What’s Happening to Connecticut’s Labor Force?

The May employment report offered the starkest example to date of the growing challenges facing Connecticut’s job market.

Employers added a modest 500 jobs in May, with the monthly employment report showcasing the growing disconnection between job demand and labor supply.

Another 11,900 residents left the labor force last month, with year-over-year losses now at 37,700 (-1.9%).

The population of those working and actively looking for work is now at its lowest point in almost five years—despite more than 85,000 job openings in the state.

“We are concerned at the long-term, structural weaknesses in Connecticut’s job market, as these reports continue to highlight,” said CBIA president and CEO Chris DiPentima. 

“A shrinking labor force is not just a jobs issue—it’s an economic growth issue and a competitiveness issue.”

Unemployment Rate Climbs

Connecticut’s labor force is now 32,900 people below pre-pandemic levels (-1.7%)—in sharp contrast with the national average, up 3.4% over the same period.

Massachusetts has the region’s strongest post-pandemic labor force growth (1.9%), followed by Rhode Island (1.3%), Maine (1.1%), New Hampshire (0.4%), Connecticut, and Vermont (-3.2%).

“It’s critical that policymakers take meaningful, sustainable action to reverse Connecticut’s affordability crisis.  

“Without solutions that reduce costs in areas including healthcare, housing, and energy, Connecticut will continue to struggle to attract and retain the workforce needed to grow the economy.”

May also brought another increase in the state’s unemployment rate, which rose one-tenth of a point to 5.1%, eighth worst in the country and the highest since November 2021.

Twelve months ago, the unemployment rate was 3.8%, the lowest in the region. It’s now the highest of the New England states.

That year-over-year spike—concentrated among workers aged under 35, in contrast to the region—was the third highest of any state.

Vermont has the region’s lowest unemployment rate (2.6%), followed by New Hampshire (3%), Maine (3.1%), Rhode Island (4.3%), Massachusetts (4.5%), and Connecticut.

The U.S. unemployment rate is 4.3%.

Industry Sectors, Labor Markets

Three of the state’s 10 major industry sectors posted job gains in May, led by the government sector, which added 1,300 positions (0.6%) to bring 12-month losses to 2,000 (-0.8%).

Education and health services added 1,200 jobs (0.3%) last month, with year-over-year gains at 6,300 (1.7%).

Leisure and hospitality gained 500 jobs (0.3%), while other services was unchanged for the month.

Professional and business services posted the largest losses of any sector in May, shedding 1,000 jobs (-0.4%) to go into the red for the past year (-400; -0.2%).

Employment in the trade, transportation, and utilities sector declined by 700 (-0.2%), followed by construction (-300; -0.5%), information (-200; -0.7%), financial activities (-200; -0.2%), and manufacturing (-100; -0.1%).

Four of the state’s five major labor market areas posted modest gains in May, led by Waterbury-Shelton with 500 new positions (0.3%), narrowing 12-month losses to 900 (-0.6%).

Hartford-West Hartford-East Hartford, added 400 jobs (0.1%), to bring 12-month gains to 3,600 (0.6%).

Bridgeport-Stamford-Danbury added 200 jobs (0.1%), with year-over-year gains at 300 (0.1%).

Employment in New Haven grew by 100 last month (0.03%), matching 12-month gains (-0.1%).

Norwich-New London-Willimantic lost 500 jobs (-0.4%) to bring 12-month gains to 600 (0.5%).