Jobs, State Spending: We’ve Hit the Wall
For years we’ve said we need to turn the tide on state spending.
To create an atmosphere for investment that kick starts state revenues and grows the economic pie, we’ve said change is necessary.
We’ve hit that wall.
DECD and DOL economists in the latest Connecticut Economic Digest compare year-to-date Connecticut state revenues in 2016 versus 2015.
The three power drivers—income tax, sales tax, and corporate income tax have—have eked out negligible gains of only $900,000 each.
These are gains of 0%, 0.1% and 0.4% respectively, essentially flat performance.
Revenues have stalled.
What’s to blame?
In part, dismal job performance versus competitor states in the region.
While Connecticut’s recovered just 77% of the jobs we lost in the recession, New York added back 259%, Massachusetts reclaimed 245%, and the U.S. overall showed a gain of 161%.
Our unemployment rate is also the highest in New England.
It's more important than ever that we reform state spending, encourage investment, and give job creators a break.
Compare Connecticut’s –0.2% gain in lower unemployment rates from March 2015 to March 2016 with New Jersey (–1.8%), New Hampshire (–1.1%), New York (–0.8%), and Massachusetts (–0.7%).
And finally, our job mix is going in the wrong direction.
Low-paying jobs are on the rise, while high-paying manufacturing and financial services jobs continue to lag.
Our fastest-growing jobs, according to the latest Connecticut Economic Digest, are personal care aides, maids, and housekeeping workers.
The new economic reality the governor has talked about is here.
It's now more important than ever that we reform state spending, encourage investment, and give job creators a break.
Pete Gioia is an economist with CBIA. Follow him on Twitter @CTEconomist.
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