New Haven Register (Sunday) (New Haven, CT)
‘THEY NEED TO BE CONTEXTUALIZED’
Conn. officials not ready to cheer recent decline in layoffs
In 2020, the job cuts reported by employers across Connecticut spiked to nearly 12,000, as businesses grappled with shutdowns caused by the COVID-19 pandemic. The total plunged to about 2,000 in 2021 and dropped below 1,800 in 2022.
The precipitous decline in the number of disclosed layoffs, notices that are sent to the state Department of Labor to comply with the federal Worker Adjustment and Retraining Notification (WARN) Act, shows that Connecticut’s economy is no longer suffering as much as it did during the early days of the pandemic. But economists and elected officials are reluctant to hail the layoff decrease, on its own, as proof of a recovery, given the limits of any one dataset and lingering concerns about the state’s economic health.
“WARN notices are one economic indicator, but only related to layoffs,” Patrick Flaherty, the Department of Labor’s director of research, said in a written statement. “They need to be contextualized by other indicators.”
Overall decline in layoffs, but big cuts at some companies
While the approximately 1,750 layoffs reported through the WARN Act in 2022 equated to about 15 percent of the 2020 total, some companies announced significant job losses.
Genomic testing firm GeneDx, formerly known as Sema4, reported the most layoffs last year. Related to its decision to stop testing for reproductive health and somatic tumors and close its laboratories in Branford and Stamford, the Stamfordheadquartered company provided two WARN notices that outlined plans to lay off nearly 700 employees. That amount included about 300 employees working remotely outside Connecticut but who reported to, or had work assigned from, a Connecticut location.
Between 2015 and 2018, during the administration of Gov. Dannel P. Malloy, the then-Sema4 was awarded a total of $15.5 million in loan funding. Of that total, $7.25 million has been forgiven, or essentially turned into a grant, as a result of the company meeting employmentrelated objectives.
If it meets other job targets,
GeneDx could earn an additional $3 million in forgiveness, for a total of $10.25 million. It was originally eligible for as much as $12.25 million in forgiveness, but the maximum write-off was reduced by $2 million as a result of the job cuts and lab closings, according to officials at the state Department of Economic and Community Development.
In the meantime, the company is making monthly interest-only payments on the remaining $6.25 million principal balance.
Signify Health accounted for the second-largest amount of layoffs. The nearly 500 jobs it planned to cut included about 340 people who were not assigned to a specific location. Of the remainder,
nearly 150 employees across offices in locations including Norwalk, New York City and Dallas were set to be laid off.
Retail was another sector that grappled with downsizing. The closings of a ShopRite supermarket in Waterbury and a Walmart store in Guilford were expected to result in about 200 and 100 job losses, respectively.
In Middlefield, temperature-management equipment maker Cooper-Atkins said the closing of its manufacturing and distribution facility would result in about 70 layoffs. In Norwalk, the cancellation of the TBS show “Full Frontal with Samantha Bee” entailed the expected layoff of about 60 employees.
‘This data does not tell
the whole story’
While the number of layoffs reported in WARN notices last year accounted for one of the lowest annual tallies since the state’s 2008-2010 recession, other indicators offer a cloudier picture of the state’s economy.
As of November 2022, Connecticut had recovered about 90 percent of the approximately 289,000 jobs that it lost during pandemic-caused shutdowns in the spring of 2020. The state’s employment
total of about 1.67 million last November compared with approximately 1.7 million positions in February 2020, the last full month before Connecticut recorded its first COVID-19 case, and the state’s all-time employment peak of 1.72 million in March 2008.
The state’s unemployment rate in November was 4.2 percent, down from 5.2 percent at the same point in 2021, but above the national level of 3.7 percent.
“Connecticut’s economy has absolutely not recovered, and this (WARN) data does not tell the whole story,” state Sen. Rob Sampson, R-Wolcott, the ranking Senate member of the state legislature’s Labor and Public Employees Committee, said in a written statement. “The overall quality of today’s jobs is disproportionate from a decade ago. Majority Democrat policies continue to damage our economy, chase away producers and encourage entitlement.”
State. Sen. Julie Kushner, DDanbury, the Senate chairwoman of the Labor and Public Employees Committee, was not available to comment.
At the same time, labor shortages reported by many employers since the beginning of the pandemic and other factors, such as high inflation and the Federal Reserve’s ongoing interest rate hikes, have further tempered enthusiasm about the decline in layoffs.
Still, when evaluated alongside other data, the WARN notices’ recent trend line is a sign of resilience in Connecticut’s economy.
“If we had a hiring slowdown in Connecticut, that may be a sign of recession, but it’s likely it would be relatively short-lived,” Flaherty said. “This isn’t to say a recession would be easy for Connecticut and our residents, but remember the economy is balanced and healthy.”
Flaherty added, “The impact on the economy is the Federal Reserve. This is in contrast to, for example, the 1980s great recession [which] began in construction and housing, [and] the 2008 recession, [which] began in the financial services sector with lending. These were economic sectors that were in trouble and caused the recession. That isn’t where we are right now.”
Limits to the law
The parameters of the WARN Act are another reason for economists’ and elected officials’ hesitation to celebrate the decline in layoffs.
It requires employers with 100 or more full-time workers to give 60 days’ notice of a plant closing or mass layoff. Scenarios such as the closing of a facility or shutdown of an operating unit that results in 50 or more full-time workers losing their jobs have to be reported.
“Employers may also be required to give 60-days advance notice if, over a 90-day period, they have a series of small layoffs, none of which individually meet the threshold requirements of a plant closing or mass layoff but which collectively add up to numbers that require WARN notice,” says an excerpt on the DOL website. “Employers are not required to give notice if [they] can show that the individual events occurred as a result of separate and distinct actions and causes and not an attempt to evade WARN Act requirements.”
Some of the recent downsizing that has not been reported to the Department of Labor has attracted scrutiny. Last month, state Sen. Matthew Lesser, D-Middletown, asked the Department of Labor to investigate whether the Ninety Nine restaurant chain violated any state or federal laws by closing establishments in Cromwell, Groton and Stratford without any advanced notice. The company responded in a written statement: “The closing process was managed for compliance with any applicable state and federal laws.”
At the same time, since they are provided before the layoffs occur, not all WARN notices turn out to be entirely accurate counts of the number of jobs eliminated.
As of last September, M&T Bank had laid off 325 employees in Connecticut related to its acquisition of People’s United Bank, while it was planning to eliminate another 333 positions.
Those numbers compared with a projection of 747 layoffs in a July 2021 WARN notice provided by People’s United.
Despite the limitations of the WARN Act, Connecticut legislators are not pushing for sweeping changes to the law.
“I have not heard anything from my constituents regarding the WARN Act or proposed changes to this federal law,” Sampson said. “I remain a firm believer that less government, not more, is the way that Connecticut will recover from the pandemic instead of lagging behind the rest of the nation.”
U.S. Rep. Joe Courtney, a Democrat who serves on the House Education and Labor Committee, said in a written statement, “I believe that there are places where the current WARN Act could be improved to ensure that the intent of the original law is met.”
Courtney also cited his support for investments in workforce-development programs to help laidoff workers gain skills and find new jobs.
“Those investments are what fuel the WARN Act’s real benefits,” said Courtney, whose district covers southeastern Connecticut. “When WARN notices have been issued here in Connecticut, they’ve meant that the labor department and workforce boards have been ready to spring into action to help transition impacted workers into new in-demand careers.”