The ongoing debate over the definition of a recession can be comical at times, but the effect of Connecticut’s last decade of economic decline is no laughing matter. A new Yankee Institute report cuts to the heart of what ails the Constitution State, and makes a clear case for reform in Hartford and across our 169 municipalities.
Connecticut’s economic woes have been present for much longer than just the past six months or even the length of the pandemic. We’ve had a lost decade.
From 2007-2021, Connecticut’s real Gross Domestic Product (GDP) dropped roughly 5% even as the U.S. experienced a 25% increase. Connecticut had the fourth lowest increase in real GDP between 2010-2019, barely managing to beat out Alaska, Wyoming and Louisiana. While the nation quibbles over the last two quarters of negative growth, Connecticut endured four straight quarters of negative growth in 2012-2013 and in 13 out of 32 quarters between 2012-2019.
Aggregate GDP numbers may feel dizzying and abstract, but focusing in on jobs, income and population trends only reinforces our negative economic performance. Connecticut has fewer people employed in the private sector today than it did all the way back in 2007. This should be alarming to policymakers, and the fact that public sector hiring again leads the way in our most recent jobs report should make this over a decade-long lack of growth in private sector employment even more concerning. There are simply fewer opportunities in Connecticut than there should be for young people to get that first job, for middle career professionals to take that next step, and for people towards the end of their career to end it where they want to be.
The general sense of life becoming more and more unaffordable that so many of us are feeling is also evident in the data. According to the U.S. Bureau of Economic Analysis, Connecticut’s growth in per-capita income was the slowest in the nation between 2009-2021. Although our state’s residents have previously held the top spot in per-capita income, we are quickly being outpaced by our neighbors and states across the country. The drastic rise in prices from inflationary policies at the national level is exacerbating the problems already faced by families and businesses trying to make ends meet here.
This helps explain why Connecticut seems unable to attract new residents. In fact, only Illinois, Mississippi and West Virginia were cumulatively worse than Connecticut at attracting new and retaining current residents between the 2010 and 2020 Census reports. We are one of the least affordable states to retire in, and we are losing millionaires – along with their taxable incomes – at record rates as well.
Even so, Connecticut still has a lot going for it. We have some of the best schools in the nation, although serious reforms are needed there as well. Our state is filled with beautiful natural landscapes, and just outside of our borders lie major urban centers with populations we can attract. Policymakers can help stave off another lost decade by making positive reforms that empower everyday people to forge a better future for themselves and their families.
A good start would be to cut back on taxes generally, as we have the second highest state and local tax burden in the nation, while installing a levy limit on property taxes specifically — like in New York and Massachusetts — to help families that are unable to afford a home. Policymakers should make it easier to start and grow a business in Connecticut by recognizing licenses from other states and decreasing fees on businesses. The state can streamline its permitting and approval of infrastructure projects that make everything come in both over time and over budget, unnecessarily burdening our businesses and municipalities. Thankfully there is no shortage of opportunities for reform.
There was nothing inevitable about the last decade of decline in Connecticut, and there is no reason for us to have another decade of malaise. We just need to remind policymakers — in Hartford and in town halls across the state — of Nobel laureate F.A. Hayek’s keen insight that economics demonstrates how little we really know about what we imagine we can design.
This article originally appeared in the CT Mirror.