Post-recession, southeastern Connecticut economy still among the hardest hit nationwide

More than five years after the Great Recession started receding in the rearview mirror of the nation, southeastern Connecticut is still looking for the exit ramp.

An expanding workforce at submarine maker Electric Boat has helped ease the pain, but a report late last month by www.areadevelopment.com indicated economic conditions in the Norwich-New London area still are among the most challenging in the nation. The region ranked 364th in terms of economic growth out of 379 metropolitan areas nationwide in the website's ranking of urban areas' attractiveness to businesses as a location.

Overall rankings placed the region way down the list for the nation's "Leading Locations" at No. 285.

If these rankings aren't depressing enough, Norwich-New London also had the dubious distinction last month of hitting its post-recession low in employment, according to economist Don Klepper-Smith, who nevertheless remains bullish on the region.

"The region has bottomed, in my estimation," Klepper-Smith said. "A turning point has been reached."

Unfortunately, the turning point did not turn up in February jobs numbers, which indicated the region had lost 500 positions during the month. While the nation has fully recovered all jobs lost during the recession and the state has brought back nearly three-quarters of positions lost, the Norwich-New London area has seen no growth in employment at all — at least at businesses within the region's borders.

In fact, since 2008, the region has lost more than 11,000 jobs, according to Klepper-Smith's numbers. About 8,000 of those jobs have been cut at the region's two casinos and another 3,000 were lost at Pfizer Inc., officials said, with smaller cuts and additions in other industries largely balancing out one another.

John Beauregard, chief executive of the Eastern Connecticut Workforce Investment Board, which runs four regional job centers, noted that the rankings of metropolitan areas were based on 2013 numbers and said there are some indications that the situation has improved over the past year or so. But he agreed that the view from southeastern Connecticut is not as rosy as in the rest of the state.

"All in all, it's more of what we've been trying to reverse for quite a while now," Beauregard said. "There hasn't really been any recovery to speak of."

Compare the picture of Norwich-New London to the New Haven area, which has regained all jobs lost during the recession, according to numbers compiled by Klepper-Smith for his firm, DataCore Partners. New Haven has been helped by a strong entrepreneurial movement around Yale University and a cooperative economic effort involving nearby towns, according to state and local officials.

Yet New Haven actually is ranked slightly below Norwich-New London in the "Leading Locations" rankings. This may mean, said University of Connecticut economist Steven Lanza, that southeastern Connecticut has more upside than it appears from employment figures alone.

"There's promise and possibility in the Norwich-New London economy," he said. "The question is 'Can the region capitalize on that?'"

Strangely, despite the Norwich-New London area's poor economic ranking, the region's workforce is among the best in the nation, according to data compiled in the "Leading Locations" report. The region ranks No. 35 for the pay and educational attainment of its workforce, among other factors.

"That's in the top 10 percent of the nation," Beauregard pointed out. "That should be the fuel for optimism to move forward."

But economist Lanza pointed out that one workforce factor possibly raising the region's rankings — gains in hourly wages — actually may be a bit of a red herring. It's possible, he said, that the region appears to have gained a higher-paid workforce only because of the loss of hundreds of low-paying casino jobs.

"I'm not sure how much stock to put into the prime workforce indicator," he said.

But Beauregard pointed to new jobs at EB, which has indicated its current workforce of 13,000 will expand to 18,000 within the next two decades. That's an average of 330 new jobs a year to complete the Ohio-class submarine replacement program, design a new ballistic missile submarine and continue work on the Virginia-class nuclear attack sub.

EB jobs are well paid, he said, which leads to a strong multiplier effect that will create other positions in the region. And the addition of a young, well-educated group of new hires at EB could be a harbinger of good times ahead, he said.

"That's a feather in our caps as a region," Beauregard said. "Talent is always such a big part of economic growth."

But Lanza said not to expect the additional jobs at EB — or other positive factors locally such as the addition of a Tanger Outlets at Foxwoods Resort Casino, the addition of a new hotel at Mohegan Sun and the possible construction of a National Coast Guard Museum in New London — to move the economic needle significantly forward any time soon.

What the region really needs, he said, is a game-changing new industry like it had back in the 1990s when the casinos came in and helped ease the pain of defense-industry downsizing after the end of the Cold War.

Barring some kind of dramatic transformation, he said, "What needs to happen, either organically or by design is to try to find ways to capitalize on the advantages the region may have."

This might already be happening, said economist Klepper-Smith, because what the job numbers don't measure is a new sense of collaboration between workforce-development and economic-development officials in the region, perhaps epitomized by the planned opening this year of a bioscience incubator at a former Pfizer laboratory building in Groton.

The jobs dip the region saw in January and February were clearly related to extended cold weather and a multitude of snowstorms because Norwich-New London had been seeing a slow but steady improvement in employment for the last several months of 2014, Klepper-Smith said.

"The economic fundamentals are clearly improving," he said.

l.howard@theday.com

Twitter: @KingstonLeeHow

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