New numbers show jobs urgency

Can Connecticut catch a break? We thought we had a decent year in 2018, adding 15,200 jobs compared with 2017.

That would have been a nearly 1 percent gain, the best year of jobs growth since 2011 — a huge uptick from the 2,300 jobs we thought the state’s economy added in 2017.

Instead, we got dumped with a March surprise, an economic nor’easter on a sunny Friday: Connecticut employers added only 2,200 jobs, in net, for all of 2018 — based on annual averages. The 2017 gain was revised up to 3,200, for what it’s worth.

What the hell is going on? How could the numbers have been so wrong? And most important, how can we move the needle upward? Maybe tax hikes really aren’t the answer.

The state and U.S. Labor Departments revise prior year estimates every March. Neither I, nor Andy Condon, the state DOL research director, could ever recall anything quite this stunning. It happened once before, maybe.

What’s weird is that other measures remain solid, or at least OK: overall economic growth, wage gains, total income. The unemployment rate in January was down to 3.8 percent, slightly better than the national rate last month and the same as the U.S. rate now.

People with any skills at all certainly aren’t out of work unless they want to be. “One possibility is that hires are healthy but so are quits,” Condon said.

And those people quitting are either exiting the state or dropping out of the labor force.

Tony Cirone, managing partner of CironeFriedberg LLP, a Fairfield County accounting, tax and consulting firm, doesn’t need to look far to come up with a prime example. He had an accountant on staff, moving up the ladder, likely to make partner in the next couple of years.

That young, talented accountant lived in the Naugatuck Valley town of Seymour, and decided to look for a house closer to the Danbury main office.

Instead, Cirone told me, the account saw house prices in places like Brookfield, and switched gears late last year — with a second child on the way and his in-laws living in North Carolina.

“He went down to North Carolina and the real estate costs were a lot less and the property tax costs were a lot less, and he got a job at just about the same compensation as we were paying him here,” Cirone said, adding that the accountant’s local property taxes fell from $12,000 to $3,000 in the move.

Yes, that newly minted Tar Heel (whatever that is) will have to pay for private school because the public schools aren’t as good as Connecticut’s. But Cirone added, “He’s on partner track down in North Carolina.”

And that’s not unusual. Cirone said it took his firm six months to find the right receptionist for its Bridgeport office. He’s not sure he’d have seen a faster result if he tacked another $4 an hour onto the advertised wage.

Jobs are open but hard to fill. Employers are hiring but also losing people. The Connecticut economy is strong in many ways. But it’s just. Not. Growing.

So what do we do? My knee-jerk reaction is to say, stop the cost increases. Now! Tolls, minimum wage hike, paid family and medical leave, Gov. Ned Lamont’s proposed sales tax expansion — all of it. No more.

Just Friday morning, before the data shocker, I got a call from Brian Jessurun, who co-owns three restaurants in Storrs, Pomfret and Putnam. A $15 minimum wage ramped up by 2022 would drive him out, he said.

Maybe the Republicans are right, enough really is enough.

On the other hand, people don’t want to come to a state with crumbling highways, low-budget schools and lackluster job training programs. It’s about value, not cost.

We’re obviously paying for the sins of the past, and that’s why we have a nonstop budget crisis which, in turn, makes matters worse. Why choke off the present if our problem is the costs we racked up in the past?

Connecticut’s poverty rate is 35 percent lower than the rate in North Carolina and we have just about the highest percentage of people with health insurance. That’s who we are.

There’s no easy answer. Certainly we can’t do all of those things that add cost, especially with the national economy showing signs of crapping out after nine good years. Friday’s weak national jobs report didn’t exactly boost confidence.

“The odds of a formal recession in 2019 are now a 50/50 proposition,” said economist Donald L. Klepper-Smith of DataCore Partners, based on his projections.

That includes a downward revision of his Liberty Bank Business Barometer, which predicts overall growth before we see the federal data. The decent gross domestic product gain for the first nine months of 2018 just might go poof as well.

Condon asked, “Is this an issue of stagnant economy or is this an issue of a shortage of labor and slow labor force growth? I don’t know, but I will. It’s difficult to expand when you don’t have the people to do it.”

A little bit on the numbers here: Another way to look at annual changes is by comparing December of one year to December of the next. In that scenario, Connecticut fell from a reported gain of 19,900 jobs to 10,000.

That method is widely used by journalists because it doesn’t require downloading and calculating averages — but it’s deceptive. Any two pairs of months can show widely varying results. The 2,200-job gain is based on the average of all months in 2018, using numbers adjusted to smooth out seasonal variations, compared with the average in 2017.

Any way we look at it, Connecticut’s economy has about 1.7 million jobs, including about 235,000 in government (including the Native American casinos). Those government jobs have been down in recent years as former Gov. Dannel P. Malloy eliminated thousands of state worker positions, the casinos shed jobs and local schools run leaner.

A very good year is up 20,000, and we last saw that in 2006. Malloy had some numbers in the teens, as high as 16,700, but here are the totals for the last few years based on the new data:

In 2018: 2,200; 2017: 3,200; 2016: 3,600; and in 2015, 13,000.

Looking at the sectors, manufacturing is still showing decent gains, even after the revisions. Financial services is flat, which is bad news for Fairfield County. Professional services took a big hit over the last year.

“We’ve got work to do,” Condon said.

He was referring to DOL analysts trying to sort out this statistical storm — but he might as well have been talking about all of us in Connecticut, trying to right the ship.