With Connecticut facing a $5 billion budget deficit, Fairfield County voices, far from the state Capitol, must be louder than ever, attendees at a regional economic summit were told May 24.

Connecticut needs to grow, and it doesn't matter whose name is on the state budget—what matters is what is in it, CBIA's Brian Flaherty told local business leaders.

Fairfield County Economic Update
"Mobility is everything." The Workplace's Adrienne Parkmond, CCIA president Don Shubert, Eversource's James Hunt, and OperationsInc's David Lewis.

"The biggest message that we are broadcasting at the Capitol is that we can do so much more than we're doing," Flaherty said in Stamford at the Fairfield County Economic Update, presented by CBIA, the Stamford Chamber of Commerce, and the New York Federal Reserve.

"If [state legislators] have a chance to meet you, to listen to you, to hear your concerns, [then] they have you and your business in mind when they push those red and green buttons at the Capitol."

Flaherty stressed that while Connecticut faces major fiscal challenges, its "can-do" attitude is a mainstay, with extraordinary workforce talents and economic potential.

Fairfield County is wrestling with the same economic issues as the state, including slow growth, sluggish job creation, and a challenging environment for attracting business investment.

Challenges

But the shoreline county has a particular set of challenges. With its commuter workforce and gridlocked infrastructure, economic growth slows down even faster.

"Fairfield County hasn't been a hotbed for anything in a while," said David Lewis, president and CEO of OperationsInc and AllCountyJobs.com.

"At one point, there were more people getting off the train in Stamford in the morning than getting on, and the implication was that people were coming into this town to work. In the last five years, that number has shifted back in the other direction."

Lewis encouraged state leaders to take the opportunity to learn why residents are leaving the county to work in New York City, in the hot market of technology and financial services, but decide to keep their residence here.

We can't be the incubator for talent that goes elsewhere. We must be an incubator for talent to stay here.
— OperationsInc CEO David Lewis
"If those people knew that there were high-paying jobs here, they would stay," he said. "And if the state knew that we have that kind of talent here, they would find companies to come who want those people."

Not only are Fairfield County residents leaving the state to work, there is a large population of chronically unemployed or underemployed that can fill the existing workforce gap.

"Connecticut is not growing the labor force here," Adrienne Parkmond, COO of The Workplace, a Bridgeport-based nonprofit specializing in workforce development programs.

"We look at how we can provide individuals that are facing foreclosures and other financial hardships with skills so that they can move up in employment.

"What these individuals lack is confidence."

Addressing the Skills Gap

The county's construction industry now faces a six-year workforce skills gap, with a majority of companies having shuttered training programs during the 2008-2010 recession.

Don Shubert, president of the Connecticut Construction Industries Association, said that means the industry "now has tremendous opportunities," with apprenticeships often providing a direct pipeline for young workers to transition seamlessly into construction and other trades.

"In our apprenticeship training programs, you can get certified college credits while going through the program," said Shubert.

"We have jobs funnels where we can take these individuals through a contextualized training program, with supportive services, and condition them to succeed."

Lewis highlights the need for greater coordination between secondary and higher education systems in Connecticut, particularly in the manufacturing sector.

He notes that growing the next generation of the manufacturing workforce begins at the grassroots level.

"We can't fill the manufacturing positions in the state right now," he said.

"We need to educate parents on the idea that manufacturing is no longer standing on the assembly line—it is a high-tech job.

"A career is manufacturing is now prosperous and prestigious. The industry needs to do a better job at branding those jobs and educating the population."

"Working with the high schools is imperative," added Parkmond. "We have to start talking to young people about careers earlier."

Retaining Talent

"In the energy industry, we have an aging workforce, particularly our line workers," said Jim Hunt, senior vice president of regulatory affairs and chief communications officer with Eversource Energy.

"We're competing for those craft workers in the construction and manufacturing industries. We're working with contractors, community colleges, and veterans services to attract a diversity of skill sets and talent into our company."

Another recruiting challenge is attracting and retaining millennials, and even younger generations.

We need to build more vibrant communities, to address that next generation of talent.
— Eversource's James Hunt
"We as a county need to better understand the millennial generation," Hunt said.

"They're here because they like the vibrant nature of these cities, but they're also very picky about where they go.

"We have kids who come here for college, but they don't want to stay here. We need to address that as leaders in the community to build more vibrant communities, to address that next generation of talent."

“We can't be the incubator for talent that goes elsewhere," added Lewis. "We must be an incubator for talent to stay here."

'Mobility Is Everything'

Shubert noted the critical importance of improving the country and state's transportation infrastructure.

"Mobility leads to everything," he said. "That is one thing the state can focus on that would be huge for recruiting efforts.

"Fairfield County has some of the most congestion in the U.S. Our infrastructure is basically falling apart, it's over capacity.

"If you want to make a real big splash, mobility would both attract people that are weary about moving to the area, and companies that see that the state has its act together in transportation improvements."

Long-term plans in connecting transportation mobility with smart growth infrastructure and transit-oriented development projects is critical to relieving congestion, adds Hunt.

"If you look at transportation emissions in New England, it represents 30%-40% of carbon emissions in our region," said Hunt.

"There's a huge opportunity there from an environmental perspective, and also an economic development standpoint, to reduce congestion and enhance livability."

Regional, National View

The country's potential economic growth rate is slowing as the workforce continues to age, said Joseph Tracy, executive vice president and senior adviser to the president of the Federal Reserve Bank of New York.

This sluggish economic growth, countered by near full national employment, hinders investments by businesses and consumption of good and services.

"There's an output gap, in the sense that the economy is underperforming its potential," said Tracy, highlighting that from the second quarter of 2009—at the tail end of the recession—to the first quarter of 2017, the U.S. experienced just 2.1% GDP growth.

New York Fed's Joseph Tracy
The U.S. economy "is underperforming its potential" says the New York Fed's Joseph Tracy.

"In hindsight, we can see that the financial crisis generated this very prolonged, slow recovery."

Employment in the Bridgeport-Stamford-Norwalk region is also performing below pre-recession levels, compared to regional neighbors in Westchester County, Long Island, and New York City, as well as the U.S.

"It's quite a different story for the county, where we had about the same drop as the nation in loss of employment during the recession, but the pace of employment locally has fallen off from the national pace," said Tracy.

"The question going forward is, 'Are we going to see firms again having to raise wages in order to attract and retain workers?'

"That upward push on compensation will be more than enough to offset of slowing of working hours growth to support income."

High Office Vacancies

Creating the next hotbed of industry in Fairfield County requires business investments to fill an increasing rate of office space vacancies in the county, "stubbornly high" 20%-plus since the recession.

Home prices also slid below national levels in Fairfield County starting in 2014, and have not yet recovered pre-recession levels. New York City metro area home prices grew 109% over the same period.

"Unlike the national recovery and in surrounding areas, house prices in Fairfield County have been trending sideways," Tracy said.

In manufacturing production, the Institute for Supply Management manufacturing index rate, which measures confidence in the economy, spiked after the 2016 election, while manufacturing production remained fairly stable.

Unlike the national recovery and in surrounding areas, house prices in Fairfield County have been trending sideways.
— New York Fed's Joseph Tracy
“We saw this almost unprecedented rise in the ISM manufacturing index," Tracy said.

"Historically, that has always been followed by real activity. First firms get enthusiastic, then they spend money."

The question is whether the post-election enthusiasm among businesses will lead to actual investments to expand production in the U.S.

"My guess is that enthusiasm and production levels are going to meet," he said.

"The question is, 'Where exactly will they meet?' If they meet in the middle, then that's a good boost to business activity."

Economic Diversification

Tracy points out that if both business enthusiasm and investment drop further in the remainder of 2017, "then it will say that this [effect from the election] was a very unusual episode, based on historical data."

The Fairfield County labor market recovered jobs close to its pre-recession levels in 2016, before slowly dropping in the beginning of 2017. Meanwhile, New York metro area employment has boomed in the past six years.

"Securities employment is holding steady in New York City, so what's generating all this employment?" Tracy asked.

"It's the IT sector, leisure and hospitality, healthcare. The New York City economy has become more diversified away from the traditional finance sector."

Fairfield County should explore expanding its economy into booming markets like those in the city to keep talent pools working here in the state, Tracy advises.

"Locally, we have a lot of exposure to that same financial sector, which is languishing even in the city. The city can't even pull it along," he said.

"Something to be thinking about, going forward, is this notion of diversification and the benefits it can provide."