Alexandra Daum, Gov. Ned Lamont’s nominee to lead the Department of Economic and Community Development, told lawmakers at her confirmation hearing last Thursday that growth will be her top priority — a now-familiar refrain from the governor’s office.
But there are strong headwinds facing Daum as she takes over the state’s top economic post. The threat of a recession looms this year, as the Federal Reserve continues to raise interest rates in an effort to tamp down on inflation, and companies have begun downsizing.
In Connecticut, several of the state’s prominent corporate employers have announced layoffs, relocations and restructuring.
Campbell’s Soup Co. said it’s closing its Pepperidge Farm headquarters in Norwalk and consolidating operations in New Jersey. Sikorsky Aircraft parent company Lockheed-Martin announced 800 layoffs in divisions that could include the Stratford plant. Cryptocurrency conglomerate Digital Currency Group, whose move to Connecticut in late 2021 was hailed by the Lamont administration, has closed down one of its subsidiaries while another of its companies filed for bankruptcy. And Denmark-based Lego Group said it’s relocating its North America headquarters from Enfield to Boston in 2025.
The flurry of unsettling announcements followed news late last year that biotechnology company Sema4 (now known as GeneDx), which received millions of dollars in state loans to build labs in Stamford and Branford, would be shuttering those operations.
Lawmakers asked the incoming economic development commissioner how she plans to respond to the trend in corporate retrenchment.
“It’s all very disappointing news across the board,” Daum said, but the “silver lining” is the number of open jobs Connecticut employers are currently trying to fill: roughly 100,000. Daum said DECD and the Department of Labor will work with employers to match people who have been laid off with job openings around the state.
The state government has thousands of open jobs to fill, and Connecticut’s school districts and health care providers are facing staff shortages. New federally funded infrastructure and broadband projects will have thousands of openings in the coming years. And new investment in the semiconductor industry is driving demand for specialized technology workers.
But it was Lego’s relocation to Boston — driven in part, the company said, by a desire for a more lively urban location with a highly skilled talent pool — that appeared to have the freshest sting.
“That decision wasn’t made to save money,” said Rep. Julio Concepcion, a democrat from Hartford who co-chairs the Executive and Legislative Nominations Committee. “It’s more about the quality of place that Boston provides,” he said.
Daum agreed. “The impression that people have is that they can’t get that experience in Connecticut.” But she said wants to change that.
“I’m a big believer in Connecticut cities, in our downtowns, and in the fact that they’ve been underappreciated for a long time,” Daum said. “We need to get the word out about our vibrant downtowns, where you do have young talent, where you do have walkability and transit-oriented environments — and at a lower cost of living than in these major metropolises. So we’ve got a good story to tell.”
Daum hopes telling that story will attract more people to the state and drive economic growth.
Marketing the state’s culture and tourism assets was one of four focus areas Daum laid out for the committee, and she highlighted the department’s recent hiring of Noelle Stevenson — who previously led visitors bureaus in Florida’s Broward and Miami-Dade Counties — as Connecticut’s tourism office director.
The other three areas Daum plans to focus on are providing technical and financial support for small businesses, administering community development grants and offering tax incentives for companies tied to how many jobs they create.
More workers means more housing
Several legislators said economic growth and population growth in the coming years would depend on the availability of housing.
“We’re tens of thousands of units of housing behind where we need to be, and employers will not come into the state if there are not the employees,” said Senate Majority Leader Bob Duff, D-Norwalk, co-chair of the committee. “We’ve got to make a commitment in this state to build housing — workforce housing.”
Daum said housing and employment are intertwined. She called attention to the department’s Communities Challenge Grant, which has so far awarded over $80 million to 20 projects around the state — 80% of which incorporated housing developments, Daum said. Another grant program, the Community Investment Fund 2030, just completed its second round and there are seven more to go.
“That’s the way we’re moving the needle on this issue,” Daum said.
She added that DECD has encouraged some employers to consider building their own housing for workers, and she said those companies could apply for state-funded community development grants to help cover the cost of construction.
“That application would likely score off the charts,” she said.
Public-private partnerships, where the state, communities, employers and other private funders all have “skin in the game,” are the kind of projects DECD likes to do, Daum said. She added that she expects to be collaborating across executive branch departments on many of her initiatives.
Sen. Joan Hartley, D-Waterbury, said she’s concerned that the advantages Connecticut afforded to people who moved here during the pandemic — more space, for one — won’t be enough to keep them around in the coming years.
“I think it would be a mistake for us to have our future economic development strategy be based on the advantages that were specific to a pandemic,” Daum responded. “Our strategy going forward, I think, should be based on fundamentals that we know to be true about Connecticut: our workforce and our quality of life and our relative cost of living,” she said.
The committee unanimously approved Daum’s nomination, which now heads to the state Senate for final consideration.