Connecticut’s weak economic recovery may fizzle if job losses re-emerge in the near future, a University of Connecticut study concluded Thursday.
The threat of public sector job loss coupled with the state’s looming $3.4 billion budget deficit “would likely thwart any major recovery in employment,” said the Connecticut Economic Outlook issued by the Connecticut Center for Economic Analysis.
The state’s unemployment rate peaked in April at 9 percent and held around 8.8 percent in June, but those numbers include the census workers laid-off during that time period.
“Deceptive; seasonal employment in June exaggerates the health in labor markets,” the report concluded.
The U.S. Bureau of Labor Statistics showed 202,000 cuts in government employment from June to July. About 155,000 of those were census workers and federal employees, 10,000 worked for states and 37,000 worked for local government. “These results indicate that even with census set aside public sector cutbacks overwhelmed employment gains in the private sector.”
What does this mean for Connecticut’s economic recovery?
“Dramatic revisions in federal economic data show that the Great Recession was significantly worse than previous thought; thus Connecticut’s economy probably has been weaker than previously recognized,” the study found.
The study’s author, Peter Gunther, a senior research fellow at the center, did manage to find a silver lining in the grim outlook.
Connecticut hasn’t seen much, if any job growth in the past 20 years, but Gunther found that the Nutmeg state managed to regain higher-wage jobs, while reducing lower-wage employment. Some of the medical occupations, including registered nurses, contributed to the gains in high-paying jobs.
But still the number high-paying occupations such as chief executive officer has fallen.
However, the decline in CEOs is in part “being overcome with expansion of middle-management occupations, including Managers for Finance, Computer and Information Systems, Sales, Marketing, Engineering, and General and Operations. While incomes in these occupations are above state averages, the margin is less than for CEOs.”
The study, which is released every three months by the center, again urged state officials to let companies use the $1 billion in unused research and development tax credits to get the economy going again.
In March the center made the recommendation saying the policy to restrict the use of these credits makes them “worthless, undercutting, if not negating, related development policies.”