Hiring Challenges Hamper State’s Economic Recovery
Numerous issues are impacting Connecticut employers’ ability to fill jobs as the state’s economy recovers from 15 months of shutdowns and restrictions.
Connecticut has recovered just 60% of the 292,400 jobs lost last March and April as COVID-19 swept the state and country.
At 8.1%, the state’s unemployment rate remains the highest in New England and one of the highest in the country.
Yet, as CBIA president and CEO Chris DiPentima notes, employers are struggling to fill vacant positions, turning to signing bonuses, raising salaries, and offering other incentives.
“It seems counter intuitive given Connecticut’s high unemployment rate, but employers cannot find people to fill entry-level and skilled positions across a number of sectors, including leisure and hospitality, advanced manufacturing, healthcare, and financial services,” he said.
“Some of the factors our members are citing include childcare issues, fears of contracting COVID-19, the federal unemployment benefit supplement, and the suspension of the state’s work search requirement for those on unemployment.”
The Lamont administration earlier this month announced a $1,000 incentive for 10,000 long-term unemployed residents if they are hired and keep the new job for at least two months.
The state will reinstate the work search requirement for unemployment recipients from May 30, joining two dozen other states in lifting the pandemic-imposed suspension.
The $300 federal benefit supplement, enacted in March as part of the American Rescue Plan Act, will likely remain in place in Connecticut until its Sept. 6 expiry date.
At least two dozen states will cancel the federal supplement as early as June.
Nationally, job openings reached a record 8.1 million at the end of March as fewer people seemed willing to return to the workforce.
A U.S. Census survey taken in late March showed that 6.3 million people nationwide did not seek work because they had to care for a child, while 4.4 million who didn’t look for jobs said they feared contracting or spreading the virus.
And an April Connecticut report showed the impact of childcare issues on the state’s economy, particularly among women, who are more likely to withdraw from the workforce to care for children.
Childcare, COVID Concerns
At a recent news conference, U.S. Labor Secretary Marty Walsh said the lack of childcare options is preventing many women from returning to the labor force.
“We need to make sure if we’re going to have a strong recovery—a strong, equitable recovery—we need to get women back into the workforce,” Walsh said.
That’s why the president’s proposed American Families Plan includes $225 billion for childcare programs, he said.
Shannon Marimón, the executive director of CBIA affiliate ReadyCT, told CBIA’s When Women Lead conference this week that no institution was more disrupted by the pandemic than childcare and education.
“Even for those who were able to transition to remote work, the trade offs were extensive,” she said.
Federal Reserve Chairman Jerome Powell has said that is “not clear” whether the $300 weekly federal unemployment benefit was causing a labor shortage.
Like many companies, Altek Electronics of Torrington is having trouble filling open skilled and unskilled job vacancies.
“Of the 15 positions we have had open for the last six weeks, we have filled six,” CEO David Altschuler said.
Altschuler said he understands unemployment benefits are necessary to help workers who lose their jobs through no fault of their own.
“Those who have legitimate claims should continue to get benefits,” he said.
But he feels the state should do more to hold recipients accountable.
“Those who are scamming the system should be ferreted out and benefits should be reduced or eliminated,” he said.
Earlier this month, the state Department of Labor and Chief State’s Attorney Richard Colangelo announced the re-establishment of an unemployment fraud prosecution unit within Colangelo’s office.
Since March 2020, Connecticut has processed more than 1.5 million unemployment applications and paid out over $8 billion in state and federal benefits.
DOL officials say they identified and stopped at least 150,000 false claims during that period, receiving 20,000 fraudulent applications alone over the course of just a few days in March.
Diane Nadeau of the Windham Region Chamber of Commerce said workers who generally earn less than $20 an hour are taking advantage of the enhanced benefits and choosing not to return to work.
“Businesses with the most issues are restaurants, contractors for laborers, retail stores, CNAs, cleaning and maintenance jobs—mostly service oriented,” she said.
Supply chain issues are slowing hiring for some employers, Nadeau said, although not in the service industry.
“Supply chain issues are more of a concern for contractors who are waiting for special orders—appliances, wood, concrete, plywood, vinyl siding, and some gutter and roofing materials—to be in stock,” she said.
DiPentima said employers are also closely watching the current legislative session, with an ongoing push for more than $1 billion in tax hikes causing widespread concern.
“Tax hikes are the last thing our fragile recovery needs right now,” he said. “They’re also completely unnecessary given this fiscal year’s $470 million budget surplus, the historic balance of the rainy day fund, and over $6 billion in federal relief.
“That kind of debate sends employers a disconcerting message—those tax hikes will hurt many of the state’s small businesses—and it’s causing a lot of uncertainty among Connecticut’s business community.”
DiPentima said rebuilding the state’s economy requires a holistic approach, noting that the legislature is considering a range of positive measures that will drive the recovery and get people back to work.
“I am grateful that so many of the recommendations we raised as part of our Rebuilding Connecticut policy priorities have gained serious consideration during the legislative session,” he said.
“However, time is running out and I believe we need a greater sense of urgency to get these measures adopted before the session ends on June 9.”
DiPentima said he was concerned that the Senate has yet to act on critical legislation—developed through collaboration between labor, employers, the Lamont administration, and a bipartisan group of lawmakers—reforming the state’s unemployment system.
“That bill passed the House 146-0 two weeks ago,” he said. “The Senate can send a very powerful message to labor and job creators by acting now and sending it to the governor for his signature.”
DiPentima also said he could not understand why some progressive lawmakers were resisting a bipartisan proposal to use $310 million in federal COVID-19 relief money to help address the state’s unemployment debt crisis.
“It took six years of higher business taxes and special assessments to pay off the $1 billion in federal unemployment loans after the last recession,” he said.
“That was a major reason why Connecticut was one of the few states that never recovered all jobs lost in the 2008-2010 recession, why our economy never came back fully.
“Employers are looking at paying off another $1 billion in federal unemployment loans. Connecticut cannot afford to make the same mistake this time—our economy will not fully recover if policymakers don’t act quickly and appropriately.”
DiPentima cited a number of other measures still under consideration, including:
- Repealing the sales tax on worker training and PPE and other safety equipment
- Expanding the manufacturing tax credit to include small manufacturers
- Streamlining professional licensing requirements, including making certifications easier for those moving to Connecticut
- Prioritizing in-demand industries for workforce development programs
- Restoring the pass-through entity tax credit to its original 93%—the 2019 reduction costs small businesses $53 million annually
- Restoring the R&D tax credit to attract entrepreneurs, foster startup businesses, and promote private sector investment
“We’re all in this together,” DiPentima said. “And we cannot recover and rebuild without broad collaboration among the public and private sectors.
“Connecticut has tremendous opportunities that we must capitalize on, that we cannot let pass by.”
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