A Path for Economic Growth in Connecticut


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There are two things that we need in our state moving forward: a strong economy that creates jobs for everyone, and a stronger workforce that reaps the benefits of this growth, without leaving anyone behind.

Unfortunately, Connecticut’s economic recovery after recessions has followed a familiar pattern: job growth comes back, the economy gets better, but the pace of our recovery lags behind the national trend.

This was often the conclusion of the “State of Working Connecticut” reports from Connecticut Voices for Children, who had been publishing largely identical warnings following every single recession for the past two decades. When the US economy got in trouble, Connecticut suffered a worse dip than the rest of the country, and it took us much longer to get back on track, to the point of barely being able to get back to the pre-recession line once the next crisis hits. For instance, median wages for low-income workers in 2017 were just around where they had been in 2007. All in all, inflation-adjusted wages for working families in the state have been stuck in a rut for decades; the median salary in Connecticut today is at the same level as it was in the late nineties.

The good news is that this trend might be starting to change. In their most recent report, Voices found that for the first time in forty years, real wages for low- and middle-wage workers are growing faster than for high-wage workers. This means that instead of staring at yet another lost decade for many, we are finally looking at an economic recovery that makes a difference in the lives of working families. Racial and gender wage gaps remain substantial (Voices estimate that Black workers earn on average 88 cents on the dollar compared to white workers of the same experience, education, and industry), but they are also slowly closing. This is the result, in no small part, of a tighter labor market following the pandemic, but also due to the substantial and welcome increases to the minimum wage, paid family leave, and expanding workforce protections. Workers have been gaining bargaining power, and that has translated to higher wages. 

So public policy does make a difference, and this means we can do better. Voices recommend passing legislation that would strengthen worker power in the labor market, including fair scheduling, limiting the use of non-compete agreements, and increasing union coverage, including filling the staggering amount of public sector jobs lost during COVID that we have not yet recovered. These are all great, positive ideas, and any candidate running this November should have them at the top of their agenda. We should also be working, as well, on  making childcare more affordable, because workers cannot get jobs without access to quality, reliable child care – and raising taxes on the wealthy, because how else are we going to pay for that otherwise.

There is one additional piece of the labor market puzzle that needs to be addressed, however: the total number of jobs we have in our state. This is another figure that has remained largely stagnant since time immemorial; we had the same amount of people employed in December 1989 than we did in 2019.

Although an aging population (meaning more retired workers) plays a role here, a big part of the problem is that we literally do not have more people living in our state. Population growth last decade was a dismal 0.9%, and that followed a good three decades of below-trend growth. It is really hard to grow an economy without adding more jobs, and it is exceedingly difficult to add more jobs if you do not have more workers and your current workforce retires. But this is what our state has been facing for quite some time.

The answer is, yet again, housing, the starting point of so many of Connecticut’s woes. People cannot move to our state because we are not building any kind of housing at any reasonable rates, let alone affordable units. This puts a hard cap on any kind of workforce expansion, slows down business growth, as they cannot hire new staff, and in turn makes the cost of living here go up significantly, as housing scarcity drives up housing prices. The result is that most of the wealth and additional income from any of our previous economic expansions ends up going to the landlords, who jack up rents as soon as economic growth pushes wages up, and homeowners. It is Connecticut´s very own form of economic redistribution, from those that do not own property to those that do.

Luckily, this is something that can be solved with legislation simply by allowing more housing in the state and providing incentives and support to ensure that a lot of the new housing is indeed affordable. A mixture of zoning reform, additional funds for affordable housing, transit-oriented development, and just letting more people come to our state is not just a matter of cost of living, but a requirement to grow our economy. We should do it right away. 

Stagnant wages, low employment growth and a sluggish economy are not inevitable, but a policy choice. We can do better – it is a matter of respecting workers and ensuring that they have a place to live.