As young people flee the state and outsiders avoid it, a report released Thursday by the Connecticut Center for Economic Analysis Outlook offered solutions to restore Connecticut’s economy.
The good news is that the state is adding jobs, but economists who authored the report estimated it will only be able to restore about half of the 120,000 jobs lost since the beginning of the recession.
Connecticut’s failure to create new jobs over the past two decades left the state unable to retain many of its young adults or attain a significant new population of workers, the report concluded.
Adding insult to injury Connecticut’s workforce is aging and could impede the state’s economic recovery. The report predicted that by 2020, the largest age groups in the nation will be over the age of 54.
The ratio of working age people to non-working age people in Connecticut is soaring according to the press release on the report. “If the state does not change its demographic trajectory, it faces a bleak future,” the report said.
But all is not lost according to the University of Connecticut economists who authored the report. The economists see a light at the end of the tunnel for the state if the initial 120,000 jobs can be replaced and 50,000 net new jobs can be created.
Its secret weapon? The unused and self-funded $2.5 billion tax credits. If that money were to be redeemed, it would convert a liability against state tax revenue into an investment fund and potentially add 100,000 net new jobs according to the report’s predictions.
Those jobs could potentially multiply and credits could be sold to enterprises which could then expand. It’s an idea UConn Economist Fred Carstensen has been touting for years.
Department of Economic and Community Development Commissioner Catherine Smith rebutted.
“Mr. Carstensen’s assertion that unleashing stranded tax credits is the cure-all for our economy is off the mark,” she said in a written statement. “These credits are not ‘entirely self-funding’ because they reduce state revenue when redeemed and there is no evidence that the holders of unredeemed credits would take advantage of Professor Carstensen’s scheme at all, much less at a level that would create tens of thousands of new jobs.”
A comprehensive and strategic approach will be the secret weapon, according to Smith, to make the state more attractive to workers and companies.
Meanwhile, the report touted the progress the state has made in expanding the University of Connecticut John Dempsey Hospital and the new partnership it has with Jackson Laboratories. These efforts could increase Connecticut’s Real Gross Domestic Product by 2013 and create space for new facilities and therefore new jobs, according to the report.
It also noted other steps, like the Small Business Express program initiated through the bipartisan jobs package passed last fall, are being taken in an attempt to pull small businesses out of their rut, too.