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Connecticut Jobs Decline

Posted on February 10, 2010

According to a new study released by the University of Connecticut, Connecticut jobs will continue to be eliminated, as outsourcing and government budget problems dim employment recovery prospects.

The report begins by grimly stating, there is no jobs recovery in sight. Assuming national growth trails off from the unsustainable 5.7% of the fourth quarter, Connecticut continues to lose jobs through 2011; the rate of loss simply slows from the predicted rate in the previous CCEA Outlook.

The state’s economy has undergone a critical structural change as the degree of outsourcing—whether to other states or abroad—has grown quickly for more than a decade; the result is that even strong growth in total output may not translate into rapid improvement in employment. The effect shows in a pattern of progressively slowed jobs recovery.

Before 1990, Connecticut’s economy recovered jobs lost in recessions in ten months or less; recovery took 23 months and then 39 months in the last two recessions. Unless the state adopts policies and makes strategic investments to change this progressively deteriorating pattern, a jobs recovery may never arrive.

“The degree of outsourcing, whether to other states or abroad, has grown quickly for more than a decade,” the outlook states. “The result is that even strong growth in total output may not translate into rapid improvement in employment.”

Outsourcing has moved large numbers of high-skill, high-wage manufacturing and financial services jobs out of Connecticut with low-wage jobs in hotels, casinos, food service and health care making up a growing percentage of the market.

Absent new strategies aimed at attracting and creating new businesses, the jobs market will continue to underperform.

“The government investments must be more than countercyclical Band-Aids,” the report says. “They should frame a facilitating business environment and create forward-looking infrastructure to generate long-term job growth, productivity gains and a transition to the increasingly electricity-dependent and knowledge economy.”

According to NorwichBulletin.com, the report’s good news is that the rate of job losses is expected to be slower than previous forecasts, UConn said. But the losses could continue into 2012 if business output drops.

“Unless the state adopts policies and makes strategic investments to change this progressively deteriorating pattern, a jobs recovery may never arrive,” the report says.

State government’s financial problems are among things blocking reforms, UConn said.

“At the very time that is hardest to take steps central to driving a fundamental structural change … is exactly when … it is most needed.”