Connecticut's Workers Among Most Productive in Nation

Diverse, Well-Educated Workforce Poises State for Economic Recovery

With one of the most productive and diverse workforces in the nation, Connecticut is well positioned to resume a course of economic expansion.

According to the Connecticut Department of Labor, worker productivity in the state is 23 percent above the national average. The state's workforce is highly educated and well trained. Connecticut ranks third nationally in the percent of population over age 25 who hold a bachelors degree or higher.

This robust level of productivity and advanced education results in high wages. Connecticut ranks first in the nation in average annual pay, with an average salary of over $45,000.

The state's industrial base with its 93,000 business establishments has diversified over the last decade. While defense and insurance continue to be important industries, the state's economic development is increasingly tied to industries such as bioscience, software development, pharmaceuticals, communications and medical technology. 

A federal Department of Labor survey put the number of high-tech workers in the state at 77,500 in 2000, up 23 percent from 1994. Connecticut ranks fifth among all states in the percentage of workers employed in technology occupations.

Connecticut also benefits economically from its geography, especially its location between the financial centers of Boston and New York. More than one quarter of the total population of the United States and 60 percent of the Canadian population lives within 500 miles of Connecticut. Over 30 percent of the nation's effective buying income, retail sales, and manufacturing firms are within a day's drive of the state.

Connecticut has an extensive network of expressways and arterial highways providing access to regional markets. In 2001 the state legislature made a major financial commitment to reducing congestion on the state's roads and highways. Bradley International Airport is strategically situated for overseas airfreight operations and has been continually upgraded to keep pace with service needs.

Connecticut provides financial assistance to all urban and rural bus services operating in the state. Railroad freight service is provided to most major towns and cities in the state, and connections are provided with major eastern railroads and Canadian markets. Rail commuter service operates between New Haven and New York City and connecting points, as well as between New London and New Haven. The state's harbors at Bridgeport, New Haven and New London can accommodate deep draft vessels.

Still, Connecticut's economy moves in the same general cycles as the national economy. At times, the state is ahead of national economic trends, at times we lag behind. As of this writing, Connecticut and the nation were moving through a period of economic recession.

According to preliminary estimates by the Bureau of Economic Analysis, Real Gross Domestic Product (GDP), which measures the output of goods and services produced in the United States, declined in the third quarter of 2001. This comes after virtually no growth in GDP in the second quarter. Over the last five years, real GDP had expanded at an average annual rate of just over 4 percent.

The National Bureau of Economic Research (NBER), a nonprofit, nonpartisan research organization that studies peaks and troughs in the business cycle, declared in November 2001 that the country had entered into recession in March 2001. This marked the end of a historic ten-year period of economic expansion. On a positive note, the NBER stated: "Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades."

The information that follows in this section examines Connecticut's economic life: where we work, what we earn, and how we spend our income. It shows a fundamentally prosperous economy that is struggling through a current period of recession but is poised to resume its historic pattern of strong growth.

Employment

• During the last recession, which ran from February 1989 to December of 1992 in Connecticut, the state lost 158,200 jobs (about 10 percent of total payroll jobs averaged for the period). The recession hit Connecticut harder than the nation in its duration and depth.
• From the beginning of the recovery in December 1992 through October 2001, the state added 163,100 payroll jobs. A net gain of 4,900 jobs since the last recession. The current slowdown is eroding this number.
• The rate of job additions in Connecticut continues to lag behind the rest of the nation. This is due in part to stagnation in the state's pool of available workers. Since 1995, Connecticut's workforce has increased just 0.4 percent as compared to a national growth rate for the period of 7.3 percent. The slow growth in the number of people seeking work in Connecticut also helps to explain the state's low unemployment rate, recorded at 3.2 percent in October.

• Labor surplus areas, as designated by the federal government, have average unemployment rates that are at least 20 percent higher than the average unemployment rate for all states. Through September 2001, Connecticut had four towns designated labor surplus areas: Bridgeport, Hartford, Killingly, and Voluntown. This is down from 21 towns in 1997 and 1998.
• According to the Connecticut Department of Labor, in 2000 the state had 109,000 workers holding more than one job. This represents 6.5 percent of employed state residents and is up from 5.9 percent in 1999. Nationally, the number of multiple jobholders declined between 1999 and 2000 from 5.8 percent to 5.6 percent.
• Over the past 10 years there has been a dramatic change in the industries in which Connecticut workers are employed. Manufacturing has been and continues to be in decline. Manufacturing has slipped from employing 20.7 percent of state workers in 1991 to 15 percent in 2001. During the same period, jobs in the service industry grew from 27 percent to 32 percent of total employment. While the service industry does include some low skill, low pay occupations it also includes engineering and management services, technology and advance business services, health care, and educational services.

• The Connecticut Labor Department reports that five of the fastest growing occupations in the state are in the computer technology field. Other fast growing occupations include: social/human services assistant, medical assistant, biological scientist, paralegal, and financial sales. Slow growth is reported in jobs relating to textiles, printing, and machine operations.

Income

• Connecticut leads the nation in per capita income at $40,870 for 2000. Connecticut's per capita income is 38.8 percent higher than that of the nation. It should be noted that per capita and total personal income figures as reported by the Bureau of Economic Analysis do not include income from capital gains.

• Like the nation, Connecticut has experienced strong personal income growth since 1995. The average annual growth rate from 1995 through 2000 was 5.7 percent in Connecticut and 5.9 percent for the United States.

• Personal income is a good indicator of the increase in total state wealth, but it tells little about how that wealth is distributed among Connecticut's residents. That is, a state could have every dollar of wealth held in a few hands and still lead the nation in per capita income. Median income provides a somewhat better measure of wealth for the average state family.
• Connecticut has the fourth highest real (inflation adjusted) median household income in the country, ranking behind Maryland, Alaska, and New Jersey.
• To analyze changes in median income the Census Bureau recommends using a two- year moving average to smooth any fluctuations caused by sampling errors. For the 1999-2000 period real median household income in Connecticut was $51,423, which is 22 percent above the national figure.

• Through the early and mid 1990's, real median household income in the state was in decline. This trend was reversed in 1996-97, and since that time the state has seen real median income growth.
• According to the Connecticut Department of Labor, the ten highest paying occupations in the state are as follows: physician; dentist; chiropractor; law teachers; judges and magistrates; financial sales agents; optometrists; lawyers; engineering; information technology and science managers; and podiatrists.
• Despite Connecticut's high overall income level; areas of regional poverty remain a problem. Hartford and New Haven counties have traditionally posted poverty rates that are approximately 20 percent higher than the state average. The Census Bureau has reported the state's three-year average poverty rate for 1998-2000 at 7.6 percent. The national average was 11.9 percent.

Other Economic Measures

• According to statistics from the Connecticut Department of Revenue Services, over the past five fiscal years retail trade sales in the state have increased at an average annual rate of 6.1 percent. Durable goods expanded at a 7.1 percent rate, while non-durable goods grew 5.5 percent.

• Based on sales tax receipts for the current year, it is clear that the recession is having a major impact on retail sales in the state. After three years of average annualized growth of 4.1 percent in the sales tax, current projections show virtually no growth for Fiscal Year 2002.
• Connecticut's export sector is playing an important role in the state's economy. From 1995 through 2000, the state's export of goods grew at an average annual rate of 5.9 percent. Transportation is the largest single export component comprising 38.1 percent of exports in 2000.
• The Census Bureau reports that Connecticut's housing stock has increased 4.9 percent between 1990 and 2000. During this same period, population grew 3.6 percent. The state has 1,385,975 housing units. Owner occupied housing comprises 66.8 percent of the total and the occupancy rate is 93.9 percent. According to the National Realtors Association, on average Connecticut families had 138 percent of the income required to buy an averaged priced single family home. This is 8 percent higher than the national average. The data suggest that housing in Connecticut is still a good long-term investment.

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