next two fiscal years is $4.6 billion.
Gabriel Klapholz | email@example.com