Tight Labor Market in Connecticut Regains 15-Year-Old Employment High


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Connecticut’s labor market had a strong 2023, fully recovering from pandemic losses with gains driven by construction, professional services, education, and health care.

In 2023, the labor market created 18,400 new jobs, according to a report released Friday by the Connecticut Department of Labor. Connecticut added 7,400 more jobs in January, reaching 1.7 million workers, the most for the state since the subprime crisis in 2008.

The Lamont administration pitched the figures as a sign of Connecticut’s economic health after weathering a pandemic, disruptions in value chains, inflation and fears of a recession.

“Today’s report is further evidence of the strong approach Connecticut took to pandemic recovery,” Department of Labor Commissioner Danté Bartolomeo said in a written statement. “Connecticut’s economy is in good shape and poised to continue growing.”

On a national level, the labor market has shown strength over the past year, consistently outperforming expectations and defying recession concerns after the Federal Reserve raised interest rates at the fastest pace in four decades to combat inflation. 

Connecticut, and its neighbors Massachusetts and Rhode Island, have followed the national trend, but face another challenge as a consequence of a tight labor market: finding workers to fill vacant jobs.

The unemployment rate increased from 4.2% in December to 4.4% in January. According to the Department of Labor, this can be explained by more people entering the labor market and not by the loss of jobs. The unemployment rate is calculated as the number of people actively looking for a job divided by the working-age population. Thus, improvements in the economic outlook can lead to a rise in unemployment.

Connecticut, however, has a higher unemployment rate than the national average of 3.9%.

Another sign of labor market tightness is that job openings continue to exceed the number of unemployed, something that is historically unusual but occurs month after month in the post-pandemic. And this could push the unemployment rate up, according to the Department of Labor.

"Job seekers may not be taking the first job offered but continuing to look for something they perceive as better," the Department of Labor Director of Research, Patrick Flaherty, said in a video released by the agency.

While employment already exceeds the pre-pandemic level, performance is uneven across industries. Construction, professional services, education, and health care employ more workers than before February 2020, but finance, information, leisure, government, and manufacturing are still below pre-pandemic levels.

Massachusetts has not yet recovered its pre-pandemic employment levels, but it registered a stronger labor market in the previous years than Connecticut and Rhode Island. Connecticut was the worst-performing state in the region following the subprime crisis in 2008 and is the only one of the three states that have not yet recovered the employment level that it had before the Great Recession.

Among the sectors where employment has been hit hardest in Connecticut since then are information, finance, manufacturing, construction and government.

The report monitors employment trends in nine urban centers in the state. Among them, some show growth in the number of employees hired compared to before the pandemic, while others have not yet fully recovered. New Haven and Bridgeport registered the biggest increases; farthest from recovery is Hartford, followed by Enfield, Waterbury and New London.

The Connecticut Business and Industry Association highlighted January's results as "a promising start" to the year but warned of the need to reduce the costs of living and running a business to solve the labor shortage.

"The demand for our product and services has never been greater, but if you don't have the people to fill those demands, customers will move to work in areas of the country that don't have as big a workforce challenge. That is the biggest risk,” said Chris DiPentima, CBIA president and chief executive. "The only thing holding us back from that is the cost of childcare, housing, taxes and regulations. We need to address those areas specifically. And if we do that, there's no stopping Connecticut's economic growth.”