Since 2011, financial services jobs have been in recovery, a slow healing process after the dismal days of the economic crash.
Now, the financial activities sector — including jobs in finance, insurance and real estate — are mounting steadily nationwide.
Not so in Connecticut.
In the Land of Steady Habits, financial services jobs have stumbled. Aside from a six-month rally around the first half of 2011, and the addition of 600 jobs in June and July, state Department of Labor data shows that Connecticut has lost — and hasn’t gained back — 13,000 such jobs since 2008.
The financial services sector currently employs 130,900 residents in Connecticut, down from 143,200 in 2008.
The slow recovery is especially noteworthy for a state that has historically prided itself on financial services jobs.
Local economists and business leaders say it’s still a major industry for the state; they argue the sagging numbers are owed in part to sea changes to America’s white-collar businesses.
But Connecticut, in particular, is caught up in a few particularly thorny problems.
Take the life insurance industry, for example. The state has a storied history in this business, but traditional life insurance jobs have slowed to a crawl, said Steven Lanza, University of Connecticut economics professor and executive editor of The Connecticut Economy.
While property/casualty and health insurance are not suffering, traditional life insurance appears to be a far more discretionary expense. As a result life insurers are not on a growth trajectory.
A recent report by state labor department economist Daniel Kennedy, for example, said Greater Hartford lost 2,000 financial jobs from October 2012 to March 2013, with the majority of losses coming from life and annuity insurance companies.
“We are in the wrong line of business, at the wrong time,” Lanza said.
But in a larger sense, it’s about the state’s emphasis on attracting and keeping large, monolithic white-collar financial firms. Lanza pointed to the mix of industries in New York and Boston as a contrast. With such a diversity of industries and businesses, those cities can overcome the Northeast’s weaknesses — namely, its high cost of doing business — while Connecticut battles similarly high costs, but has also put itself at the mercy of fewer, larger firms.
The state should concentrate on being a better environment for smaller, entrepreneurial firms, Lanza says. Politicians love to go after big-fish companies that make headlines, but the real emphasis should be on promoting a broader mix. That takes a longer time, he said — longer than a typical election cycle, for example — but a firmer, broader foundation of companies and industries would be better for the state’s long-term outlook.
That lack of business diversity has indeed held Connecticut back, said Joseph McGee, vice president for public policy at the Business Counsel of Fairfield County. While Manhattan is thriving with a mix of new entrepreneurial business, Stamford is dotted with empty commercial space, he said. Connecticut was hit hard by the economic crash, he said, and the new conditions of the American economy are making it tough to come back.
For example, worker productivity is soaring, with technology advancements in particular allowing one person to manage work that previously would have taken multiple employees. Gone are the days when every executive needed a personal secretary, he said — now, most people can pretty much get by with laptops and smartphones.
Don Klepper-Smith, chief economist for New Haven’s DataCore Partners, doesn’t dispute that the current American economy is all about maximizing productivity — squeezing it, really — out of every single worker.
“This economy is not for the weak of heart,” he said; 60- to 70-hour workweeks are now no longer unheard-of. Indeed, employers are hiring far more part-time and contract labor than ever before, trying to extract productivity without making an investment in a larger, more permanent workforce.
But this is true everywhere in America. Connecticut, he emphasized, is different.
“The Connecticut recovery is coming back inch by inch instead of yard by yard,” he said. According to the Bureau of Economic Analysis, Connecticut lost 3.5 percent of its job base from 2007 to 2012, and is coming back at a snail’s pace. It was also the only state to post a decline in real gross state product in 2012.
Connecticut’s Achilles heel is its high cost of doing business, Klepper-Smith said, with government expenses racing far ahead of the state’s ability to pay for them.
Businesses are laser-focused on extracting the most productivity at the lowest costs. Also, financial services jobs are highly transferrable; with an Internet connection and some minimal infrastructure, they can be moved elsewhere. So if it’s cheaper to do business in North Carolina — which, Klepper-Smith added, has seen a spike in financial service jobs — then why wouldn’t you build your business there instead?
It should be noted that Connecticut’s overall white-collar jobs numbers aren’t all in a slump. Aside from financial services, the category “professional and business services” is another major, private-sector, white-collar segment, and at 208,700 jobs as of July 2013, it’s grown at a steady clip since May 2010, when it was at 191,200 jobs.
Klepper-Smith was skeptical that those numbers were cause for celebration, though, saying that those jobs were just as likely to be seeded with the kinds of temporary or contract white-collar work currently in vogue among employers. But Susan Winkler, executive director of the Hartford-based Insurance and Financial Services Cluster, suggested that those business service positions were actually better news for financial services than one might suppose.
Financial services companies aren’t hiring very quickly, she acknowledged, but where they do need help, they typically need technology professionals and support services, as well as legal and compliance help. That kind of work is likely to fall in the service of the financial sector, she said, but be classified as something else.
And while hiring is slow, she said, there are jobs to be had out there, and financial services companies are focusing on where to grow. The mood in the industry is cautious, but optimistic overall, she said.
That’s true of Waterbury-based Webster Bank, said Tony Denniston, senior vice president of employee relations for the $20 billion-asset, 2,800-employee institution.
The bank is hiring for a number of positions, he said, in customer-facing, revenue-generating positions such as loan origination. It’s a targeted, opportunistic approach, and it’s generally a sign of the momentum that has slowly been growing at the bank since roughly the middle of last year — capitalizing on “slowly improving” economic conditions, Denniston said.
It’s not unlike other banks’ positions, he added, saying he was sure they were looking toward growth, too.
