A full-blown labor crisis
The state’s labor force has fallen by a staggering 92,000 people since February 2020.
That’s more than 10 percent of the country’s losses, yet we are just 1 percent of the U.S. population.
At the same time, job openings in the state ballooned to 110,000 in December, a 64 percent increase over December 2020.
And our unemployment rate remains stubbornly high, tied for sixth highest in the country at 5.8 percent and almost two percentage points above the national rate.
To look at it another way: If every unemployed person in Connecticut found a job today, we would still have 5,800 open positions.
The labor force is the number of employed residents plus those actively looking for work.
All industries are impacted, although the decline is magnified in highly skilled, high-paying sectors such as financial activities, information and manufacturing, despite record demand for products and services.
It’s even more troubling considering our labor force did not decline during the last recession, despite major job losses. In fact, it grew in 2008, 2009 and 2010.
We navigated the pandemic better than most states and have one of the highest vaccination rates in the country. We should be in the driver’s seat today, embracing the recovery and building a vibrant, robust economy.
What happened? A number of factors are driving this crisis, including ongoing COVID-19 concerns, childcare challenges, insufficient and mismatched workforce development efforts, supply chain disruptions, shifting work and career expectations, the state’s high costs and an aging population.
Many of those factors are structural and predate the pandemic, but COVID accelerated the impact of others, particularly the aging workforce and the shift — partly generational — in attitudes toward work and careers.
Connecticut is a highcost state — ranked the eighth most expensive state to live with the sixth highest cost of running a business by CNBC’s 2021 America’s Top States for Business.
Workplace mandates drive much of those costs and undermine our economy’s structural foundation. Consider that the state legislature enacted an astonishing 28 mandates — and debated another 122 — between 2016 and 2021, during a period of anemic job, population, and GDP growth.
The pandemic plays a role, as it does across the country. What economists call the Great Resignation continues, with 4.3 million Americans (2.9 percent) resigning their jobs in December 2021.
The good news is that Connecticut’s quits rate is just 2.4 percent, tied for third lowest in the United States. And year-over-year layoffs and terminations fell 75 percent in December, the largest decline in the region, while the overall rate is the second lowest in the country.
Workers’ compensation data reveals that Connecticut’s workplaces are among the safest in the country. Wages and salaries increased almost 10 percent year-over-year based on third-quarter 2021 data.
The CBIA/Marcum 2021 Survey of Connecticut Businesses shows employers are making investments in hiring, and they are making training and retention their top priorities. It’s clear that policymakers must follow suit.
The state has brought greater emphasis to workforce development in recent years, including the creation of the Governor’s Workforce Council — featuring public and private sector leaders — to set strategy and policy. We now have an Office of Workforce Strategy, charged with executing that strategy, along with a chief manufacturing officer.
Federal pandemic relief funding offers a once-in-ageneration opportunity to make the investments needed to address many of the structural flaws in our economy — initiatives like the state’s new $70 million CareerConneCT training program.
However, demand for such programs is immense. CareerConneCT is completely oversubscribed, with staffers now wading through more than $250 million in grant applications.
The economic numbers are clear: We are playing catch-up to the region, the country and much of the world. The pandemic compounded the structural issues that weakened our ability to compete. We have made some progress and optimism is improving, but there is so much more to be done.
Resolving this crisis requires even greater collaboration and coordination between the public and private sectors, more resources and — most importantly — broader understanding and recognition from the state legislature.
Small businesses, for instance, were hit hardest by this crisis and urgently need access to programs like the manufacturing apprenticeship tax credit and the research and development tax credit to spur investment in talent.
Connecticut also needs to exempt training programs from sales taxes, knock down barriers preventing formerly incarcerated citizens from rejoining the workforce, reform archaic professional licensing regulations and better align education curriculums with the needs of a modern economy.
What we can least afford are more costly mandates that make a challenging situation even tougher — further driving up costs, dumping administrative burdens on smaller employers and reinforcing tired old perceptions about the state’s business climate.
If these jobs remain unfilled, then businesses cannot meet that record demand for their products and services. The resulting domino effect — sending customers out of state or giving Connecticut companies little choice but to move and expand elsewhere — brings potentially disastrous consequences.
Lawmakers must focus on this crisis. There is no greater issue this session.
They must make it easier to create jobs and keep residents and companies here, smoothing the path to an economic recovery that attracts new residents and companies, leveraging our state’s incredible strengths and generating greater opportunities for all residents.