Third month of job losses stalls state’s economic momentum

A third consecutive month of job losses in Connecticut and continued declines in the state’s labor force are raising concern about the state’s economic outlook.

Payrolls shrunk by 300 in September, following the loss of 2,200 jobs in August, according to the state Department of Labor’s Oct. 21 monthly employment report. That brings 12-month job growth to a modest 0.7%, the slowest in the region and 42nd in the country.

Patrick Flaherty, research director for the labor department, said the economy is following the “new normal” of strong early year growth that tapers off by end of year.

“This market continues to present challenges for recruiters,” Flaherty said. “Stronger economic growth is constrained by the size of the work force and high retirements in key industries such as manufacturing.

“The very low unemployment rate is an indicator that the labor market remains healthy despite monthly job declines,” Flaherty said.

A “concerning” trend

The Connecticut Business and Industry Association, the state’s largest business organization, expressed concern over the September employment report.

“It’s concerning to see the positive economic momentum that highlighted the first half of the year has stalled,” said Chris Davis, vice president for public policy for the association.

Davis noted that the demand for workers remains strong, highlighted by strong gains in the professional and business services sector and the state’s low unemployment rate. “However, the falling unemployment rate is actually being driven by Connecticut’s shrinking labor force, which declined by 2,000 people in September, the fourth consecutive month of losses,” he said.

The industry association official noted that job openings are up 10% since February 2020, while the number of those working and actively looking for work fell by 30,600 over the same period, “in stark contrast with what’s happened in most of the region and nationally.”

In response to the third straight month of job losses in the state, the Connecticut Senate Republican Caucus issued a statement on Oct. 22 rejecting the notion that the job losses are “a new normal.”

Senate Republican Leader Steve Harding (R-30) said while the most recent labor department numbers are “not necessarily bad, I think we can do far better.”
 

He pointed to a need for boosting manufacturing and trades job growth, by “connecting with our vocational programs to set up a stronger manufacturing base here in Connecticut.”

Harding also called on greater collaboration between the Governor’s office and lawmakers aimed at increased regulatory fairness for businesses.

“We in Connecticut still have not fully recovered from the 2008 recession job losses, and when 2020 hit, obviously it was another setback,” Harding said. “Almost every other state, prior to COVID, recovered from job losses, but Connecticut and one other state never recovered.”

Labor Commissioner Dante Bartolomeo said while Connecticut was hit harder by the pandemic than most states, “our recovery is steady, and the overall economy is moving at a stable and sustainable pace.”

State Rep. Maria Horn (D-64) noted that the monthly economic numbers are “quite complex,” and often follow a pattern. “There have been stronger losses in the second half of the year.”

She pointed to workforce development and housing as key factors.
 

“I hear all the time that people can’t afford to live in our neck of the woods or attract and retain a talented workforce,” she said. “We have to be sure to look at the tangibles and the intangibles.”

Horn attributed some of the job losses to large cuts in government positions.

“Some people get all excited when the government has fewer employees,” Horn said. “We trimmed a great number of workers over the past decade, and then during the pandemic they said we didn’t have enough workers to respond, so it’s a balancing act.”

Six-month growth streak ended this summer

Connecticut lost 3,100 jobs in July and August, ending a six-month growth streak as most industry sectors saw decline.
The labor department reported 3,200 job losses for August and revised its preliminary July numbers lower by 1,600 to a loss of 90 positions.

August also saw another 5,295 people leave the labor force, with the numbers of those working and looking for work declining 11,965 in the last three months, according to the Connecticut Business and Industry Association.

“The August losses and revised July numbers highlight the volatility of Connecticut’s job market and the structural issues impacting economic growth,” industry association President and CEO Chris DiPentima said.

“CBIA’s 2024 Survey of Connecticut Businesses showed that 91% of business leaders say the cost of doing business is increasing, and only 10% believe the state’s business climate is improving,” DiPentima said.

On Oct. 9 the Connecticut Business and Industry Association Foundation released its 2024 legislative policy pledge, a 12-point package of solutions designed to unlock and reimagine Connecticut’s economy.

CBIA officials said the policy pledge is a roadmap for boosting the state’s competitiveness, retaining and attracting investment and talent, fostering innovation, expanding career pathway opportunities and growing a vibrant economy.

“Connecticut is at a critical point in its post-pandemic growth,” DiPentima said. “Rather than endorse candidates for elected office, CBIA is encouraging them to sign the ReimagineCT policy pledge.”

He said the policies, developed with the input and engagement of a diverse group of stakeholders, including business, nonprofit, education and community leaders, will help retain and attract residents, enhance and protect the workforce’s well-earned reputation for innovation and productivity, and promote the state as a destination for businesses of all sizes.