With the volatile stock market generating huge gains in recent years for Connecticut’s millionaires and billionaires, residents at the other end of the economic spectrum are struggling.
In a slow but steady trend, Connecticut’s unemployment rate has been rising this year to 5.2%, tying the state with California, Oregon and Washington for the nation’s highest unemployment rate. Hawaii and Vermont are half Connecticut’s rate at 2.6%, while North Dakota is 2.3% and South Dakota is the lowest at 2.0%, based on the latest federal statistics for June.
Connecticut is now solidly above the national unemployment rate of 4.1%.
But the trend has not gotten much attention because the state has avoided high-profile disruptions at major employers.
“No one is laying off,” said Chris DiPentima, the chief executive officer of the Connecticut Business and Industry Association, the state’s largest business organization. “We’re not having mass layoffs. It’s more of a slow hire, slow fire. If it was a fast fire, we would see bigger layoffs and shutdowns. We’re not seeing that. … Only six months ago, we were at the national average. … I don’t think the general public has been aware.”
The slowdown in hiring, he said, has impacted professional services that include consulting, accounting, legal services, and the key industries of finance and insurance.
“People who have skill sets in those areas are staying on unemployment for longer periods of time, and those areas are not seeing a lot of job growth, either,” DiPentima told The Courant in an interview. “Some college graduates in those same areas are struggling to find a job. That’s driving the higher unemployment percentage that we have seen growing since January that is now at a national high.”
He added, “We’re not seeing that same behavior in manufacturing or construction or healthcare. In those sectors, we have actually seen job growth and lower unemployment percentages.”
At the same time, there are nearly 90,000 unfilled jobs statewide, including about 15,000 positions in healthcare such as data technicians and licensed practical nurses, among others. In addition, the state has about 8,000 job openings in manufacturing and more than 15,000 in restaurants, hotels and retail stores that do not require a college degree.
Among the ways that the state is trying to address the problem is Gov. Ned Lamont’s executive order that created the Connecticut Careers Pathway Commission, chaired by former state and national education secretary Miguel Cardona. The 40-member commission includes legislators, college presidents, superintendents, teachers’ union leaders, CBIA, and state officials, among others. The group also includes the head of human resources for Electric Boat, which has in recent years been hiring thousands of workers in southeastern Connecticut as the shipyard builds the latest class of submarines.
The group has been meeting in subcommittees and full committee meetings as it heads toward a deadline of Dec. 31 on a five-year strategic plan to be reported to the legislature and Lamont. The goal is to project the need for jobs now and in the future, including advances in artificial intelligence.
“AI, automation, and global competition are reshaping work faster than any of us have seen in our lifetimes,” Lamont said. “We need a career pathways system that doesn’t just prepare people for today’s jobs, but one that can learn, evolve, and respond to the changes and opportunities we know are coming. We must have a system where students and jobseekers can see the full arc of opportunity, a system where employers help shape the programs that prepare their future workforce, and a system where everyone – from classrooms to campuses to companies – is aligned around shared goals and shared outcomes.”
Stock market impact
At the high end, the booming stock market in recent years has generated billions of dollars in capital gains taxes that led to surpluses over the past eight years and allowed the state to pay down a substantial portion of the pension debt that had been largely ignored for decades by governors and legislators from both political parties.
Fueled by the stock market gains, the incomes of the wealthy increased at a much faster rate than those of rank-and-file workers who receive a paycheck every two weeks. While the volatile stock market has regular ups and downs that sometimes feature sharp downturns, the general trend in recent years has been upward as stocks reached all-time highs under both Presidents Joe Biden and Donald Trump.
During the recent Democratic primary campaign, state Rep. Josh Elliott repeated his signature issue on the campaign trail and in television commercials that the rich pay a smaller percentage of their overall income in taxes than the working poor. His commercials said the system is tilted against the working poor and favors the rich – saying that the state should “make the billionaires pay their fair share” in taxes.
Lamont countered that his tax cuts have essentially eliminated the income tax for a family of four with two children that qualifies for the state and federal earned income tax credit and earns less than $55,000 per year.
“Our income tax is one of the highest in the country, not the highest. It would be almost the highest if Josh has his way,” Lamont said during the campaign. “Our sales tax is about average. Our property tax is heavy. That’s why I’ve increased municipal aid. I’ve increased the education cost sharing formula every year that I have been here, trying to do everything we can.”
With high costs for everything from groceries to electric bills, a large percentage of the population is living paycheck to paycheck, including some families earning more than $100,000 per year. That has pushed the average age of a first-time homeowner to 40 years old, according to national statistics.
Despite pushback from Elliott and other Democrats, Lamont has avoided income tax rate hikes for the past eight years as the top rate has remained at the same level of 6.99% on the highest earners.
On the campaign trail, the state economy will be a major issue in the final two months before the November election. Both Lamont and his Republican rival, Sen. Ryan Fazio, have repeatedly aired television commercials about high electricity rates, a prominent target of Republicans in the 2024 state elections.
“In Connecticut, Main Street is really hurting,” Fazio told The Courant in an interview. “We have an unemployment rate that is now well above the national unemployment rate. … As governor, I will be entirely focused on making Connecticut affordable for middle-class and working-class families. That’s why I’m proposing a 20% cut to electric rates by eliminating all the hidden taxes and fees in our electric bill.”
While Fazio agrees that the state surpluses would not have been possible without the booming stock market, he added that many residents have not directly benefitted from the Wall Street boom.
“It’s like 10% of Americans might own 80% of the stocks,” Fazio said. “It’s good when the stock market goes up. But that’s a national and international phenomenon that Connecticut has been lucky to benefit from. What really matters in this election is our state policy and whether it has made life affordable or unaffordable for Connecticut residents. As is, I think it’s made it unaffordable. We need change so that everybody can benefit and afford to live here.”
Minimum wage
For workers at the lower end of the spectrum, Connecticut’s minimum wage will be increasing starting on Jan. 1 to $17.48 per hour. That represents an increase from the current rate of $16.94 per hour as state law requires the number to be adjusted for inflation with each new calendar year.
By comparison, the federal minimum wage is $7.25 per hour, meaning that Connecticut is more than double the federal level. The wage is set at the federal level in at least 20 states, including New Hampshire, South Carolina, Alabama, Louisiana and others. Connecticut ranks among the highest in the nation and is now slightly above high-cost states like California and Hawaii.
“Nobody working a full-time job should live in poverty,” Lamont said. “For too long, while the nation’s economy grew, the income of the lowest earning workers has stayed flat, making already existing pay disparities even worse and preventing hardworking families from obtaining financial security. That is why I enacted a law requiring the minimum wage to be adjusted every year based on the health of the economy. This is a fair, modest increase, and the money earned by workers will go right back into our own economy, supporting local businesses and our communities.”
Under changes that were signed into state law in 2019 by Lamont, the Connecticut minimum wage has been increasing steadily for years — going from $10.10 per hour in September 2019 to nearly $18 per hour next New Year’s Day. The spike represents one of the sharpest increases in the nation at more than 70% in less than eight years.
Overtime
While the state has many unfilled jobs in various categories, there are difficulties in hiring in some professions, leading to high amounts of overtime in the Connecticut state budget, officials said. Some of the most difficult positions to fill have been state troopers, correction officers in the prisons, and nurses in psychiatric hospitals.
Statistics from the state comptroller’s office show that the state spent $378 million for overtime during the 2024 calendar year across nearly 50 departments in state government. The highest amounts were in the state prison system with $113 million in overtime, followed by the Department of Mental Health and Addiction Services at $62 million and the state police at $60 million, according to the records.
Among the top 25 individuals with the most overtime, 17 work for the state police, while six work in mental health facilities. Three of the top five employees, at more than $230,000 each for overtime alone, work at the Whiting Forensic Institute, an inpatient psychiatric facility for those in the criminal justice system who require 24-hour care and have been committed by the Psychiatric Security Review Board or need to have their competency restored before trial.
The high amount of overtime at the mental health department is related mainly to nurses working at Whiting and Connecticut Valley Hospital, both in Middletown. Amid the nationwide nursing shortage, the hospitals are paying overtime to nurses in order to fill shifts, officials said. In addition, the staffing ratios need to be higher for the patients who have more complex needs than those in general hospitals, officials said.
Going forward, many businesses are still looking for qualified workers, based on responses to an employer survey by CBIA.
“The number one thing when we asked employers, nearly 80% said the top challenge in Connecticut was finding people,” DiPentima said. “When we asked them why can’t you find people to fill those jobs, their number one issue was they’re not qualified. When we asked further, the employers said they’re looking for general work skills: problem solving, working in teams, obviously showing up for work. … They’re having a hard time finding those type of individuals. We need to connect the job seekers [as employers] with the people who are looking to fill jobs. We need to make sure those looking for jobs have those basic skills so when they are connected that they can get these jobs.”
