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June 2007 — Vol. 85, No. 5

COVER STORY

We’re perilously close to

Losing the heart of our workforce

 

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Thirty years ago a newly graduated electronics engineer from New York City turned down a good job offer with a defense contractor in Windsor Locks. The reason he gave his family was: “What would I do up there for a social life?” He moved instead to San Diego.

This year, a college-educated young man who grew up here in Connecticut packed up and moved to Charlotte, N.C. He was lured by lower housing costs and a friend’s report of a good lifestyle there.

The first situation illustrates a long-standing problem Connecticut is still trying to solve: how to make the state a more exciting place for young adults to live. The second demonstrates a more recent problem: how to create more housing that young workers can afford.

Both problems are aspects of an overriding one that has become a significant, and growing, threat to Connecticut’s economy: Young workers are leaving the state in droves for real or perceived greener pastures elsewhere.

Between 1990 and 2004 Connecticut lost more 25- to 34-year-olds than any other state. That age group shrank 30% here (25% in New England as a whole), compared with a decline of only 7% nationally and gains as high as 60% in some states, according to Ross Gittell, author of a Carsey Institute fact sheet, “The Declining Young Adult Population in New England.” Gittell is a senior fellow at the institute and a professor at the University of New Hampshire’s Whitmore School of Business and Economics.

From 2000 to 2005 Connecticut had a net loss of 2,000 25- to -39-year-olds, says Peter Francese, director of demographic forecasts for the New England Economic Partnership (NEEP).

“You can’t sustain that kind of loss of young workers — these are college graduates, people with skills. They’re the key to workforce growth,” Francese says. “The fact that they’re leaving in such numbers means that over the next 10 years you’ll see really large declines in the 35-to-49 age group. That will be a very large decline in the heart of the working age population.”

Now, the outflow of young workers is being partially offset by immigration, he says. “But, by and large, immigrants don’t have college degrees or the skills needed in the 21st century workplace. So the offset isn’t an equal offset.” What’s more, he believes that current anti-immigrant sentiments and federal immigration policies will result in fewer immigrants, educated and otherwise, coming here.

“Long term, the outlook for the workforce in Connecticut is pretty grim,” Francese says.

Grim, but not hopeless. “If you can get more people who are now under 25 to think about staying, you have a chance to turn the situation around,” he says.

CBIA and other groups have begun working on strategies aimed at doing that.

“We have identified this as a very important issue affecting our economic competitiveness,” says association President and CEO John Rathgeber.

Shrinking pool of entry-level and replacement workers

As Peter Gioia, CBIA vice president and economist, notes, “The young-adult age group is the primary source of entry-level workers. And our surveys show that Connecticut businesses are already having difficulty hiring people for entry-level positions,” he says. “If there aren’t enough entry-level workers, it will lead to jobs going unfilled or companies looking to other markets to open operations and fulfill their staffing needs.”

Companies also need young workers to replace the growing numbers of retirees. Gioia says, “Over the past seven years, demand for replacement workers to fill jobs vacated by retirements has grown from 40,000 to 50,000 a year” — a number that will swell even further as baby boomers retire en masse within a decade or so.

The combination of many retirees and too few workers to fill the void has broader implications, too. As professor Gittell notes in his article on the declining population of young adults, “... the imbalanced growth in the older population leaves the region vulnerable to a host of health care and elder care costs without the productive base to support them.”

Why are the young shunning Connecticut?

There’s no hard economic data on the exact reasons young adults are increasingly shunning the state. But Francese says that from a demographer’s point of view, the main culprit is clear: Connecticut’s unaffordable housing.

“In Connecticut, the small-town structure of government creates conditions where small municipalities can exclude affordable housing. Most towns want nothing but ‘childproof’ housing. They think they can reduce their property taxes by restricting housing that they think will flood the schools with kids. That’s a myth. It will not reduce their property taxes,” he says. “And affordable housing does not flood the schools with kids.

“Why didn’t this problem occur before?” Francese asks rhetorically. “Because of changing demographics. Most of the baby boomers are out of childbearing age. As a result, the percentage of households with children has been shrinking. So the number of people who will vote to support education is shrinking. They don’t want to see ‘worker housing’ because they think it will mean more kids in the schools. ... They start sending the message to younger families: ‘We don’t want to pay what it takes to educate your kids.’

“Young people leave Connecticut to go to places where public education is paid for at the county or state level,” he says. For example, in 2000 North Carolina’s Mecklenburg County, which includes the city of Charlotte, had over 700,000 people. By 2006 it had 827,000 people, according to Francese. “The entire county is one school district,” he notes. Population-wise, “that one school district is roughly the size of ... Fairfield County. Imagine making all of Fairfield County one school district?”

Encouraging affordable housing

HOMEConnecticut, a campaign to increase the supply of affordable housing here, agrees that young adults are leaving Connecticut “in large part because housing is less expensive in other states,” according to the campaign’s Web site.

HOMEConnecticut’s steering committee has developed a proposal now being considered by the state legislature that includes, among other things, incentives “to overcome municipal objections to housing that they think will bring more kids,” says William Cibes, chair of the steering committee and chair emeritus of the Connecticut State University System.

“We have found through our research that the number of affordable housing units being built [in Connecticut] in the past 10 years or so has not been sufficient to meet the demand from folks who would like to take jobs offered by companies here,” Cibes says.

“Pfizer, for example, closed some facilities in Michigan and would like to move people from those facilities to Connecticut,” he says. “But even with $100,000 in housing assistance from Pfizer, many of those workers can’t afford a house here.”

And Pfizer is located in southeastern Connecticut, which tends to have lower housing prices than most other parts of the state.

CBIA surveys confirm that high housing costs are a problem for employers. Two-thirds of the companies surveyed in southeastern Connecticut said affordable housing is extremely important to the region. And 95% of surveyed companies in Fairfield and Westchester counties said the availability of affordable housing is somewhat to extremely important to the ability of companies there to attract and retain workers. The main reasons employers in Fairfield and Westchester had trouble finding workers was the high cost of living in the area (said 42%) and high housing costs (24%).

According to Cibes, the insufficient supply of affordable housing itself has further driven up housing prices. “Since 2000, housing prices have gone up 65% while wages have only risen about 18%. As a consequence, in 157 of the state’s 169 towns a median-priced single-family home is not affordable to median-income families in those towns,” he says.

“HOMEConnecticut has developed a program (see below) which would induce towns to zone land at a high enough density that it would encourage developers to build more affordable housing. The main problem is not a lack of land; it’s a lack of land zoned for housing at prices folks can afford,” Cibes says.

Demographer Francese notes another concern: The affordable housing that is being built in Connecticut these days is mostly age-restricted for people 55 and over.

“You have a state where the population of 65- to 74-year-olds is likely to grow at a ferocious rate over the next 10 years,” he says. As things stand now, he adds, “It will be very difficult to provide the health care those people will need, very difficult to find funding for excellent education, and very difficult for employers, especially large employers, to operate in Connecticut.

“The only solution, in my view, is to unlock the lock on workforce housing,” Francese says. “You have to provide homes for everybody, not just those 55 and over. You have to figure out how you are going to pay for schools. Businesspeople have to advocate [for these things]. Your economic survival depends on it.”

Attracting young professionals

Young adults benefit the region in other ways, besides serving as a source of workers. As Professor Gittell notes, “They make the region more interesting, more dynamic and can be a magnet that attracts others to come and visit and live in the region, both young and old.”

To create such a “magnet,” the chambers of commerce in both Hartford and New Haven have established young-professionals groups.

A year ago, for example, the MetroHartford Alliance started a networking group called Hartford Young Professionals and Entrepreneurs.

“HYPE provides a forum in which young professionals can meet others,” says Oz Griebel, the alliance’s president and CEO.

The group holds professional development events, social activities and community service efforts. “We’re now trying to get them involved in public policy,” says Griebel.
He notes that HYPE “is not intended to replace the [young professionals] efforts of other organizations, such as the Urban League and the World Affairs Council. We had an event last year at which those groups gave presentations, and we’ll be doing something like that again this June.”

HYPE’s kick-off event last year drew 450 people, a number that has now grown to about 1,400.

Griebel also says the effort to revitalize downtown Hartford “is a critical element in attracting young people here.” That undertaking includes the new convention center, science center, residential construction, Front Street retail and entertainment establishments, as well as the football stadium at Rentschler Field in East Hartford. And a private-sector effort called Business Improvement Downtown “aims to make the area between downtown and Asylum Hill more attractive and lively, for example, with restaurants and social activities,” Griebel says.

New Haven, meanwhile, already has a “youth magnet” in Yale and the amenities offered by a university town. To capitalize on that, “We’re trying to at least get the [young adults] who are here to stay here,” says Tony Rescigno, president of the Greater New Haven Chamber.

“We established a young-professionals organization about two years ago,” he says. “The idea is that if they have a network of colleagues here, they’ll be less likely to leave.

“We reached out to young people we knew and asked them to bring people they knew. We told them we wanted to keep them here, saying ‘You are our future leaders,’” says Rescigno.

The group is “now about 700 members strong. They meet monthly, mostly for social reasons. They’re now adding business-focused events. And they’ve expanded to include young teachers,” he says.

Creating links to local companies

Having educational centers of excellence such as Yale and UConn gives Connecticut one advantage in attracting students. But the state needs to step up its efforts to attract more out-of-state students, including foreign students, and work to keep them here after they graduate, says CBIA’s Gioia.

“That means giving them access to careers here and connectivity to Connecticut companies through internships. We also need better coordination between degree programs offered by higher education institutions and what companies here need,” he says.

Currently, Connecticut exports more college students than it imports. Once young people leave for college, they often don’t return to Connecticut for jobs.

“Young, highly educated people will go to places like New York, Boston and Washington without a job because those cities are exciting enough that they’ll take that risk,” says CBIA’s Rathgeber. “It’s pretty unlikely that someone will come to Hartford without a good job.”

He adds, “We need to make sure that good jobs are available and that Connecticut is an affordable and exciting place for young adults to live.”

As Francese notes, there’s still time to turn the tide of young people leaving the state — but not much.

“Now, Connecticut has almost 300,000 people aged 45 to 49. There are fewer than 200,000 people aged 25 to 29, and that number is declining,” he says. “You can’t have that situation continue and not impact your economy, long term.”

 

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