The gap between job growth in Connecticut and the national pace of job recovery since the pandemic recession is expected to widen, hampering state economic growth in the years to come, according to the latest annual report on Connecticut’s labor force from policy research group Connecticut Voices for Children.
The progressive think tank’s “2022 State of Working Connecticut” found that while the U.S. has fully recovered all the jobs lost during the pandemic recession of 2020, Connecticut isn’t expected to meet that threshold until June of next year.
Researchers attributed the slower job growth largely to a decline, since the Great Recession, of public sector employment in state and local government. They also highlighted new findings showing unemployment among Black and Latino Connecticut residents remains elevated, and wages among those groups are disproportionately low. Both factors could hold back workforce growth and economic expansion, researchers said.
“The state’s precarious position as it relates to employment and wage equity is something we should be paying close attention to,” said Emily Byrne, executive director of Connecticut Voices for Children.
“Job growth is a major component of economic growth more broadly, which is a major source of growth in the tax base,” the report found. “Compared to the U.S., Connecticut’s slower job recovery is contributing to a slower economic recovery.”
The group recommended various policies aimed at closing wage and employment gaps, such as expanding affordable child care, providing stable scheduling through “fair work week” legislation, limiting so-called “noncompete” agreements that can prevent low-wage workers from seeking higher pay at competing employers, and further raising the minimum wage.
Connecticut Voices also called for more hiring in public sector jobs, which have a higher rate of union representation and a lower level of wage inequality across the sector.
“Similar to the recovery from the recent recession, the loss of public sector jobs slowed Connecticut’s recovery from the Great Recession,” said Patrick O’Brien, the organization’s research and policy director. Public sector jobs, which include those in education, corrections, hospitals, courts and other government operations, are down by 29,500 since the Great Recession, O’Brien said.
“One way that we think the government can most directly address this problem is essentially by funding these public sector jobs, which are going to boost wages for low- and middle-wage workers,” O’Brien said. That will increase the purchasing power of those workers, which will boost the private sector, he said. “These things are related.”
Chris DiPentima, president of the Connecticut Business & Industry Association, said he agreed with the report’s assessment of shortfalls in the labor market, which he attributed to essentially flat population growth after the Great Recession. In his assessment, tax increases on businesses and individuals during that time made the state less affordable and people chose to live elsewhere.
But DiPentima sees the decline in public sector employment, “through retirements and modernization and efficiencies,” as something of a positive development since the Great Recession.
“There’s certainly some areas in the public sector that have shortages that need to be filled,” he said, citing corrections and transportation, “but the majority have been able to have employees retire and put in systems in place … that provide services to the residents of Connecticut more efficiently and with less staff.”
“We don’t need larger government,” he said.
One bright spot in this year’s report was data showing average wages for low- and middle-income residents are rising faster than they have in the past. While inequality persists in Connecticut, it did narrow slightly over the last two years due to mandated increases in the minimum wage and stronger demand for workers.
Connecticut’s annual adjustments to the minimum wage, which will rise again to $15 an hour next June, have improved equity, O’Brien said. The wage gap between white workers and workers of color is smallest in the lowest wage bracket because the minimum wage “sets a floor for all workers,” he said.
But, he added, “It’s important to realize we still have a very high level of wage inequality. … This is a break in the trend from like the past 40 years.”
As such, Connecticut Voices recommended continuing to raise the minimum wage and — in order to offset rising inflation — annually adjust income taxes on those earning minimum wage so they don’t end up paying a higher percentage in taxes each year.