Newsflash: On jobs, Connecticut is doing terrible
Connecticut is in a full-blown job crisis.
The state workforce has contracted by about 160,000, or 8.2%, from its pre-pandemic level of 1.93 million in February 2020, the worst decline in the nation. Only three other states have experienced drops of more than 5%.
Of Connecticut’s remaining workforce, about 140,000, or 7.9%, are unemployed − the highest unemployment rate of the 50 states.
Combined, 300,000 people, or 15.5% of the pre-pandemic workforce, have dropped out or are currently unemployed. The next worst level is 10.9% in Hawaii.
Being last is one thing that Connecticut is accustomed to, but to trail 49th place by such a huge margin is alarming.
Yet, the Democrats who control the state seem clueless. Governor Lamont was mum about last week’s report of just 3,500 jobs gained in June. which occurred entirely in the public sector. Public employment is down only 9,600 from its February 2020 level.
The state’s Congressional delegation seems oblivious as well. Congressman Jim Himes (D-4th District) emailed constituents last week trumpeting that “the strong June (national) jobs report surpassed expectations by adding 850,000 new jobs.” He made no mention of the dismal conditions in Connecticut. Perhaps he didn’t know.
Let’s parse the numbers, first with some definitions. If you are receiving unemployment benefits, you are officially an unemployed member of the workforce. If you have no job, but are not collecting unemployment, you are no longer part of the workforce.
Normally, to qualify for benefits, you must be looking for a job. However, during COVID, that requirement was waived.
Why would anyone pass up free money, namely unemployment benefits without any strings attached? Unemployment benefits eligibility during COVID was expanded to cover so-called “gig workers,” i.e. the self-employed and independent contractors, so virtually everyone could receive benefits simply by filling out forms. Why would anyone pass up rich benefits that include the super-generous federal supplement of $300 weekly ($15,600 per year) on top of normal benefits?
There would not seem to be any rational reason not to collect unemployment, to effectively drop out of the workforce, except one: you think your future is brighter in another state. By this logic, there’s a strong possibility that many, if not most, of the 160,000 dropouts from Connecticut’s workforce have left the Nutmeg State for greener pastures.
While Census Bureau data for 2020 interstate migration is not yet available, United Van Lines, the nation’s largest moving company, has published its 2020 moving data. It shows Connecticut with the fourth highest outmigration, with outbound moves almost twice the number of inbound. So much for the fantasy that an exodus from New York City will rescue the state.
Most economists believe that overgenerous unemployment benefits are hindering job growth, with many workers calculating that they can collect more in unemployment benefits than they can earn in the workplace.
Earlier this spring, other reasons were cited. Those reasons have faded. If childcare was a problem with schools closed during the school year, it cannot be a problem in summer when schools are always closed.
Lingering concerns about COVID cannot be determinative given the nation’s high vaccination rate; 68% of citizens over 18 have had at least one shot – over 80% in Connecticut.
The case is compelling that Connecticut’s job crisis is a function of: (1) overgenerous unemployment benefits and (2) outmigration.
Lamont should terminate the $300 weekly federal supplement, as 22 states did in June. In June, workforces in those 22 states averaged less than 1% below pre-pandemic levels versus 2.4% below for the 24 states planning to pay the $300 until it expires in September. Average unemployment in the 22 was 4.3% versus 5.9% in the 24. Three more states ended the supplement this month. Another will on Aug. 3.
Outmigration is a long-term problem with no quick fix. In the short term, the overgenerous $300 supplement doesn’t help. Businesses cannot find workers. As a result, some will close or move out of state. So, fewer jobs will be available. Fewer workers will be able to find jobs. Inexorably, the state economy will continue its stagnation — gaining only about 5,000 jobs over the decade before the pandemic — or shrink.
Business and individual taxpayers will face even larger tax bills to pay to a state government bureaucracy that, in contrast, has not declined, courtesy of employees’ decade-long contractual no-layoff guarantee. The state has been richly overcompensating those employees, whose average pay has increased 11.5% over just the last 25 months.
This increase is so rich that some union members have been earning more than their non-union bosses, to whom, therefore, Democrats just gave equivalent raises.
Little wonder, then, that state workers are sticking around.
Red Jahncke (Twitter: @RedJahncke) is president of The Townsend Group Intl. LLC, a Connecticut business consulting firm, and a contributing Day columnist.
Stories that may interest you
This is not to dismiss the challenges facing retailers and other businesses that relied on inexpensive labor and well-oiled supply chains. But how many tears must be shed for cyclists who have to wait a while for their $1,200 bikes?