Many were startled by the report of 11,500 new jobs in Connecticut in September, the fastest rate of job creation in more than 20 years. Given the timing, coming shortly before the election, many will cynically discount the importance of this information. We do so at our peril. The remarkable growth in jobs in September — almost entirely in the private sector — when combined with other data, argues that Connecticut is now enjoying real recovery, not only from the doldrums of the Great Recession, but from more than a generation of failing to create net new jobs.
Looking at data on growth in jobs over the last three years, the unusual job growth is not surprising. It might even have been expected. Connecticut has been adding jobs, year over year, since October 2010, for 48 months.
Available employment numbers, output data, and projections made a strong argument that Connecticut was on a sustained, positive trajectory even before the confirmatory jobs report came out. Growth in output from the end of 2011 through 2013 has been essentially tied with Massachusetts for the best in the Northeast and close to the national rate. Growth in private sector output has actually exceeded the national rate over the same period. Excluding North Dakota and Texas, whose economies grew at double-digit rates, fueled by energy, Connecticut’s output has been growing faster than the national rate, and faster than 30 other states.
Finally, the projection from the Boston Federal Reserve and Moody’s Economy.Com—the New England Economic Partnership—forecast strong growth in jobs this year, 2014, and even stronger growth in both 2015 and 2016, perhaps reaching 60,000 additional new jobs over those two years. This translates into a projection of adding more than 80,000 new jobs by the end of 2016, propelling Connecticut employment well past the previous peak in 2007.
Continuing growth in the national economy deserves some credit, but Connecticut’s economy contracted from 2007 to the end of 2011, a contraction longer and deeper than nearly any other state suffered; only Florida and Nevada performed worse over that period. The national economy began to recover in the middle of 2009; all of the other New England states were recovering long before Connecticut. Presumptively, Connecticut suffered from unique factors that were holding it back. Indeed, for a generation Connecticut had inflicted on itself a trifecta of policy failures: failure to invest in infrastructure (including IT, where the state lags badly); failure to invest in human capital (the education-workforce pipeline as well as intellectual property transfer); and absent or incoherent development policies.
The Malloy administration has worked to address all three failures — we can argue how effectively and whether other approaches might have delivered more, but his administration deserves a share of the credit for the strength of the sustained recovery. An array of initiatives focused on short-term benefits, such as Small Business Express, First Five, and the UBS loan. These looked either to keep jobs here or to bring new jobs in. But they were strategies that did little to change a framework that would keep those jobs here in the longer run, or to build new competitive strength in the state’s economy.
Other efforts took a longer view, to preserve core strengths or create new, dynamic sectors. These initiatives have looked to “anchor” a company in Connecticut and build the foundation for those emerging economic sectors, which will have growing importance. Such strategies significantly reduce the likelihood or even the ability to move jobs. Malloy’s initiatives with NBC and ESPN took that approach, as did the two most important efforts to date. One promises to retain and even grow a powerful presence for one of Connecticut’s critical industries, aerospace engineering, the other builds a global presence in a leading growth sector, bioscience.
The first is the United Technologies Corp. agreement, permitting UTC to use tax credits it earned to help fund a $450 million Pratt research campus, anchoring all of the associated jobs and related value-chain activities in Connecticut.
The second is the successful attraction of the Jackson Laboratory research facility, vastly strengthening the Bioscience Connecticut initiative already underway at the UConn Health Center and providing the already powerful Yale-New Haven biomedical complex a wonderful collaborator. Critically, it literally put Connecticut at the epicenter of the global bioscience research sector.
Led by Dr. Charles Lee, who was considered a Nobel Laureate finalist, the Jackson team has already filed for patents and secured $14 million in research funding. With hiring ahead of original projections and the expectation that the current building will fill to capacity within only a couple of years, Jackson Lab is already talking of building a second research building. The recent announcement that the Icahn School of Medicine will put a major genome sequencing facility in Branford is proof of the growing strength of the biomedical cluster in Connecticut.
The best analogy for the dynamic that is unfolding in Connecticut is probably the history of the North Carolina Research Triangle. It languished for nearly a decade, until the National Institutes of Health put a national research laboratory there — essentially identical in scale and industry visibility to the decision of JAX to come to Farmington; it unleashes the power to colocation. Within a few years of NIH’s arrival, nearly every pharmaceutical and biomedical company had facilities in the Research Triangle, which now hosts over 1,000 companies and is closely affiliated with UNC-Chapel Hill, NC State, Duke, and NC A&T.
The investment in Bioscience Connecticut and NexGen is parallel to what drove the Research Triangle’s success. Together with the UTC agreement there is in prospect a stronger, growing, and competitive Connecticut economy.
Fred V. Carstensen is a finance professor at UConn and the economics director of the Connecticut Center for Economic Analysis.
