Thursday, May 24, 2012

Connecticut: Report Suggests Aging Workforce Harming Economic Recovery

According to a report from the Connecticut Center of Economic Analysis at the University of Connecticut, the state is recovering from the recession, "but without the robustness needed to restore reasonably full employment and household income." Furthermore, "Connecticut faces a dismal future, with its 65 and over population doubling, its working age population shrinking while its quality deteriorates, and its under‐18 cohort contracts." However, according to "Recovery Stirring? But will Connecticut be too Old to Compete? The Connecticut Economic Outlook: May 2012," the state has "one asset that could vault it to the top of the growth charts and, critically, rescue it from its current bleak demographic trajectory."

According to the report's authors, the challenge for Connecticut is to replace all 120,000 jobs lost since 2008 and to create substantially more--at least 50,000 net net--to retain and attract new workers, to change its demographic future. To do this, they recommend that the state "unleash existing stranded tax credits in a highly targeted program to drive economic growth.  If the $2.5 billion in tax credits currently sitting unused and unusable on balance sheets could be redeemed ex post against the cost of major capital projects."
Given current labor force patterns and participation rates, with an aggressive expansion policy, Connecticut could effectively compete both to retain its own educated youth and to pull in thousands of new workers, significantly exceeding its previous employment level.  In the longer term, together with the initiatives in place, aggressive use of the stranded tax credits would launch Connecticut on a long‐term dynamic path that would continue expanding employment opportunities for two or more decades.
Source: The CT Mirror "Report: Aging workforce threatens state's economic recovery" (May 23, 2012)

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