A Federal Reserve economist Thursday painted a sobering picture of a Connecticut economy that continues to struggle nearly a decade after the last recession, still losing higher-paying jobs and replacing them with ones that pay less.
“During the downturn and the recovery, the state’s economy was undergoing some fairly important and dramatic changes in what [Connecticut’s] economy is,” Jeffrey P. Thompson, senior economist at the Federal Reserve Bank of Boston and its director of the New England Public Policy Center. “The economy has changed, and there has been a shift to lower paying jobs.”
Thompson’s comments came during a forum organized by the 2GEN Advisory Council, whose goal is to remove barriers that keep Connecticut residents in poverty by addressing training, housing and other needs. The council includes state and local leaders, social service and education advocates, employers such as Electric Boat and business groups.
Thompson unpacked an unsettling portrait of employment in Connecticut, beginning with the mainstay finance, insurance and real estate sector. The sector accounted for 8.6 percent of the state’s employment in 2007, prior to the beginning of the last recession. But in 2013, nearly three years after the state technically emerged from recession, the percentage was 8 percent, and, in 2019, it is still lower, at 7.5 percent.
While Connecticut is still a leader among states in finance and insurance jobs, it is not experiencing growth.
“That has been a blow to the state,” Thompson said.
The trends were much the same in other industries that traditionally paid their workers well, including manufacturing and construction.
By contrast, leisure and hospitality — mostly low-paying jobs– represented 8 percent of employment in 2007, grew to 8.7 percent in 2013 and 9.5 percent in 2019. Education and health services — a mix of high- and low-paying jobs — jumped from 16.8 percent in 2007 to 19.3 percent in 2013 and nearly 20 percent in 2019.
In Connecticut, the last recession stretched from March 2008 to February, 2010. Connecticut has recovered 80.3 percent of the 120,300 jobs lost in what is often called the “Great Recession,” with the job recovery in its 110th month. That’s far short of job recovery in the U.S. and other New England states.
Thompson reminded the council that Connecticut is faced with a “pretty low hurdle” in gaining back lost jobs because the economic expansion that came prior to 2008 was often described as the “jobless recovery.”
“To me, that’s startling,” Thompson said.
The jobs picture, so far in 2019, has been gloomy. Connecticut employers cut 1,300 net jobs in March, leading to negative employment growth in the first three months of the year, the state Department of Labor reported Thursday.
Thompson said the job picture is complicated by a population of unemployed that has evolved since the last recession and have different training needs.
The unemployed are “disproportionately” young, non-white and less educated. Of the employed, 9.1 percent are “non-Hispanic, black,” compared with 6.2 percent for New England as a whole.
The so-called “long-term unemployed” are increasingly older, non-white and more educated, particularly since 2013, Thompson said.
“The state will have to adjust to the changing populations to meet workforce and human services needs,” Thompson said. “We’re not in recession anymore. The state is continuing to struggle, but the pool of people who are out there, they are different than they were before.”
