Costs, Credit Barriers to Job Growth
The biggest factor determing Connecticut’s long-range economic health, say leading national economists, are business costs.
Unfortunately, Connecticut currently has the fifth-highest business costs in the U.S. — 27% higher than the national average.
These statistics (from Moody’s Economy.com, the Milken Institute, and DataCore Partners LLC) dramatically illustrate the tough work ahead for the state to recharge economic growth and job creation.
Connecticut businesses face high costs for energy, healthcare, state and local taxes, unemployment compensation, workers’ compensation and labor. Together, they make it very hard for companies to grow and create jobs here.
Another barrier to jobs is the ability of businesses to obtain credit to grow. Credit conditions in Connecticut, which had shown slight improvement at the end of last year, are backsliding, according to the first-quarter 2011 CBIA/Farmington Bank Credit Survey.
More than half of all survey respondents said that without access to capital, they will be unable to finance increased sales; half said they will be unable to grow or expand their business; and 40% said they may have to reduce their workforce.
More data from the state Labor Department reminds us that Connecticut still has a very long way to go to climb out of the jobs ditch dug by the recession.
According to DataCore Partners LLC, the state’s recession was much deeper than originally thought. Connecticut lost 119,000 jobs, 15% more than an earlier tally. Our unemployment rate remains stuck at 9.1%.
It would seem obvious that in order to get the state back on track to strong economic growth, business costs must come down.
Businesses, however, are not seeing much evidence of that trend happening soon. Chief Executive magazine’s annual rankings of the best and worst states for doing business shows that Connecticut’s ranking remains unchanged from last year — an alarming 44th among the 50 states.
As a Hartford Courant editorial recently said, this is absolutely no time for lawmakers to entertain any cost-raising, anti-business proposals in the General Assembly — such as mandatory paid sick leave and the captive audience measure— that would keep jobs in the ditch.
Business confidence is key to economic recovery and jobs. Employers will be watching very carefully over the next few weeks what the legislature will do to restore their confidence in the state.
For more information, contact CBIA’s Pete Gioia at 860.244.1945 or email@example.com.
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