Financial services jobs in Connecticut grew steadily from 1999 to 2007, increasing by more than 5,000 positions, but the financial crisis that shook the industry over the last year has erased most of that growth, an economic report said.
Statewide, finance jobs in the state peaked at 145,000 in 2007, but recent losses have reduced that total to about 140,000, according to the Connecticut Quarterly Review, an economic report done by University of Connecticut economists.
That is the same number of jobs the industry recorded in 1999, the survey said. Some economists predict that job losses in the industry could get worse before they get better.
Fairfield University economics professor Edward Deak, for example, forecasted that employment losses in financial activities will continue for Connecticut through 2010, and by 2013, finance-sector employment is expected to be 4 percent below the 2007 peak, the report said.
“While financial companies seem to be regaining their strength, you can get short odds that they will eventually look quite different from the way they did just two years ago,” the survey said. “The impact of the changes …on the entire state could be profound.”
That outlook could complicate the state’s economic recovery since Connecticut relies heavily on the financial services industry for a good portion of its income tax revenue.
In the early 1990s, about 7.5 percent of statewide personal income came from finance and insurance. That percentage rose steadily to nearly 13 percent in 2006 and 2007, and currently stands at about 11 percent, the report said.
Fairfield County, with its close ties to New York City and Wall Street, fueled most of that growth. That region alone accounts for 38 percent of Connecticut’s personal income tax, the report said.
In 2008, compensation per employee in Connecticut’s finance industry averaged more than $142,500. Mean industry earnings that year in Hartford County were $97,700, while in Fairfield County, they were $245,400. But in the subsector of securities, commodity, and investments, jobs largely concentrated in Fairfield Country, 2008 earnings averaged $379,100, the report said.
Those plush salaries helped fill the state’s coffers in recent years, but the industry’s recent decline contributed to the state’s massive $8.7 billion deficit for the next two fiscal years.
Rae Rosen of the Federal Reserve Bank of New York estimates that as much as 40 percent of financial services earnings paid in recent years will not be sustainable in the long run due to job losses and lower compensation.
As a result, it’s likely that “a significant portion of the state income taxes collected from Fairfield County taxpayers may well vanish for the foreseeable future,” the report said.
Credit Unions Improving
Connecticut credit unions improved their performance during the second quarter of 2009, but their collective income is still well behind last year’s pace, according to data from the industry’s federal regulator.
Net income for the state’s 142-federally insured credit unions fell 69 percent during the first half of 2009 to $6.1 million, compared $19.7 million during the same period last year, according to data from the National Credit Union Administration.
But, statistically the state’s credit unions performed much better in quarter two of this year, which ended June 30, compared to the first three months of 2009 when they reported a $41 million net loss.
Delinquent loans at the state’s credit unions rose 56 percent from a year ago, and as of June 30, $47.6 million in loans were at least one month overdue. That was a 12 percent increase since March, when credit unions had $42.5 million in overdue loans.
Connecticut credit unions had nearly $10 million in overdue fixed-rate mortgage loans and about $3.4 million in overdue adjustable-rate home mortgages. Delinquent credit card loans equaled about $6.2 million.
Salisbury Bank Names CFO
Lakeville-based Salisbury Bank has named Ian McMahon chief financial officer and chief accounting officer of the company. McMahon, who is 50, served as senior vice president of financial planning and analysis from 2008 to 2009 and senior financial consultant from 2006 to 2007 of Doral Financial Corp.
Previously he also served as executive vice president, chief financial officer and treasurer of NewMil Bancorp Inc.
Greg Bordonaro is a Hartford Business Journal staff writer.
