Report: State Losing Economic Ground

October 20, 2005
By KENNETH R. GOSSELIN, Courant Staff Writer

Business leaders sounded an alarm Wednesday about the state's future economic growth, after a report suggested that Connecticut is losing its competitive edge and is in danger of being surpassed by other states.

The report, which immediately became fodder for the gubernatorial campaign, urged elected officials and the private sector to work together to develop an overall economic development strategy for the state.

The 150-page report from the Connecticut Economic Resource Center Inc., a nonprofit economic development agency, brings new urgency for developing a strategy that critics say the state has long lacked. It said Connecticut ranked in the bottom third among states in the crucial area of technology growth between 1990 and 2003, among other conclusions.

A debate over the report's conclusions would focus attention on old concerns such as attracting and retaining young professionals, the widening gap between the rich and the poor, the role of economic development incentives, tax policy and the state's quality of life. Economists and business executives have acknowledged the dangerous trend for years, but have not agreed on solutions.

In a press conference at the state Capitol, businesses that helped underwrite the report urged immediate debate among policymakers.

"Put simply, Connecticut's economy isn't growing and that means businesses aren't growing and that means jobs aren't being created," said Cheryl Grise, utility group president at Northeast Utilities. "This is not where our state needs to be."

James C. Smith, chairman and chief executive of Webster Bank said the report is a "clarion call" to action.

"Connecticut is losing its competitive edge because we're not improving fast enough," Smith said. "These trends will be dangerous if not corrected."

Despite retaining its distinction as the state with the highest per-capita income, Connecticut has struggled to build employment. The report notes the state has not made strides in job creation in the past 15 years.

Connecticut has regained only half the jobs it lost in and after the 2001 recession, and may not break even until next year or 2007. Meanwhile, the nation as a whole gained back the employment it lost in January.

The report compares Connecticut's economy with the rest of the states in areas considered key to future growth. Chief among these is the foundation in technology, along with sources of financing, entrepreneurial vitality, quality of the workforce and connection to the global marketplace.

Technology is broadly defined and includes "traditional" industries such as aerospace as well as information technology and emerging biotech companies.

The report provided two views of each category. One is a snapshot from 2003, the latest year for which data was available. The other is a look at rate of growth between 1990 and 2003. Connecticut was then ranked in comparison with each other state.

Connecticut ranked second, behind Oregon, in the strength of its foundation in technology, marked by high worker productivity, employment and high-speed transmission lines as of 2003.

But CERC researchers pointed to a disturbing trend: Between 1990 and 2003, Connecticut ranked 36th in how quickly its technology base grew.

"The bad news here outweighs the good," said Jeffrey W. Blodgett, CERC's vice president of research.

According to the report, employment in technology industries saw a 5 percent increase nationally between 1990 and 2003. But Connecticut suffered a 17 percent decline in the same period, primarily in the loss of jobs in the aerospace industry.

Smith said Connecticut has a firm base to build on when it comes to technology and innovation and noted the report was not to intended to criticize past efforts but to invite new ideas.

But the report prompted an immediate volley at Republican Gov. M. Jodi Rell by Stamford Mayor Dannel Malloy, who is seeking the Democratic gubernatorial nomination.

Malloy and New Haven Mayor John DeStefano, who also is campaigning for the Democratic nomination, have hammered Rell after a recent Federal Deposit Insurance Corp. report ranked Connecticut dead last in job creation. Democrats are seizing on the state's economy as a primary vehicle for criticizing Rell.

In a release, Malloy said the report "proves that Gov. Rell has been in denial about our economy and its impact on families for too long."

As evidence, Malloy pointed to news reports of an Oct. 5 speech by Rell saying the state's economy is getting better and jobs are being created.

Rell, in a release, said she knows that creating jobs in the Connecticut and the Northeast, particularly in manufacturing and other mature industries, is difficult. But, she said, that is why her focus has been on "getting and staying out front" in the emerging high-tech and biotech sectors.

The governor said the report raises critical issues and carries a serious warning "that I will heed."

"I intend to turn it into a blueprint for further reviving our economy," Rell said.

Courant Staff Writer Mark Pazniokas contributed to this story.