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Economists: Real Unemployment Rate Closer To 10.7%

by Christine Stuart | Dec 23, 2013 12:21pm
(10) Comments | Commenting has expired
Posted to: Economics, Jobs, Labor

Despite a Labor Department report last week touting Connecticut’s improving unemployment situation, a group of economists at the Connecticut Center for Economic Analysis say it’s a “smoke screen.”

The economists concluded in their last report of the year that if participation in the job market were the same as it was in the second quarter of 2010 then the unemployment rate is close to 10.7 percent, instead of the 7.6 percent reported last week by the Labor Department.

“So, while Connecticut’s sluggish recovery has not only failed to restore jobs lost since 2007, the state’s economic malaise [has] driven many adults out of the work force,” the center said.

The center found that about 65,000 working-age adults “simply stopped looking for employment during the last three years.” According to the Labor Department’s report last week, Connecticut has recovered about 63,500 positions, or 52.4 percent, of the 121,200 seasonally adjusted non-farm jobs that were lost in the state from March 2008 through February 2010 when the employment recovery began.

“Connecticut is one of the few states whose economy, whether measured in output or household income, is not close to its 2007 peak,” the center said in its report. “Job recovery has been equally slow, with barely a quarter of the jobs lost (since 2007) restored, with many of those who have returned to work going to lower quality jobs than the one they lost.”

The national economy plays a role too. “Connecticut has been directly impacted by budget cuts through decreases in SNAP (food stamps) and layoffs by private sector firms due to the October furloughing of federal personnel including inspectors of private sector output,” the center said. “Going forward, the abrupt loss of long-term unemployment benefits — which seems likely given their exclusion from the budget agreement — will further undermine both national and state recovery.”

Republicans used the report as evidence that Democratic Gov. Dannel P. Malloy hasn’t done enough to help improve the situation.

“The state’s unemployment rate has been artificially understated because there are far fewer people in the labor market now than just 2010,’’ House Minority Leader Lawrence Cafero said.

He said the report shows that more than 25,000 fewer residents have jobs than when Malloy took office in 2011.

Republican gubernatorial challenger Tom Foley said things are so bad under Malloy that he has “broken the spirit of the 60,000 Connecticut citizens who have quit looking for work since he was elected.”

But Malloy’s spokesman pointed out that the exercise detailed in the report was academic.

“While hypotheticals may make for interesting academic work, government must deal with reality,” Andrew Doba, Malloy’s spokesman, said. “And the reality is that unemployment is at its lowest level since 2009 and we have grown more than 40,000 private sector jobs since Governor Malloy took office — the largest gains in private sector employment since the late 1990s.”

Still, the center pointed out that “Connecticut has not created and sustained net new jobs in 25 years; current employment remains below the level of 1989.”

While Republicans may be happy to use the information in the report to their advantage, the party may or may not agree with the suggestions the center’s economists make for avoiding further erosion of employment in the state.

The center suggested that in order to drive short-term job creation, enhance state revenues, and build long-term competitive strength the state should dramatically accelerate public sector capital projects whose funding has already been approved and now exceeds $6.5 billion and unleash “a trove of accumulated tax credits to fund private sector capital projects.”

A previous report by the center found that the Malloy administration is sitting on $6.5 billion in bonding that has already been approved but has not been released by the state. That’s double the amount of money held back by former Gov. M. Jodi Rell’s administration.

However, the report praised the Malloy administration for its investment in economic development, including $291 million in Jackson Laboratory, and the tax credits and loans given out to large companies that agree to create more than 200 jobs.

Rep. Gail Lavielle, R-Wilton, said she believes there is a better way forward.

“It is disappointing that the CCEA report also does not take into account the feedback from business owners, suggesting only more government spending and incentives,” Lavielle said. “Even the most optimistic budget forecasts for the next biennium project a deficit of more than $1 billion. Spending more on debt service will exacerbate that figure. And tax credits are of little value to businesses struggling with persistent high structural costs.”

She said in order to grow jobs the state should consider cutting taxes. “A commitment to reducing taxes across the board will help businesses lower their structural costs and sustain the kind of long-term growth that fosters job creation,” Lavielle opined.

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(10) Comments

posted by: dano860 | December 23, 2013  12:47pm

The Republicans should not be thumping their chests or throwing arrows, they do not have any plans that would work either.
The State needs to be totally revamped, especially the tax structure.
Andrew says that Dannel has bought 40 K jobs. Great, but it does not compensate for the numbers lost.
Being a right to work State would be a good start too.

posted by: joemanc | December 23, 2013  1:15pm

“And the reality is that unemployment is at its lowest level since 2009 and we have grown more than 40,000 private sector jobs since Governor Malloy took office - the largest gains in private sector employment since the late 1990s.”
Hi Andrew? Since those additional workers are now paying income taxes and filling up the state’s coffers, can you rescind that middle income tax increase you passed years ago? Thanks.

posted by: Noteworthy | December 23, 2013  2:44pm

Reality Check Notes:

1. Doba’s sense of reality is from the warm bosum of the taxpayer’s checkbook. It’s a twisted view indeed.

2. This is an academic excerise - an attempt to establish the real unemployment number? That number represents real people, and real families who have given up hope of work. That’s their reality and I suggest Doba get in touch with it. To find an alternative reality that ignores these people and their families is the pinnacle of hubris.

3. There ought not be gloating by Dems or the GOP - the report notes we have not sustained any net advancement in jobs in 25 fxxxxxx years. That’s a pox on the whole system, all the people in it and all the policies that have generated such misery and poor performance on the people of this state.

posted by: artythesmarty | December 23, 2013  3:47pm

I think the number is almost 13% as there are 56k state workers with a no layoff clause, 40k teachers with tenure, and public safety etc that is untouchable(occasionally city hall lays off a part time admin).  10.7*(100/85)=12.58823529%.  Then again my brother in law is a manager in DSS and works most Saturdays for Overtime(manager gets overtime?) so evidently they cant get their work done during theweek.

posted by: SocialButterfly | December 23, 2013  5:17pm

dano 860: Gov. Malloy and his controlled General Assembly “have the state handcuffed”—so don’t knock any Republican plans as they won’t happen. Don’t believe that our Governor has gained 40,000 private sector jobs—unless you can verify that glowing press release yourself.

posted by: Not that Michael Brown | December 24, 2013  12:18am

Everyone knows that the Labor Department’s year-over-year unemployment figure does not included the people who have “simply stopped looking for employment ...”  It only used to show a trend.

Also, how does one “simply stopped looking for employment.” Do they go on food stamps or disability. Are they foraging along the roadside or dumpster-diving? What? Or are these 65,000 souls tending to their home while being supported by a spouse.  I saw no answers to this question in the *short* 10 page report by the Center.  Smoke screen indeed.

posted by: SocialButterfly | December 24, 2013  10:42am

Connecticut has not created and sustained new jobs in 25 years, and current unemployment remains below the level of 1989. according to the Connecticut Center of Economic Analysis. Nearly 65,000 working-adults have stopped looking for work in the last three years - according to the report.  The only jobs that the Malloy administration has realistically gained at this time are seasonal, mostly part-time Christmas sales oriented jobs—that will basically disappear after the Holidays. You don’t have to be a Philadelphia lawyer to ascertain that the the claim of gaining 40,000 private sector state jobs—“is careless with the truth.”  People can’t believe that news media releases from the governor’s office are really accurate and truthful—even during the Holidays.

posted by: dano860 | December 26, 2013  9:32am

Stan I don’t believe anything this administration puts out without having facts, you are correct. I certainly won’t believe any press releases published by them. These jobs that they have claimed as being created are not just jobs related directly to the product or services provided by the ones getting all of our money. They are allowed to count the support and service jobs as being “created” by them. The trash hauling company driver is counted, the window washer is counted, the limo driver is counted and so on. So it is rather specious when they report them as new when many of these jobs already exist but they just happen to be getting another check from another place, is that really job creation? The term in the contract, I believe, is, “new or created.”
At present I have yet to hear any plans from the Republicans that I feel will push us toward being a productive, job producing State once again. Plus it doesn’t matter that we get another Republican Governor when, as we know, the Democrat controlled legislature will keep any of their plans from happening.
The only thing that will change things under the dome is a ‘super sweep’ of a large majority them. We need radically new ideas proposed by business people that know and understand finances and operating a profitable corporation.
The largest employer in the State is the State and they can’t considered profitable or cost neutral today.

posted by: SocialButterfly | December 26, 2013  10:37am

dano880 You tell the truth—but our election’s deciding big city welfare voters aren’t interested in any new ideas suggested by business people. Our growing national socialism is taking over our state also.

posted by: dano860 | December 26, 2013  6:51pm

That is why we need to get the voters to the polls.  When the inner city riders turn out in larger numbers than the ones pulling the wagon, we get the shaft. Good candidates, higher percentage of voter turnout and things may begin to look as though they could improve.
Finding the good candidates is the first and largest issue. The local Town Committees really need to get busy. Look up Ray Hackett’s columns from last week, Norwich Bulletin, he said the same thing.