Filling jobs crucial for state's economy

In the Land of Steady Habits, the to-do list for the economy in 2025 looks a lot like it did in 2024.

One of the items at the top of the list is particularly familiar: accelerating jobs growth. While Connecticut has recovered all the positions that it lost at the beginning of the COVID-19 pandemic, its employment levels have flatlined in recent months. To achieve stronger growth next year, the state will need to make more progress tackling the labor shortages that have dogged its economy in the past few years.

"It all goes back to filling those open jobs," said Chris DiPentima, CEO and president of the Connecticut Business & Industry Association. "It's a matter of getting people in the state and keeping people in the state to fill those jobs."

Many job openings

Connecticut's estimated number of payroll jobs last month was only 0.6% higher than a year ago, compared with a nationwide increase of 1.4%, according to data from the state Department of Labor.

The state's struggles with jobs growth are hardly new. As of last month, Connecticut was still about 11,600 positions away from returning to its all-time jobs peak, which was reached in March 2008. West Virginia and Wyoming are the only other states that still have fewer jobs than they did in March 2008.

Unlike during the Great Recession, Connecticut does not suffer from a lack of available jobs. Now, it is hamstrung by an insufficient amount of workers. There were about 81,000 job openings in the state in September 2024, compared with about 51,000 in September 2014, according to the most recent federal data.

The labor squeeze is the product of many factors, including widespread worker retirements during the pandemic and low population growth since the Great Recession. The state's high cost of living, particularly in housing, contributes to many people leaving the state or deciding against moving here. In this year's edition of CNBC's Top States for Business study, Connecticut ranked No. 34 in the cost-of-living category, compared with No. 34 last year, and No. 43 in 2022 and 2021.

"Every state lawmaker needs to look at every bill in 2025 through the lens of how will this make the state more affordable, how will this attract people to Connecticut and keep people in the state," DiPentima said. "The businesses are getting frustrated, no doubt about it."

Connecticut's labor shortages could intensify if President-elect Donald Trump follows through with his warning to carry out mass deportations of people in the country illegally. Even if that plan does not advance or gets thwarted by local or state officials, the threat alone could cause some immigrants who are not in the country legally to preemptively leave the U.S., or make businesses more hesitant about hiring them.

Industries such as leisure and hospitality would be particularly affected if there were an exodus -- forced or voluntary -- of workers not authorized to be in the country.

"Immigration conversations are constant ... no matter what the administration is," said Scott Dolch, CEO and president of the Connecticut Restaurant Association. "We're a great measuring stick of people that are in our country, that want to be here and want to work in our industry."

At the same time, questions swirl about the new tariffs that Trump has vowed to impose in his second term. In manufacturing, some businesses might trim their workforces and scale back hiring as part of cost-cutting to offset new tariffs.

"If there are large tariffs on critical supplies to Connecticut industry that we cannot replace by other sources, that is clearly going to increase the cost of producing products in Connecticut and therefore affect ... the financial profile of businesses," said Stephen Henn, an adjunct professor of economics and finance at Sacred Heart University.

Watching out for job losses

Alongside the proliferation of job vacancies, Connecticut's economy could be weighed down in 2025 by downsizing in some industries.

The estimated number of jobs in Connecticut's public sector last month was down about 4,000 from the total in June, according to Department of Labor data. Shrinking employment in some education systems appears to be driving the trend.

"The big picture here is we treat government as every other employment sector," said Patrick Flaherty, director of research for the state Department of Labor. "Education is about a third of state jobs. It's a huge piece, and it's hugely seasonal. There are cafeteria, dorm and student workers, even though professors and teachers are on a 12-month basis."

Job losses are also a concern in some parts of the insurance industry. Across January and February, CVS Health plans to cut about 200 jobs connected to its offices in Hartford, where its health-insurance business Aetna is based. About 20 of the employees in that group are Connecticut residents, while the rest live in other states.

The next round of downsizing will follow layoffs this month and last year that have affected about 1,000 employees who are based at or report to the Hartford offices. The job cuts are part of a plan by the struggling CVS to slash $2 billion in expenses.

"This steady drip, drip, drip of significant Connecticut insurance job losses continues to be troubling," said state Sen. Tony Hwang, R-Fairfield, ranking Senate member of the General Assembly's Insurance and Real Estate Committee. "In order to get its takeover of Aetna approved in 2018, CVS promised to maintain 5,291 jobs at Aetna for at least four years. These days, we see repeated layoff announcements. Connecticut state government officials must continue to be persistent in demanding transparency."

Includes previous reporting by Ken Dixon and Liese Klein.