As Connecticut Inc. heads into a shortened Labor Day week, it’s a good time to reflect on the state of the economy. Despite adding 11,500 jobs in July, Connecticut’s unemployment rate remains stubbornly high at 8.1 percent, well above the national unemployment rate of 7.4 percent. Still, the addition of more than 10,000 jobs has economists hopeful that Connecticut’s economic recovery is taking hold.
A closer look at the data, however, raises serious questions about Connecticut’s economic performance. Last month’s jobs growth was led by government hiring — the sector added 4,200 positions.
A truly vibrant economy is driven by private sector growth, and while Connecticut businesses added jobs overall last month government accounted for more than a third of the gains. Meanwhile, two key industry sectors — construction and manufacturing — shed jobs in July. This is not a recipe for long-term economic success, particularly when the state needs to rein in government spending, not expand its bureaucratic wings.
Another troubling sign is the types of jobs being added in the economy. According to state figures, the private sector workweek averaged 33.6 hours in July, down four-tenths of an hour from a year earlier. Meanwhile, average hourly earnings totaled $27.77, down 14 cents from July 2012. These numbers indicate Connecticut is adding lots of part-time positions with lower pay and fewer hours.
So, what does this mean? It’s not clear exactly. The Farmers’ Almanac forecast of an impending snow storm for next year’s Super Bowl in New Jersey is likely more reliable than any predictions about Connecticut’s economic outlook. What’s clear, however, is that future prosperity lies with growing a vibrant private sector. State and local policymakers can help this cause by reducing spending and bureaucracy businesses have long complained about; not by expanding government payrolls.
