Many were startled by the report of 11,500 new jobs in Connecticut in September, the fastest rate of job creation in more than 20 years. Given the timing, coming shortly before the election, many will cynically discount the importance of this information. We do so at our peril.
The remarkable growth in jobs in September — almost entirely in the private sector — when combined with other data, argues that Connecticut is now enjoying real recovery, not only from the doldrums of the Great Recession, but from more than a generation of failing to create net new jobs.
Looking at data on growth in jobs over the last three years, the unusual job growth is not surprising. It might even have been expected. Connecticut has been adding jobs, year over year, since October 2010, for 48 months. Every month.
Available employment numbers, output data, and projections made a strong argument that Connecticut was on a sustained, positive trajectory even before the confirmatory jobs report came out. Growth in output from the end of 2011 through 2013 has been essentially tied with Massachusetts for the best in the Northeast and close to the national rate. Growth in private sector output (excluding the public sector) has actually exceeded the national rate over the same period (the latest for which we have official data). Excluding North Dakota and Texas, whose economies grew at double-digit rates fueled by energy, Connecticut’s output has been growing faster than the national rate, and faster than 30 other states.
Finally, the projection from the Boston Federal Reserve and Moody’s Economy.Com — the New England Economic Project — forecast strong growth in jobs this year, 2014, and even stronger growth in both 2015 and 2016, perhaps reaching 60,000 additional new jobs over those two years. This translates into a projection of adding more than 80,000 new jobs by the end of 2016, propelling Connecticut employment well past the previous peak in 2007.
Continuing growth in the national economy deserves some credit, but Connecticut’s economy contracted from 2007 to the end of 2011, a contraction longer and deeper that nearly any other state suffered; only Florida and Nevada performed worse over that period. The national economy began to recover in the middle of 2009; all of the other NE states were recovering long before Connecticut.
Presumptively, Connecticut suffered from unique factors that were holding it back. Indeed, for a generation Connecticut had inflicted on itself a trifecta of policy failures: failure to invest in infrastructure (including IT, where the state lags badly), failure to invest in human capital (the education-workforce pipeline as well as IP transfer), and absent or incoherent development policies.
Gov. Dannel P. Malloy’s administration has worked to address all three failures — we can argue how effectively and whether other approaches might have delivered more, but his administration deserves a share of the credit for the strength of the sustained recovery. An array of initiatives focused on short-term benefits, such as Business Express, First Five, and the UBS loan. These looked either to keep jobs here or to bring new jobs in. But they were strategies that did little to change a framework that would keep those jobs here in the longer run or to build new competitive strength in the state’s economy.
Other efforts took a longer view, looking to preserve core strengths or create new, dynamic sectors. These initiatives have looked “anchor” a company in Connecticut and build the foundation for those emerging economic sectors that will have growing importance. Such strategies significantly reduce the likelihood or even the ability to move jobs. Malloy’s initiatives with NBC and ESPN took that approach, as did the two most important efforts to date. One promises to retain and even grow a powerful presence for one of Connecticut’s critical industries, aerospace engineering, the other builds a global presence in a leading growth sector, bioscience.
The first is the UTC agreement, permitting UTC to use tax credits it earned to help fund a $450 million Pratt research campus, anchoring all of the associated jobs and related value-chain activities in Connecticut (jobs can and often do move; the specialized research campus can not be moved and the jobs based there can not be done without the building).
The second is the successful attraction of the Jackson Laboratories human genome research facility, vastly strengthening the BioScience initiative already under way at the University of Connecticut and providing the already powerful Yale-New Haven biomedical complex with a wonderful collaborator.
Critically, it literally put Connecticut at the epicenter of the global bioscience research sector. Led by potential Nobel Laureate Dr. Charles Lee, the Jackson team already has filed for patents and secured $14 million in research funding; more applications for funding are in the pipeline. With hiring ahead of original projections and the expectation that the current building will fill to capacity within only a couple of years, Jackson Labs is already talking of building a second research building. The recent announcement that the Icahn School of Medicine will put a major genome sequencing facility in Branford is proof of the growing strength of the biomedical cluster in Connecticut and presages significant future co-location effects.
The best analogy for the dynamic that is unfolding in Connecticut is probably the history of the North Carolina Research Triangle. It languished for nearly a decade, until NIH put a national research laboratory there — essentially identical in scale and industry visibility to the decision of JAX to come to Farmington; it unleashes the power to co-location. Within a few years of NIH’s arrival, nearly every pharmaceutical and biomedical company had facilities in the Research Triangle; soon high-tech companies followed.
The Research Triangle now plays host to more than 1,000 companies. And, of course, it is closely affiliated with UNC-Chapel Hill, NC State, Duke, and NC A&T. That is, the investment in BioScience Connecticut and NexGen parallel what drove the success of the Research Triangle. Together with the UTC agreement, which preserves the aerospace and engineering eminence of Connecticut, there is in prospect a stronger, growing, and competitive Connecticut economy.
Fred V. Carstensen is a professor of Finance and Economics and director of the Connecticut Center for Economic Analysis.