Labor Shortage: ‘Losing a Town Every Year’

Employers added 1,500 jobs last month and 9,500 through the first half of the year—8,600 more than in all of 2025—with nonfarm payroll employment now at an all-time high.

The manufacturing and education and health services sectors accounted for 84% of those new 2026 jobs, with the latter hitting a record employment high of 383,100 positions.

That’s the good news from Connecticut’s June employment report.

The report also revealed that the state’s unemployment rate hit 5.2%, up 1.3 points in the last 12 months—with 22,700 more people collecting benefits—and a point higher than the national rate.

Another 11,300 people left the labor force in June, with the population of those working and looking for work down 46,900 (-2.4%) in the last year.

And total employment—which includes nonfarm payrolls, independent contractors, and the self-employed—fell by 69,600, or 3.7%, over the past year. 

Economic Weakening?

CBIA CEO Chris DiPentima said while it was important to recognize the growth in payroll jobs, the unemployment, labor force, and total employment numbers “suggest a weakening in the economy.”

“When you have a high tide, when you have a stable economy, you’re hiding some of the rocks that are under the water,” he said.

“But as that economy starts to slow down or that stability maybe starts to become a little more unsettled, those rocks expose themselves and they could be pretty sharp and pretty damaging.”

DiPentima said he was particularly concerned with the labor force declines, given that Connecticut has more than 81,000 job openings and employers continue to struggle with finding workers.

“When you think about that, over the last 12 months, we’ve essentially lost the city of Middletown—the population of Middletown—from the labor force,” he said.

“As more experienced workers retire, there are not enough younger workers entering the labor market to replace them.  

“Combined with slower population growth and reduced immigration, those trends are creating increased pressure on the state’s workforce and overall economy.” 

Unemployment Rate Climbs

Connecticut’s labor force is now 44,200 people below pre-pandemic levels (-2.3%)—in sharp contrast with the national average, up 3% over the same period.

Massachusetts has the region’s strongest post-pandemic labor force growth (1.8%), followed by Rhode Island (0.8%), Maine (0.8%), New Hampshire (0.2%), Connecticut, and Vermont (-3.6%).

Twelve months ago, Connecticut’s unemployment rate was 3.9%, the lowest in the region. It’s now the highest of the New England states and fourth highest in the country.

Vermont has the region’s lowest unemployment rate (2.6%), followed by New Hampshire (2.9%), Maine (3.1%), Rhode Island (4.1%), Massachusetts (4.4%), and Connecticut. The U.S. unemployment rate is 4.2%.

DiPentima noted that while Connecticut’s average private sector weekly earnings are the fifth highest in the U.S., the state is one of the most expensive to live, with high energy, healthcare, housing, and childcare costs.

“If Connecticut hopes to capitalize on its economic opportunities and address its workforce challenges, creating a more affordable and attractive environment for families and workers is essential,” he said.

“That’s how we grow our workforce, attract new talent, and support long-term economic growth and opportunity for all residents.”

Industry Sectors, Labor Markets

Half of the state’s 10 major industry sectors posted job gains in June, led by trade, transportation, and utilities, which added 1,200 positions (0.4%), bringing 12-month gains to 500 (0.2%).

Construction added 600 positions (0.9%) and leads all sectors in year-over-year percentage gains with 2,000 net new jobs (3.1%).

Manufacturing added 500 jobs (0.3%)—bringing 12-month gains to 3,200 (2.1%)—followed by information (300; 1%) and education and health services (300; 0.1%).

Employment in the other services and professional services sectors was unchanged for the month.

Leisure and hospitality posted the largest losses of any sector in June, shedding 700 jobs (-0.5%) and extending 12-month losses to 1,800 (-1.2%).

Employment in the financial activities sector declined by 600 (-0.5%) and has contracted by 1,800 jobs (-1.5%) since June 2025.

The government sector, which includes state, local, and federal government entities and the tribal casinos, lost 100 jobs in June (-0.04%).

Three of the state’s five major labor market areas posted gains in June, led by New Haven and Bridgeport-Stamford-Danbury, which each added 700 jobs (0.2%).

Employment in Waterbury-Shelton increased by 400 jobs (0.3%).

Norwich-New London-Willimantic lost 200 jobs (-0.2%) in June while Hartford-West Hartford-East Hartford, which leads all areas in 12-month gains (3,300; 0.5%), lost 100 positions (-0.02%).