Stagnant job growth in 2012
With only 1,900 jobs created in the first 11 months of 2012, Connecticut business leaders are anxious to move forward in 2013.
The rate of job growth in Connecticut was markedly stagnant this year, as by this time last year, roughly 8,800 jobs had been created in the state.
In November, the state’s unemployment rate fell to 8.8 percent from 9 percent the previous month, with the state’s economy adding 300 jobs, the Connecticut Department of Labor (DOL) announced Dec. 20.
Additionally, the state DOL revised its October job reading to 1,400 jobs created from an initial estimate of 1,200 jobs created.
“It seems like we’re in a rut and we’re stuck,” said Joseph Carbone, CEO of The WorkPlace Inc., a Bridgeport nonprofit devoted to workforce development. “It has not been a good year. If you look at a five-year set of statistics there is virtually no movement in the right direction.”
The WorkPlace also partners with the DOL to serve as the Regional Workforce Investment Board for the southwest portion of the state.
Only 26 percent of the 117,000 total jobs lost during the recession have been recovered in the state. And while national employment prospects are expected to fully recover by the end of 2014, Connecticut isn’t expected to recover the amount of jobs it lost until the fourth quarter of 2016, according to forecasts by the New England Economic Partnership (NEEP), based in Massachusetts.
“We’re continuing to search for our economic niche, post-recession, and we’re unable to find it, Carbone said. “There is only one sector that has been consistently increasing and that’s health care. Everything else has been declining steadily.”
Since the recovery began in February 2010, the financial sector — widely regarded as the state’s economic engine – has shed 4,400 jobs while government entities cut another 11,300 positions. Job gains in the construction, manufacturing and information sectors have leveled off.
The only sectors to see growth have been hospitality, which has made a full recovery from the jobs it lost during the recession, education, and the health care industry, which has added 25,700 new jobs since the end of 2008.
“Although the health care sector creates occupations and track for careers, it’s not one you can rely on,” Carbone said. “We’ve got to see other sectors of our economy grow.”
“We haven’t quite found what is our next niche,” he added. “I still believe we have an opportunity to grow from our anchor, the financial sector … the nucleus and economic generator that we’ve enjoyed for years.”
As Connecticut’s economy is integrated into both the global and national economy, Chris Bruhl, CEO of the Business Council of Fairfield County, said the state has lagged in job growth due to two ongoing economic trends. First there’s the slow national recovery and then the piggyback effect of businesses now being able to do more with less, he said.
“The productivity of larger companies enabled them to do more with fewer people,” Bruhl said. “Long-term productive gains, accelerated by the financial pressures of the recession, combined with slow economic recovery – these factors just stop job growth.”
Historically, Connecticut’s labor force has had its ups and downs. In the second half of the 1980s and 1990s there were enormous growth periods, with nonfarm employment fluctuating as low as 1,421,000 in 1983 and as high as 1,679,000 at the tail end of the 1990s.
Bruhl said these growth periods were mainly due to structural changes prompted by New York companies moving to Connecticut and the artificial growth simulated by “reckless” credit and overbuilding in the housing market.
“That problem came home to roost in the 2008 collapse,” Bruhl said. “And we’re still dealing with that collapse. So much of our economy was built into inflated housing values. We’re going through a balance sheet correction.”
But without artificially propped-up growth, Bruhl said he expects 2013 to be a year of job growth. The housing market is beginning to turn around, there’s a real demand for services building, and part-time and overtime hours are slowly growing, he said.
Forecasts predict job increases of 5,600 in 2013 and 22,300 in 2014, according to NEEP.
“We’re beginning to see all the signs that recovery should accelerate in 2013, borrowing Washington doesn’t self destruct,” Bruhl said.
After certainty is sorted out on the fiscal cliff and state’s budget, Bruhl said businesses should be ready to hire.
“Certainty will lead to hiring,” he said. “The need is there. Cash is building on balance sheets across the county that needs to be deployed.”