Personal in­come growth lags in state, re­port finds

The Register Citizen (Torrington, CT) - - FRONT PAGE - By Keith M. Pha­neuf CTMIRROR.ORG

Personal in­come surged na­tion­ally this year in a way not seen since 2011 — but growth in Con­necti­cut still lagged most of the na­tion, ac­cord­ing to a new anal­y­sis from Pew Char­i­ta­ble Trusts.

Personal in­come in the U.S. rose by 2 per­cent in the first quar­ter of 2019 com­pared with the same three­month pe­riod in 2018. Con­necti­cut’s growth was only about one fourth of that.

More im­por­tantly it marked the sec­ond con­sec­u­tive quar­ter that personal in­come grew in all 50 states — a bench­mark not reached in eight years, ac­cord­ing to Pew an­a­lysts.

Personal in­come in­cludes wages and in­ter­est earn­ings, in­come from rent and pub­lic as­sis­tance pro­grams — but not capital gains — This is an im­por­tant dis­tinc­tion, es­pe­cially in Con­necti­cut and other north­east­ern states with economies heav­ily re­liant on in­vest­ments and financial ser­vices. For ex­am­ple, nearly one­third of all Con­necti­cut state in­come tax re­ceipts come from quar­terly fil­ings, which are heav­ily in­flu­enced by capital gains and div­i­dends.

Still, personal in­come is an im­por­tant bench­mark that shows changes in most of the earn­ing ca­pac­ity for a sig­nif­i­cant por­tion of the pop­u­la­tion.

Twenty­four states tied or ex­ceeded the na­tional av­er­age growth rate of 2 per­cent led by West Vir­ginia, where personal in­come rose 4.3 per­cent be­tween the first quar­ter of 2018 and the first three months of 2019.

But over the same pe­riod,

growth in Con­necti­cut was just 0.6 per­cent, tied with New York for 48th, only Rhode Is­land (0.3 per­cent) and New Hamp­shire (0.2 per­cent) ranked lower.

“It kind of mir­rors what we’ve been say­ing to pol­i­cy­mak­ers: Our growth still hasn’t been mea­sur­ing up to the rest of the coun­try,” said Joseph F. Bren­nan, pres­i­dent and CEO of the Con­necti­cut Busi­ness and In­dus­try As­so­ci­a­tion.

Bren­nan added that while there are good things hap­pen­ing with Con­necti­cut’s econ­omy, “when you look at the macro num­bers, we’re not keep­ing pace.”

Econ­o­mist Fred Carstensen, who heads the Uni­ver­sity of Con­necti­cut’s eco­nomic think tank, said this state still is feel­ing the effects of the first few years af­ter the last re­ces­sion ended. Be­tween 2010 and 2014 Con­necti­cut badly lagged the na­tion, not only in jobs re­cov­ered, but also in wages re­gained.

In other words, the state lost many high­pay­ing jobs dur­ing the re­ces­sion, par­tic­u­larly in key ar­eas like financial ser­vices and ad­vanced man­u­fac­tur­ing, and re­placed them with lower pay­ing ser­vice jobs.

“We haven’t re­cov­ered yet, in real terms, in jobs or in out­put,” Carstensen said. “This re­cov­ery has been ex­traor­di­nar­ily weak.”

Ac­cord­ing to Pew an­a­lysts, Con­necti­cut ranks dead last among states in personal in­come growth be­tween the fourth quar­ter of 2007 — just be­fore the last re­ces­sion be­gan — and the first quar­ter of this year.

While the na­tion has av­er­aged 1.9 per­cent growth over this pe­riod, Con­necti­cut is up just 0.8 per­cent.

“There is no ques­tion Con­necti­cut has strug­gled to re­cover from the Great Re­ces­sion,” said Of­fice of Pol­icy and Man­age­ment Sec­re­tary Melissa McCaw, Gov. Ned La­mont’s bud­get di­rec­tor. “Even as our state’s pri­vate sec­tor has re­cov­ered all of the jobs lost dur­ing that con­trac­tion, the data has shown that we have re­placed the lost higher­wage jobs with low­er­wage po­si­tions, which would stymie a mea­sure such as growth in personal in­come across our en­tire state.”

McCaw added that “our work is not done. We must fo­cus our ef­forts on mak­ing our state a place where busi­nesses can grow and thrive, where we can pro­vide a pipe­line of tal­ented em­ploy­ees, and where our pub­lic and pri­vate uni­ver­si­ties and com­mu­nity col­leges pro­duce the next gen­er­a­tion of em­ploy­ees with the spe­cial­ized skills our busi­nesses need. We need to con­tinue to in­vest in work­force de­vel­op­ment, whether it is pro­vid­ing train­ing to some­one pur­su­ing a new ca­reer, sup­port­ing growth in Ad­vanced Man­u­fac­tur­ing Tech­nol­ogy Cen­ters, cre­at­ing a fer­tile en­vi­ron­ment for in­vest­ment in star­tups, and in­creas­ing ac­cess to and op­por­tu­nity for ed­u­ca­tion be­gin­ning with preschool.”

Don Klep­per­Smith, an econ­o­mist with DataCore Part­ners, said even as Con­necti­cut’s re­cov­ery be­gan to pick up steam in 2015 and later, it hasn’t been enough to over­come all of the prob­lems dur­ing the last re­ces­sion and the ini­tial years of slug­gish re­cov­ery.

Su­san Haigh / As­so­ci­ated Press

Melissa McCaw, sec­re­tary of the Of­fice of Pol­icy and Man­age­ment for Gov. Ned La­mont

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