The need for Conn. to reinvigorate its economy
Connecticut has historically been recognized as a center of innovation. It was the birthplace of the first North American constitution in 1639 and is thus known as the Constitution State. In the 1800s and early 1900s, it was a hotbed for inventors, leading to the modern bicycle, the frisbee, and yes, likely, the hamburger.
Along with its inventiveness, Connecticut has used geographic and historical advantages to build a strong economy: proximity to New York City and Boston, which helps foster its insurance and financial sectors; a higher education sector built upon some of the nation’s most prestigious institutions; and outdoor beauty, particularly visible now, that attracts young and old.
However, there are growing signs that the Connecticut economy needs invigorating and is not serving the state’s population equally. While Connecticut boasts one of the nation’s highest productivity measures, it also has the second-highest inequality index relative to peer states. This inequality is reflected in the outcomes of different racial and ethnic groups: White residents in Connecticut have more than twice the income of Black and Hispanic residents and nearly one-third the unemployment rate.
The state’s overall employment growth since 2008 has underperformed nearly all other states at negative 6.7 percent, and the state has seen a population decline over the last seven years, with a net of nearly 20,000 people yearly moving to other states.
Despite these warning signs, there are also signs of strength and potential. The state’s penchant for innovation can be seen in its high number of patents per capita, which is fourth in the nation. Fueled by tech transfer programs and venture capital funding, this innovation leads to a high number of business starts, but it has so far failed to translate into later-stage startups. Connecticut is 48th in the nation in startup density and 49th in the share of new employers. Developing greater access to growth capital and resources for startups to stay and grow in the state could potentially help improve in these areas.
Connecticut has historically been strong in higher education, but there are gaps in the state’s own holistic education and workforce development ecosystem. Among peer states like Massachusetts, New Jersey, New York and Rhode Island, Connecticut produces the lowest share of STEM graduates. While the state has made inroads in implementing computer science programs in the K-12 system, gaps persist. New Haven Public Schools, for example, only has 10 percent of students participating in computer science courses. As the state sees more demand for information technology talent, investing in a holistic workforce training approach, including apprenticeship programs and career readiness curricula could be another area for review.
With the changing nature of the workplace, Connecticut may be an even more attractive place to live for workers with flexibility. Several cities, like Tulsa, Okla., have even given stipends to workers who come to work there remotely. To attract more young workers, Connecticut may need to invest more in its cities, as young professionals show an increasing preference for living in an urban environment. This could include supporting the development of first-class city parks, public transportation and marketing itself as an ideal location for flexible workers.
A final area where Connecticut can improve is in its business attractiveness. The state ranked 49th in WalletHub’s “Best States to Start a Business” and 43rd in Forbes’ “Best states for business” rankings. A main driver of this is the high price of energy, which is 68 percent higher than the U.S. average. The state has already taken steps to address this by accelerating the shift to renewable clean energy. Connecticut is ranked eighth by WalletHub as the most environmentally friendly state, and earlier this year released a comprehensive three-year, $708 million energy efficiency plan. Following through on initiatives to improve energy efficiency and transition to clean energy could help reduce costs for businesses and residents.
Connecticut has a storied history and a relatively healthy economy, but it may need to make investments to maintain growth and confront the trends of climate transition and the future of work. The raw ingredients are present across academia, business and the social sector, but further coordination is required to ensure that all components of the Connecticut economy are functioning smoothly together and creating inclusive economic growth for all its residents.