“More jobs” was one of the many things Gov. Ned Lamont touted earlier this week in response to claims that Connecticut’s economy is in continued decline.
The criticism came from Fred Carstensen, an economist and University of Connecticut professor who heads the Connecticut Center for Economic Analysis, who was asked about it in a one-on-one interview with the Connecticut Mirror and Lamont on Tuesday.
“Right now, we are slowly becoming the fastest growing economy in the Northeast,” Lamont continued.
But what makes an economy “grow” and “fast”? It depends on who you ask, but it’s often more complex than looking at a single measure. Inflation, income distribution, cost of living, total product, exports, and many other factors can be considered, each painting a different picture of a state’s economy.
However, one common way to look at this is to consider employment. That is, how many people are working, how many are qualified, and how many want to work.
Lamont said more people are employed now than ever before. TRUE? That varies by time frame, according to data from the U.S. Bureau of Labor Statistics. In 2023, Connecticut’s average employment was 1,822,000 people, which is:
• 0.63% decrease from the 2022 average (1,833,000 → 1.822 people)
• 2.16% decrease from 2019 (1,862,000 → 1,822 people)
• 6% increase from 2013 (1.718 million → 1.822 people)
• 5.7% increase since 2000 (1,723,000 → 1,822)
More people are employed in Connecticut than there were decades ago, which is normal for a state with a growing population.
Since 2000, the number of employed people in the state has increased by 5.7%, while the population aged 16 and older has increased by 12%. This difference is not unexpected, as Connecticut’s population is aging, along with other factors.
Another measure of this relationship is the employment to population ratio. In 2000, the percentage of employed people in the total population was 65%. In 2023, it will be 61.8%. All other New England states saw similar declines.
In the short term, employment numbers were lower last year than before the pandemic in 2019, when the number of workers in Connecticut hit a record high of 1.862 million. Every New England state except Rhode Island has seen a decline in the number of workers since 2019.
The part of the population that is not working may be either not in the labor force or unemployed. The number of people in the total labor force who are unemployed or looking for work constitutes the unemployment rate.
Connecticut’s unemployment rate in 2023 was 3.8%, the highest in New England, but “an unemployment rate of around 4% would be considered low by historical standards,” said researchers at the state’s Department of Labor. writes in the March 2024 issue of The Connecticut. economic digest.
The unemployment rate has declined since 2020, a sign of recovery from the pandemic, but remains slightly higher than before the pandemic. This trend is seen in Massachusetts, but not in other New England states. In 2019, the unemployment rate in Connecticut was 3.6%, and in 2023 it will be 3.8%.
The unemployment rate in 2023 will not be as low as the 2000 level, which reached 2.1%, but it is still lower than the 1990 unemployment rate of 4.9%.
Some argue that rising unemployment, despite its negative connotations, can be a good thing. In a national analysis in September 2022, when the unemployment rate rose, the U.S. Department of Labor’s chief economist at the time wrote, “The unemployment rate rose for a positive reason: more unemployed people began looking for work.” Ta.
As more people look for work and join the labor force, the unemployment rate increases because more people are classified as “unemployed.”
There is also a measure known as the labor force participation rate, which combines both of the above measures and measures the proportion of employed and unemployed people in the total working-age population.
In 1990, Connecticut’s labor force participation rate was 70.6%, but last year it was 64.2%. This multi-decade downward trend is seen in other New England states and is linked to an aging population and reduced participation by certain groups of men, researchers from the U.S. Census Bureau and the Federal Reserve Bank of Philadelphia explained. It is said that they are doing so.
However, in recent years, the 2023 participation rate has rebounded from a historic low in 2021, but is still back to the pre-pandemic 2019 participation rate of 66.3%, just 2.1 percentage points higher than last year’s participation rate. do not have.
So what does this mean? Mr. Lamont was right that there are more people working now than there were decades ago, but that’s to be expected if the state’s population is growing. That’s it. However, taking that into account, the number of workers has not increased as much as the population aged 16 and over. As of last year, the state’s employment and labor force participation rates were still below pre-pandemic levels, and the unemployment rate, although falling, was higher.
And while Connecticut had the highest unemployment rate and third-lowest labor force participation rate among New England states last year, New England was not alone in its decline.