Category Archives: Economy

Connecticut Income Gains Outpace Nation in First Quarter

by Categorized: Economy Date:

Connecticut residents, though not necessarily the bulk of us, saw accelerating income growth in the first three months of 2014, outgaining the nation as a whole for only the second quarter since the start of 2013.

Personal income grew by 0.9 percent in the state in the winter quarter to an annual rate of $221.5 billion, placing Connecticut as the No. 16 state in growth, according to the U.S. Bureau of Economic Analysis.  The nation grew by 0.8 percent in the quarter, to an annual rate of $14.4 trillion.

Despite trailing the nation in recent quarters, Connecticut’s lead in per-capita income remains secure, at $60,847 for 2013, the BEA reported previously. The No. 2 state was North Dakota at $57,084 on the strength of its oil boom, but that state was the biggest decliner in the first three months of 2014, losing a colossal 2.9 percent of its income amid declining crop prices and oil price volatility.

Washington state saw the fastest growth in income, at 1.4 percent in the winter quarter.

None of this says much about how typical families are faring. Personal income is a measure of all income before taxes, and Connecticut is largely driven by Gold Coast wealth, combined with the relative lack of vast populations in poverty.

Why Metro Hartford Tops “American Dream Cities” List

by Categorized: Economic Development, Economy Date:

Metro Hartford often fares well in surveys that measure quality of life, but this one is a real surprise. The capital region came out No. 1 in the newly released “American Dream Cities 2013″ ranking of the largest U.S. metro areas, by Xavier University in Cincinnati and an Ohio marketing firm.

Metro Hartford is not just on top — it’s far and away ahead of the No. 2 metro, Jacksonville.

How can this be? Despite rosy predictions by a national real estate firm, the Hartford area housing market remains ho-hum. Job growth throughout the state was subpar last year, income gains have been spotty, the core city has an ex-mayor fighting a jail term and the governor is facing a tough battle after raising taxes three years ago.

We might think this is another of the many idiotic lists based on nothing that pollute the webosphere, but no, it’s based on scientific polling of random populations.

“The folks that live there feel really good about the lives they have,” said Greg Smith, a Xavier professor of information systems and director of the American Dream survey.

Okay then. It’s a broad look at social, personal and civic measures, not just economic. And it’s about how people feel, not just how well they’re doing by measurable standards such as income or home values.

Far from just owning a home and holding a middle-class job, the “American dream,” Smith said, “is all these things from having freedoms to having economic prosperity to having a clean physical environment and on and on.”

American-Dream-Cities-Report-2013-2In a series of monthly national surveys of about 1,000 people responding to 139 statements, Hartford came out on top in several sub-categories including “economic conditions,” “diversity,” “freedom of expression,” “support of friends,” “fruits of my labor,” “leisure activities” and “social status.”

And we aced my own personal favorite, “support of someone special.”

It’s a good thing that having a dysfunctional core city didn’t matter.

The ranking calls itself a measure of cities, but it’s not that at all. It looked at the 52 metro areas with at least 1 million people; Metro Hartford, with 1.2 million residents in 2012, the latest year with available Census data, is the nation’s 46th largest metro.

Here’s the ranking of the top seven and the bottom six in the American Dream ranking, produced by Xavier and the Burghard Group, a “place-branding” firm in Ohio. Index values are shown for each.

BEST:

  • Hartford, 111
  • Jacksonville, 107
  • Riverside-San Bernardino, Cal., 106
  • Miami-Fort. Lauderdale, 106
  • Rochester, N.Y., 105
  • Columbus, Ohio, 105
  • Raleigh, N.C., 105

WORST:

  • Grand Rapids, Mich., 95
  • Pittsburgh, 94
  • Nashville, Tenn., 93
  • Sacramento, Cal., 93
  • Oklahoma City, 90
  • Birmingham, Ala., 90

The biggest metro areas tended to be in the middle of the pack. The list is a bit of a head-scratcher not because Hartford came out on top, but because places such as Oklahoma City and Pittsburgh have seen a renaissance in recent years that often shows up on quality-of-life surveys.

And Texas is the land of job and population growth. Before the survey, Smith said, “I’m thinking to myself, of course Texas is going to win.”

But growth is not the same as satisfaction, and it’s possible that some central cities are doing well while the metro areas around them are not.  Metro Hartford has a core city of just 10 percent of its population, so the city matters less in metro rankings than cities elsewhere.

Metro Hartford fared very well in how people feel about their jobs and their colleagues, but not so well in how they feel about their pay and benefits, and as we’d expect in a slow-growth state, not so well in job mobility.

Regardless, we will take the good with the bad. The report opens with a large photo of downtown Hartford in the winter when the Hartford 21 apartment tower was under construction, under the title, “American Dream Cities 2013.”

The obvious conclusion is that if metro Hartford is to upgrade its professional baseball franchise and make it work as a diamond asset for the region, it needs to do so as a region.

Happy Days Are Here…Almost, Economists Tell Business Audience

by Categorized: Economy Date:

CROMWELL — We keep hearing about a strong economic recovery. It’s out there somewhere, certainly in North Dakota, but not yet in Connecticut, at least not the kind of gains that can, say, easily get a governor re-elected.

But hang on, economists told business executives at a conference Friday. It’s coming later this year, and if not in 2014, definitely next year. The gains will come from a national surge. And they’ll last at least through 2016.

“Pessimism has become very popular and it’s taken its toll on the national psyche,” said Ryan Sweet, director and senior economist at Moody’s Analytics, told a crowd at the event organized by the Connecticut Business and Industry Association. “People are going to get caught off guard in the next few years about how strong our economy can grow.”

Go ahead, everyone agreed, catch us off-guard after nearly five post-recession years of waiting. The total output of the national economy, which was unexpectedly flat in the first three months of the year, will recover to reach 3 percent this year, 4 percent in 2015 and 3 percent in 2016, Sweet said, as the housing recovery gains strength.

Of course, as the vehicle miles per-gallon ads warn, results may vary. But in slow-growing Connecticut, rising interest rates — which can be expected to temper growth in order to quell any threat of inflation — could help, Sweet suggested, by boosting the fortunes of the financial services industry.

And the threat of rising interest rates will prod cash-rich companies, especially the blue chips, to spend some of that money and borrow more before rates shoot up. “There is a tremendous amount of pent-up demand in business investment,” Sweet said.

“The job market will be in much better shape, even in Connecticut,” he said, adding, “All signs point toward a noticeable improvement in the housing market. …and that’s going to do wonders for our economy”

Sweet’s upbeat view mirrors that of Connecticut economists at UConn and the New England Economic Partnership.

All of this assumes that consumer demand picks up. Many households are well positioned to spend more, as revolving credit card debt is nowhere near its old peaks. But stagnant wages must rise as part of the equation, and although it wasn’t a popular move for this crowd, the Connecticut minimum wage increase to $10.10 in 2017, driven by Gov. Dannel P. Malloy this year, will help push up overall pay for wage-earners.

Connecticut has special issues, including a weak housing recovery in some places, the lack of any clear engines of job creation and a predicted stock market downturn, which would typically hurt this state more than others.

“The next couple of years will be very good years for Main Street,” Sweet said, “whereas Wall Street is going to have tough years.”

As economist Jim Glassman sees it, considering the nation had $3 trillion worth of underwater mortgages, the slow recovery could have been much worse, like what we saw in Japan for decades.

“The pace of growth may be disappointing to you,” said Glassman, managing director and head economist for the JPMorgan Chase commercial banking unit, “but I think it’s miraculous that it’s happening at all.”

Many have blamed the mortgage-security industry for a host of recession-era abuses and ills, but because mortgages were packaged and resold as securities, investors were forced to immediately write down their values after the collapse, Glassman said. That led to a faster return to the normal order. “This is why the U.S. is powering out of recession,” he said.

As Lawmakers Wind Down, Three Languishing Business Bills Prove A Point

by Categorized: Economy, Government, Health Care, Politics Date:

Among the more than 250 bills hanging on with fading hopes as the last day of the state legislative session dawns, three with significance to Connecticut business illustrate different ways a bill can hang on a cliff.

And all three help make the case that a legislature meeting for three or five months a year doesn’t cut it.

The first, a bill that would allow social entrepreneurs to easily establish “benefit corporations,” has not come to a vote in the House or the Senate despite having only minor opposition and broad, bipartisan sponsorship.

The bill would make it possible to incorporate “Type B” businesses explicitly for social benefits beyond just profits for the owners. On Jan. 14, I said the bill “seems like a lock to pass” after Gov. Dannel P. Malloy trekked downtown to the Pratt Street office of reSET, the Social Enterprise Trust, to declare his support after two tries fell short in 2012 and 2013.

The social enterprise bill passed through three committees by a total vote of 95-7. Yet its best hope now is a back-door route, sneaking under the coattails of a broader bill. If it fails amid horse-trading and delay tactics, it would reflect the worst of the legislative process. The only controversy has been over whether to include a provision that locks in a social benefit incorporation irrevokably, something no other state has.

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Half of Connecticut Residents Want To Leave, But Why?

by Categorized: Economic Development, Economy Date:

There’s a lot of hand-wringing in the Land of Steady Habits over a new Gallup poll that shows just under half of Connecticut residents — 49 percent — would flee their home state if they could.

We come in at No. 2, barely behind Illinois, where exactly half the population dreams of departing.  Lowest on the list are Maine, Montana and Hawaii, where less than a quarter of residents say they’d head for the borders if they could.

Gallup: States Where The Most Residents Would Leave If They Could (%)

  • Illinois 50
  • Connecticut 49
  • Maryland  47
  • Nevada  43
  • Rhode Island 42

Gallup: States Where The Fewest Residents Would Leave If They Could (%)

  • Montana  23
  • Hawaii  23
  • Maine  23
  • Oregon 24
  • New Hampshire  24

The tax-conscious business lobby would have us believe our problem is largely about high levies, regulations and road congestion.  Yes, of course, Connecticut has some of the highest costs, in fact we rank No. 6 overall in cost of living according to the U.S. Bureau of Economic Analysis.

But is that really why 49 percent of people want to leave?  Nope. Hawaii is the most expensive state by far. What we have here is a much more complex picture, a conundrum with a contradiction and a story that might not be so bad for Connecticut.

Thousands of people who head for the exit are hauling their young, professional, mobile butts to Brooklyn, Manhattan, Boston, DC, Seattle, San Francisco and Atlanta — metro areas that are not known for their low cost, and except for Atlanta, are among the most expensive places to exist on the planet.

Having been here for a lot of years, I certainly recall a time when people left for the Carolinas and other low-cost destinations, especially in times when jobs were shrinking. But lately I can hardly think of anyone who left Connecticut other than to stake out a big metro — and that includes several who are well into middle age.

So from that viewpoint it looks like Connecticut’s problem is our lack of urban vibrancy — a major metro area that doesn’t have to fork over $100 million in taxpayer graft to attract apartment dwellers, concert venues and university campuses.

In fact, when we look at the actual numbers of people uprooting from Connecticut to other states, New York is by far the biggest destination. And get this news bulletin: They’re not moving to low-cost Utica or Syracuse.

Click here for a fabulous interactive graphic by Vizynary.com showing migration patterns from every state.

Thus the conundrum. Depending on who they are, people want to flee Connecticut because costs are too high; because urban energy and vibrancy, which usually means higher cost, is too low; because the job they want is elsewhere; because it’s too cold; or because they’re miserable wherever they live. And we can’t do anything for the cold and miserable.

So the issue comes down to value. It’s neither about cost nor urban vibrancy, but rather, how you feel about what you’re getting back in exchange for your $1,800-a-month rent or mortgage payment, your half-hour commute, your 45-hours a week of toil, your hard-earned engineering degree.

States are a poor measure if we want to gauge lifestyle choices. Massachusetts, for example, is 2 percent less expensive than Connecticut according to the federal government measure. But metro Boston, where more people want to be, is more expensive than metro Hartford or New Haven. Likewise, in Illinois, where the highest percentage of people want out, are they eager to abandon Chicago or corn country? Maybe they should just switch places for half of each year.

Connecticut’s problem is this: If you’re willing to live in a 700-square-foot apartment for 40 percent of your income and travel 45 minutes to a job where there are lots of people like you with hip glasses and the whole world is at your sidewalk — there are better places to be than here.

And if you’re willing to live in a region with no great urban centers nearby, where the political and cultural climate is far more conservative but you can buy a big house with a greener lawn or maybe a few acres of woods — there are better places to be than here.

As for the number who told Gallup they are at least somewhat likely to actually pack out in the next 12 months, Connecticut is closer to the middle of the pack — 16 percent, compared with a national average of 14 percent, well within the margin of error.

And as for the actual number of folks who move out compared with the number moving in, Connecticut’s departure rate is far smaller than that of Illinois and New York. It was also a smaller departure rate than Minnesota had in 2012, and that state had only 25 percent who wanted out in the Gallup poll.

Cutting through the clutter of numbers, the Gallup poll measured this, when it comes to Connecticut: A majority don’t think it’s perfect. But for an even larger majority, it could still be very good.

Report: One-Third Of Businesses Affected By Storm Sandy Were Uninsured

by Categorized: Economy Date:

Among small businesses affected by storm Sandy in 2012 and polled by the Federal Reserve Bank of New York, one-third had no insurance and half paid for damages out of personal funds.

The New York Fed polled the businesses in New Jersey, New York city, the Hudson Valley and coastal Connecticut late last year between Oct. 10 and Dec. 3, roughly a year after the storm.

Forty percent of firms reported being affected by the storm, mostly negatively, although 8 percent said they had net financial gains — including some in construction.  Among the one-third of respondents hurt by the storm, “22 percent had losses greater than $100,000,” the New York Fed said in a release Monday.

“The top sources of losses for firms included decreased customer demand (59 percent), utility or service disruption (43 percent), and damage to or loss of assets (29 percent),” the report said.

A breakdown of responses by state or county was not available Monday. New Jersey and New York city were hit much harder than Connecticut and the Hudson Valley.

Among the firms hurt by the storm, 43 percent cited a continued financing need of $25,000 to $100,000. a similar percentage of those helped by the storm cited the same financing need.

 

UConn Parade Raises, Spends $90K; How Much Economic Benefit?

by Categorized: Economic Development, Economy, Entertainment/Tourism Date:

The final tally is in for Sunday’s UConn victory parade in downtown Hartford: Exactly $90,000 raised from 23 corporate sponsors.

And that’s exactly how much the Hartford Downtown Improvement District, the organizing group, will spend, said Mike Zaleski, executive director. As of midday Monday the bills totaled $86,500.

The most important economic effect of the UConn celebration: Cheerleading for Hartford. Dan Haar/The Hartford Courant

The most important economic effect of the UConn celebration: Cheerleading for Hartford.
Dan Haar/The Hartford Courant

The figure is up from $50,000 that Zaleski has set last Wednesday as a minimum needed to mount the celebration, and it’s up from the $70,000 that Gov. Dannel P. Malloy announced as the total early Friday morning.

The added dough enabled the organizers to rent a 20-foot video screen for the rally at the north steps of the state Capitol — for $13,475, delivered from a firm in Philadelphia.

Seems like a lot in an age when large-screen TV’s are dropping in price.  But I was at the event with friends, and one said, “This has a big-time feel.”

And that’s the economic point. Forget the money the 200,000 visitors to the Capital City did or did not spend. That’s small stuff. What makes an economy move is an improvement in how people feel about a region.

This event, one of the few mass-happenings that was truly racially integrated, accomplished that, though it can’t be measured. And it was problem-free except for one guy who fell out of a tree in front of the Hartford Public Library.

Aside from the obvious double championship, part of what made up the “feel” of the parade was a larger event, with 51 marching and rolling units, up from 33 last year, and a shorter route than in the past.

Metro Hartford is an $80 billion-a-year ecosystem of commerce. We don’t have a lot of growth but we do have a lot of wealth.  As we’ve learned, it’s not easy to convert that wealth into energy and positive feelings by the wide population.

In other words: Just as money doesn’t buy happiness, it doesn’t buy the sorts of good feelings that can lead to decisions by people and companies to spend in a region. That takes things like quickly organized parades that have a “big-time feel.”

Here’s the list of corporate sponsors who donated cash. It doesn’t include “in-kind” sponsors such as the Peter Pan bus company.

  • Webster Bank
  • Mohegan Sun
  • Cigna
  • The Travelers Companies, Inc.
  • The Hartford Steam Boiler Inspection and Insurance Company
  • Northeast Utilities
  • United Technologies Corporation
  • AT&T
  • Virtus Investment Partners
  • The Connecticut Buick and GMC Dealers
  • Harvard Pilgrim Health Care
  • Coca-Cola
  • Bank of America
  • The Hartford Financial Services Group
  • Aetna
  • SNY
  • Capital Region Development Authority
  • XL Center
  • CBS Radio
  • Rogo Distributors
  • Peel Liqueur
  • Robinson & Cole
  • Foxwoods Resort Casino

February Report: Slow Progress For Metro Hartford House Sales

by Categorized: Economy, Housing Date:

The frozen month of February brought more slow improvement to the housing market in central Connecticut, not a realization of the high hopes from a strong January report, but progress nonetheless.

The median price was up by 2.7 percent for single-family houses that sold in the 57-town area of the Greater Hartford Association of Realtors, the group said Monday. The number of closed sales 478, was up by nearly 5 percent from the same month in 2013.

The number of new listings rose by 5 percent to 1,055, but the number of days on the market also increased by more than 6 percent, to 82 days.

“It’s encouraging that even with this harsh winter, closed sales continue to rise in our housing market,” said Jeff Arakelian, the association’s president and CEO.

The modest year-over-year price increase, to $194,000, followed a 10 percent jump in January, to $220,000.

All in all, the market heads into the spring season as it has in recent years: with some momentum but no clear sign of a breakout year — other than a prediction by CoreLogic, a California-based firm, that Metro Hartford will be one of the nation’s hot housing markets in 2014.

Plan To Charge Stores For Paying Low Wages: Flawed But Has Merit

by Categorized: Economy, Jobs, Labor, Politics, Poverty, Retail Date:

Connecticut is already one of the three states with the highest minimum wages and it’s the only one with mandatory paid sick days. Now advocates for the working poor are pushing for a novel plan to address the crisis of below-poverty wages: Penalize employers that pay too little.

The controversial plan isn’t in effect in any state and was narrowly defeated in Washington D.C., where Wal-Mart threatened to pull out. The idea is to extract money from low-paying retailers and fast-food companies to help the state compensate for the income supports that low-wage workers receive.

Fair is fair, the logic goes. Why should taxpayers subsidize Wal-Mart, McDonald’s and Dunkin’ Donuts?

Tina Conners, a McDonald's employee in Manchester who lives in her car. Dan Haar/The Hartford Courant

Tina Conners, a McDonald’s employee in Manchester who lives in her car.
Dan Haar/The Hartford Courant

Care to get upset? A recent report by the Connecticut Association for Human Services showed that a family of four with two adults working a total of 60 hours a week at $10 an hour would be eligible for $29,147 a year in public assistance — much of it Medicaid. And that wouldn’t even include the earned income tax credit, which would push the total higher.

That means you the taxpayer are subsidizing you the shopper to the tune of thousands of dollars for every low-wage sales employee. Still feel good about those 12-packs of socks for $6?

Under the Connecticut version of the wage penalty bill, which had a hearing Tuesday before the legislature’s labor committee, any company with at least 500 employees in the state would have to pay $1 per hour per affected worker into state coffers if it paid less than the “standard wage” for its lowest job classification. For a minimum wage worker in fast food, for example, the standard wage is $11.31 an hour — 130 percent of the $8.70 minimum.

The idea has big problems, illustrated in the story of Tina Conners, who’s from Manchester and told lawmakers and Gov. Dannel P. Malloy Tuesday, in a meeting in his office, that she lives in her car.  Conners, 21, works between 10 hours and 20 hours a week  at a local McDonald’s. She’d like to have more hours but can’t get them.

Conners was at the Capitol to push for the low-wage penalty and a higher minimum wage, which Malloy wants. But what she needs more than a slightly higher wage is many more hours. She told me she’d prefer to log 20 to 30 hours a week, leaving her time and money to go to college and eventually, a career as a dentist.

The $1 an hour penalty wouldn’t come close to paying for the public subsidies that we the taxpayers have to shell out for low-wage workers, but it would be a start. And it wouldn’t help Tina Conners add hours to her workweek; if anything, it could lead to fewer hours.

Another problem: Franchisers such as McD’s and Subway are not the employers. No worry, advocates say. Franchisers would be liable even if they didn’t own the stores in question.

Bills like this come up precisely because low-wage employers are abusing the public trust. We as greedy, shortsighted consumers are the ones letting them do it — all the worse in the case of the poison we’re buying and ingesting from the fast food industry.

And so the bill is politically brilliant if only for the point it makes: The fines would not go to the workers, in effect an enforced wage; rather, the money would go back to the taxpayers.  “Politically, it’s a no-brainer. It’s a home run,” said Tom Swan, executive director of the Connecticut Citizen Action Group and a leader of the effort. “Morally, it’s the right thing to do.”

It’s not a home run for the Connecticut Retail Merchants Association and the Connecticut Business and Industry Association, who argue that the bill would raise costs in the state and drive out retailers that pay property taxes and offer opportunity to workers. “Our employers do the best job they can,” said Tim Phelan, president of the retail merchants group.

Well, no, they don’t. He can say that about his small retail members that are just getting by, but not about the big national chains and franchises that are transferring billions of dollars from taxpayers to shareholders by shortchanging workers. McDonald’s employees alone receive $1.2 billion a year in public assistance, an October, 2013 report by the National Employment Law Project showed.

Phelan and CBIA advance the idea that low-wage jobs are entry level. “They provide the learning experience,” said Eric Gjede, assistant counsel at CBIA, the state’s largest business group.

Certainly any specific worker can get ahead, but by definition the system will screw most people, simply because the wage structure at many big retailers is so bottom-heavy.

Both sides flash numbers showing why states should, or should not, force employers to pay higher wages or penalize those that don’t.  But ultimately, the states are just bystanders in a private-sector pay system that creates opportunity for a few and poverty for the many, to the benefit of us the consumers.

Maybe we should try the penalty. Flawed as it is, nothing else is working.

Hospitals Fire Back At Malloy: We Are 9 Percent Of CT Economy

by Categorized: Economy, Health Care, Jobs, Public finance Date:

Fresh from another snub by Gov. Dannel P. Malloy, the Connecticut Hospital Association is waving around a new report that claims its member hospitals account for nearly 9 percent of all economic activity in the state, and that every dollar the state gives them brings $2.33 from the federal government.

The first statement seems hard to believe, though without question hospitals are a huge part any region’s economy, especially the hard-hit cities.  The second statement about federal reimbursement is not exactly true but isn’t always wrong.

The hospital association’s report says the hospitals employ 55,000 people directly, with a direct payroll of $5.3 billion, or $96,000 per job. By spending money in the community, those employees indirectly create another 56,000 jobs for a total of 111,000 jobs, and $11 billion in payroll.

Separately, the hospitals themselves buy goods and services that directly or indirectly create another $8.1 billion in activity, and they spend another $530 million on buildings and other capital projects which multiplies to $1.1 billion in the economy, the report said.

Grand total: $20.2 billion in a state economy that’s $235 billion a year.

That’s a rebuke to Malloy, who, the hospital association says, shorted the hospitals by just over $500 million in Medicaid reimbursements and other costs last spring that they said they would need to keep providing the same level of services.

Then, when Malloy’s budget chief, Ben Barnes, was asked by reporters on opening day at the Capitol last week whether there was anything for hospitals in this year’s proposal, he said simply, “No.”  When pressed, he said he had looked at the state filings and thought the hospitals were doing fine.

They of course disagree.

As for the $20.2 billion, we see a handful of these economic output reports from industries, and this one seems to push toward the high side. For example, I know there are formulas to get there but it’s still not clear to me how a group of employees with $5.3 billion in their pockets can give rise to another group of people who earn $5.7 billion.

Yes, we are all connected in the economy.

And as for the federal reimbursement, the hospital association appears to be referring to the Medicaid formula when it says the federal “match rate” is 70/30. That means for every additional dollar we spend on Medicaid, we get $2.33 back.

But Malloy and Barnes say their plan did not cut back on Medicaid spending, only on the amount the hospitals wanted to receive from the state. They say the $1.7 billion for hospitals is actually up slightly, but of course the hospitals argue that Medicaid spending is up more than slightly.

To be continued this spring at a state Capitol near you.