The Register Citizen (Torrington, CT)
Economy in flux as Lamont rounds toward 2022 vote
At least once a week, Gov. Ned Lamont hopscotches the state, highlighting Connecticut’s local businesses and progress toward an economic turnaround. Last week, he launched a “Made in Connecticut” series on Instagram that included the landmark Pepe’s pizza in New Haven.
These high-profile events, combined with federal pandemic relief, a robust emergency reserve fund, a hot housing market amid an influx of residents during the COVID-19 crisis and an unexpected boost in tax revenue from investment gains, have created an enviable platform for the 67-year-old multimillionaire to launch an anticipated campaign for a second term next year.
There are signs that the economy is turning around, with 18,000 new jobs in the last four months and 102,000 over the last 12 months, according to the state Department of Labor. Those would be standout
numbers in any normal year. But the state has so far recovered only about 189,000 of the 292,400 jobs lost in the March and April lockdown of 2020.
As a result, Connecticut still has one of the highest unemployment rates in the country, tied with New Mexico at 7.9 percent and just ahead of Nevada’s 7.8 percent, according to the federal Bureau of Labor Statistics. While there are tens of thousands of job openings, including technology manufacturing and restaurants, prospective employees seem slow to return to the work force.
As the 2022 election season approaches, the condition of the economy — decidedly mixed with conflicting signals — will become a key focus in the campaigns for Congress, the General Assembly and especially in Lamont’s anticipated reelection effort.
As for overall growth, that, too, is a mixed picture. The federal Bureau of Economic Analysis in the Department of Commerce recently reported that Connecticut’s gross domestic product grew by 6 percent in the first quarter of 2021. That’s slightly below the 6.4 percent average growth nationwide.
While Lamont’s daily public schedule regularly includes stops at state companies — especially startups, new arrivals and transplants — to highlight his administration’s efforts, the truth is, economists say, Connecticut still has a long way to crawl out of problems that date back to the Great Recession of 2008 and earlier.
“The economy gained 102,800 jobs between Jan 2010 and Feb 2020, a 10-year period,” said Donald Klepper-Smith of DataCore Partners LLC, who has studied the state’s economy for 40 years. His point: In just a few pandemic crisis weeks, the jobs loss was two and a half times the entire job creation of the prior decade.
Still climbing back from the Great Recession
Connecticut never regained the 1.72 million peak of jobs it saw before the 2008-09 recession, as it was still climbing back when the pandemic hit.
“I have seen little evidence that Connecticut is on the mend economically,” said Fred Carstensen, professor of finance and economics and director of the Connecticut Center for Economic Analysis at the University of Connecticut. “The Connecticut Department of Labor data shows a collapse in employment among Connecticut residents. This includes those who work out-of-state but live in Connecticut.”
Over the last decade, Carstensen said, Connecticut’s total economic output shrank, while new businesses did not stimulate growth. “There were largely the kind of businesses that simply move money around: a new retailer who takes in money that was once spent at an adjacent store; a new restaurant that simply takes in money that was once spent at a neighboring restaurant; a new grocery store that simply puts another grocery store out of business,” he said.
This will likely be the focus of challengers for the Republican nomination for governor next year including Themis Klarides, the former minority leader of the state House of Representatives, who has filed her intentions to run with state election regulators; and possibly Bob Stefanowski, the 2018 GOP nominee who lost to Lamont.
Lamont portrays the state as business-friendly and committed to helping attract, relocate and expand companies. Gone are the days of custom-designed, multi-million-dollar incentive packages for larger employers moving or expanding in Connecticut. Lamont instead wants to focus on improving business conditions for every company, with a more modest job incentives plan that many more employers can use.
The State Bond Commission recently approved $20 million for the state’s sevenyear-old Manufacturing Innovation Fund (MIF) to offer grants and loans for companies such as the Juniper Design Group, Inc. of Southington, which moved from Brooklyn, N.Y. a year and a half ago and now employs 45 people at the average wage of $26 an hour in a converted 95-year-old factory.
In fact, there is a need for 70,000 workers in the state’s manufacturing sector, said David Lehman, commissioner of the state Department of Economic and Community Development, during a visit last week to Juniper Design, along with Lamont and Bartolomeo.
“You see all these new companies really getting the sense of the job creation, understanding what is really the job creator, but based on all the data we’ve seen from the new business starts, it seems like it is continuing,” Lehman said in an interview. “Our unemployment rate, optically, is high. It’s been improving and I think it will continue to improve. I want to make sure that those 70,000 job slots get filled with 100,000-plus people that are filing their continuing claims. I think the key is making sure that our workforce is plugging on all cylinders.”
An example of what’s needed
Connecticut needs more mid-sized, growing businesses, Lehman told reporters and Juniper workers including company founder Shant Madjarian, who transitioned from a finance career to manufacturing specialty lighting products.
“The job growth in the state of Connecticut is going to be driven by small and middle-sized companies like Juniper Design that are coming here for our workforce, for opportunities to purchase buildings and repurpose them for this, and this is truly unique to this part of the country and what Connecticut offers,” Lehman said.
Juniper received $50,000 in funding to purchase equipment under the MIF program and has hired 45 people in the last year and a half.
Companies like Juniper, on Southington’s Water Street, are helping the economic picture as well as Lamont’s public profile ahead of the 2022 election season.
“Coming here to Connecticut was almost the necessity of having to move away and get somewhere where we could expand,” Madjarian said of the three-year, $3 million project to purchase and renovate the former mill, originally built in 1926.
“I love the fact they are growing fast here in Connecticut,” Lamont said after meeting Juniper workers and touring the converted brick building. He said that allowing them to stay open as an essential business in the pandemic was crucial, as was the availability of child care. “This is a great success.”
“His growth has been amazing,” Bartolomeo said. “They are growing with the aid and help of some of Connecticut’s best programs for support, purchasing and manufacturing products.”
Progress but no clear direction
The question is whether it’s adding up.
Ashley Zane, government affairs associate with the Connecticut Business & Industry Association, said the MIF’s job-training and capital investment programs are definitely helping state businesses, particularly as advanced manufacturing expands. She noted that during the same recent State Bond Commission that replenished the MIF, $3 million was approved for new equipment for community college students studying manufacturing.
“In terms of employment numbers in manufacturing, we’re not quite regaining job losses from the pandemic because we have retirements in the workforce,” Zane said. “There is a pipeline, but there aren’t enough employees. They’re just having a hard time finding interested applicants. Historically manufacturing is seen as dirty and grungy, but I think we’re going to see more females in manufacturing. I think people think they are also not highpaying jobs. Nowadays people in manufacturing are making $30 to $40 an hour with no debt.”
Zane said that prospective employees might be shocked to know that bosses such as Madjarian are eager to train dependable workers for jobs as diverse as welding and computerized lasers.
Tracking the number of new business registrations offers only slight illumination.
“My office has been hard at work to improve our business service solutions to ensure that businesses can easily start and grow right here in Connecticut,” Secretary of the State Denise Merrill, who tracks business registration, said. “Even in the face of the largest public health crisis in a century, Connecticut is ready to get back to work.”
But a recent net increase of more than 3,000 in companies is tiny compared to the pre-pandemic. From January of 2017 to May of 2019 there was a net increase of more than 44,000 new companies registered with the secretary of the state, even as job growth lagged.
The registrations include individual workers operating as consultants, property owners and others who are not necessarily employers. That’s why Carstensen and Klepper-Smith discount that measurement in favor of overall job totals.
“You can't make any judgments on the basis of this kind of data,” Carstensen said. “We don't know if these businesses are actually functioning businesses with employees and revenues.”
A blue state with a purple economy
Lehman said it was crucial to the state’ s economy to keep manufacturers open. “We actually lost less jobs and our recovery has been a bit faster than it otherwise would have been,” he said. “As you have seen during COVID in manufacturing and beyond, it’s forced businesses to innovate, to change how they do things and to adapt their equipment.”
Carstensen, however, said Connecticut needs better information to understand what’s happening.
“The tragedy is that Connecticut truly flies blind. It refuses to collect the critical data that would permit us — legislators, policy makers, citizens, analysts — to see what the dynamic is and to assess our future trajectory,” he said, adding that a national expert told him that the state is among the four worst nationwide. “It is part of our deep commitment to flying blind — one of our steady habits.”
Another steady habit could be the re-election of governors. The last time an incumbent failed to push for another term was when Gov. Lowell P. Weicker, a former Republican U.S. senator, ran under a newly created party in 1990 and pushed through the personal income tax in 1991. He did not run for re-election in 1994.
Ben Proto, the state Republican chairman, says that Connecticut Democrats are vulnerable on the economy. “We have the second highest tax burden, the highest unemployment rate, one of the highest, if not the highest out migration, the highest cost of living,” Proto said Monday. “When people say the economy’s good I’m not sure what economy they’re talking about.”
The Washington-based, non-partisan Inside Elections with Nathan L. Gonzales, rates Connecticut solidly Democratic for the 2022 governor’s race.
Kyle Kondik, managing editor of Sabato’s Crystal Ball, another respected analysis site at the University of Virginia’s Center for Politics, said Monday that Lamont would likely win re-election, however it remains to be seen whether Republican gains nationally in the mid-term elections next year can translate to Connecticut.
“The last three gubernatorial races were really close, but I think Lamont is decently positioned,” Kondik said. “Unlike some governors around the country who got dinged for the coronavirus, Lamont gained popularity.”
With strong state budgets, no broad tax hikes for residents and house prices on the rise, Lamont has story to tell. He also has some big problems with job creation and unemployment — and a few months to prepare for the 2022 election showdown.