Connecticut’s labor market not fully recovered other indicators raise concerns
New Haven Register, July 4, 2016
By Luther Turmelle
As executive director of Workforce Alliance, the New Haven-based job training agency, Bill Villano doesn’t like what he sees in the May edition of the New Haven Register’s economic scorecard. It’s not just the 1,500-person decline in the New Haven area labor force that troubles Villano. It’s the numbers that are behind it.
“The New Haven area labor market isn’t fully recovered,” Villano said, referring to the region recovering all the jobs that were lost during the most recent recession. “Three times last year, we reached full recovery and each time, we’d slip back. It’s disconcerting that we can’t attain recovery and sustain it.”
The New Haven Register’s economic scorecard is presented in partnership with DataCore Partners LLC and Workforce Alliance. The size of the region’s labor force is one of eight economic indicators that make up the scorecard. And in May, half of those indicators — labor force, consumer confidence, new housing units and the median single-family home price — were headed in a negative direction.
Donald Klepper-Smith, chief economist and director of research for New Haven-based DataCore Partners and author of the scorecard, said he is concerned that Great Britain’s exit from the European Union will have a negative effect on companies in the area whose businesses are reliant upon exporting.
“It’s going to dampen job growth and our exports are going to be much less affordable,” Klepper-Smith said. “In times of uncertainty, people seek a safe haven in the U.S. dollar, which in turn drives up the cost of exports.”
Klepper-Smith said he also is concerned about declining home values. The median single-family home price in May for the 14 towns the economic scorecard tracks was $197,500, down $12,400 from the same month in 2015. “Every dollar you lose on the value of your home translates into seven cents that doesn’t get spent in the local economy,” Klepper-Smith said.
Concerns about employment and housing values had an impact on consumer confidence, which was down 6.9 percent in May compared to the same period in 2015. Klepper-Smith said it also didn’t help consumer confidence that real disposable income indicator in the scorecard was flat, earning it a neutral rating, Real disposable income is the amount of money that households have available for spending and saving after income taxes have been accounted for.
“I’m concerned because the real disposable income (level) in Massachusetts is four times what it is in Connecticut,” he said. “When you’re not getting growth in real disposable income, people start asking questions. Consumers are concerned about where the economy is going.”
Housing values down back to top
New housing units, which are considered a leading economic indicator regarding the health of the housing market, were off dramatically in May compared to the same period a year ago.
There were only 22 new housing units approved in May of this for the 14 towns the economic scorecard tracks, compared to 84 during the same period in 2015.
Two of the scorecard’s labor components, total employment and the region’s jobless rate, were headed in a positive direction. The region added 800 jobs in May compared to the same period in 2015 and the unemployment rate was down two-tenths of a percentage point.
But Villano said employment gains don’t tell the whole story of the state of the New Haven-area economy in the latest scorecard. The breakdown of gains and losses from different employment sectors in the region showed some volatility in health care and education jobs, he said.
“Health care lost 1,000 jobs and education lost 500,” Villano said. “Those sectors are traditionally the two strongest for our area. From a job training standpoint, they were good to train people for because there was always demand.”