The COVID-19 pandemic was a shock to the labor market in Connecticut, knocking back jobs gains in the sectors that had grown in the decade since the Great Recession and accelerating job losses in those that were already struggling.
Even now, over a year after the short-lived pandemic recession, the previous decade’s job growth remains entirely wiped out.
Following the Great Recession, from January 2011 to January 2020, total nonfarm jobs in the state rose 71,500, a gentle 4.4%, according to the U.S. Bureau of Labor Statistics. But beginning in early 2020, the pandemic drove sharp job losses, and recovery since the spring 2020 recession has been incomplete as the pandemic waxed and waned.
From January 2020 to November of this year, Connecticut nonfarm jobs have declined by nearly 74,000. And more than 101,000 Connecticut residents have exited the workforce entirely. Connecticut’s statewide unemployment rate in November was 6.0%, higher than the national rate of 4.2%.
The state’s interim Labor Commissioner, Danté Bartolomeo, said last week that job growth has been steady throughout 2021 — calling the latest monthly jobs report “good economic news.” In a statement accompanying the report, Bartolomeo said, “We have a lot of work ahead of us, but the numbers tell a powerful story.”
While the health of Connecticut’s labor market is improving — unemployment is sliding downward and job numbers and openings are steadily rising — economists say the state needs to better support growth in sectors that provide steadier, higher-paying employment.
As in much of the country, industries that bore the brunt of job losses in Connecticut were high-contact, lower-wage sectors. Leisure and hospitality jobs were down 21,800 from January 2020 to November of this year. In education and health services, jobs have declined by 17,100.
Prior to the pandemic, those were the sectors where jobs had been growing the fastest in the state.
“Connecticut unemployment is slightly higher than national average, particularly because Connecticut’s growth had been focused on the sectors that have been particularly hit hard during the pandemic,” said Sadia Priyanka, an economics professor at Connecticut College.
The pandemic recession was different from the Great Recession in the kinds of jobs it eliminated, Priyanka said. “After the financial crisis, we saw more job losses in construction and manufacturing, which are typically more male-dominated industries.” The problem, she added, is that Connecticut’s construction and manufacturing sectors never fully rebounded after the Great Recession.
The same wasn’t true in the rest of the country. Nationwide, construction jobs grew by about 40%, and manufacturing was up more than 10% between January 2011 and January 2020.
Connecticut has also seen ongoing job losses or stagnation in other higher-wage industries over the past decade — trends that weren’t helped by the pandemic recession. Jobs in the financial sector declined by 13,200 between January 2011 and January 2020, and job losses have continued since then, off by another 4,900 as of November. A slight decline in information jobs after the Great Recession accelerated during the pandemic, falling 3,300 between January 2020 and November of this year. And government jobs are down by more than 20,000 over the last decade, half of which disappeared since last January.
“Connecticut has disconnected from the national economy over the last three decades, and especially since 2010,” said University of Connecticut economist Fred Carstensen, who runs the Connecticut Center for Economic Analysis. After the Great Recession, Connecticut never returned to its previous levels of employment and output, Carstensen said. Instead, “Connecticut’s economy was shifting to low-skill, low-wage activities — tourism and hospitality, logistics, elder care. All pay less than $40,000 annually — if you work full time, which few do in these sectors.”
Coupled with the loss of much of the state’s higher-paying manufacturing, finance and insurance jobs, Connecticut was in a particularly vulnerable position when the COVID recession hit.
A distinct kind of shock
But a global pandemic wasn’t the kind of economic shock that many in leadership positions were prepared for, said Rakesh Kochhar, senior researcher with Pew Research Center. “I don’t know who was anticipating that, frankly. It’s hard to say what things [the labor market] is vulnerable to or not until they happen.” The nature of the coronavirus being airborne drove a distinct kind of labor market shock, he said.
“For the first time in all the recessions on record, post-World War II, the services sector was the one that bore most of the impact,” Kochhar said. “They led in job loss, and because women are more likely than men to be in services, we saw that women initially experienced a greater increase in unemployment and a greater decrease in labor force participation.”
After the Great Recession, women’s participation in the labor force — the percentage of women who are working or looking for work — declined. It had begun to recover when the pandemic arrived, which led to another, much sharper drop in female participation. As of November, 56.2% of working-age women in the United States were participating in the labor force, below the overall labor force participation rate of 61.8%. (The latest figures for Connecticut — 2020 annual averages — show women’s participation stood at 59.3% compared to overall participation of 64.8%.)
Many women dropped out of the labor force during the pandemic, “but it wasn’t only because of school closures,” said Stephanie Aaronson, an economist with Brookings Institution. “They were in service positions at hotels, restaurants, stores and personal services — all these things closed. School closings obviously mattered, but these other things mattered a lot,” Aaronson said.
And women may remain out of the labor force for a while yet, even as the economy has mostly reopened. “People’s labor force decisions are very sticky in the sense that they might not be permanent, but they don’t tend to reverse very quickly,” Aaronson said. “We shouldn’t ignore the fact that the pandemic is still weighing on people even if schools are open and things seem more normal.”
Adam Grossberg, an economics professor at Trinity College, said because of ongoing and random COVID-19 infections, many parents still face day-to-day uncertainty over whether their child care will even be open. “If the kid is home 40% of the time, what are we paying for?” he wondered.
“The labor supply has been interrupted by the lack of reliable child care,” Grossberg said. But with social safety programs providing extra financial assistance to families with children during the pandemic, some two-income households have been able to contemplate living off a single income — even if only temporarily. “In a sense, the pandemic has forced households into this experiment that they didn’t have the courage to walk into voluntarily,” Grossberg said.
But there are sure signs the labor market is on track to recovery. “There is still a shortfall; we’re not back to pre-pandemic levels,” Kochhar said. “But definitely since the beginning of this year, there has been a lot of change in what you might call the right direction.”
The question remains whether Connecticut’s pre-pandemic economy was moving in the “right direction” before the pandemic shock.
“The quality of jobs in Connecticut systematically deteriorated for the last decade,” Carstensen said. But the state can bolster its faltering labor market, he added, by improving the school-to-workforce pipeline in advanced fields like aerospace, biomedical and information technology.
Connecticut also needs to be “more aggressive” with tax credits for advanced industries, Carstensen said, by helping companies build facilities locally and expanding eligibility for incentives. He said a new state incentive program designed to attract data centers was a positive development.
“We are behind our competitors, and if you want to catch up, you often have to do more,” he said.