First quarter 1997 (1Q97)
employment figures compiled
through the ES-202 Covered
Employment and Wages Program,
which provides the largest available
universe of monthly employment
and quarterly wage information,
show that Connecticut is
continuing to gradually regain
employment lost during the "Great
Recession" of the early 1990s.
Connecticut's Unemployment
Insurance covered employment
averaged 1,567,019 during 1Q97,
an increase of 2.6 percent over
1Q96. The 1Q97 increase marked
the third consecutive over-the-year
rise in first quarter employment,
and was the highest figure recorded
for the period since 1990
when total employment averaged
1,616,915. Average employment
in 1Q97 remained five percent
lower than in 1989, when first
quarter employment peaked at 1,648,725.
Comparing 1Q97 private
industry employment to 1Q96
shows that two industry divisions
registered decreases: manufacturing
dipped 0.04 percent, and
finance, insurance, and real estate
declined 0.8 percent. The construction
division showed the
greatest employment gain from
1Q96, expanding 12.9 percent.
Services and wholesale trade
followed, growing 5.6 percent and
3.6 percent respectively. Other
employment divisions showed the
following increases: transportation
and public utilities, 2.5 percent;
mining, 2.1 percent; retail trade,
1.7 percent; and agriculture,
forestry and fishing, 0.9 percent.
A factor that influenced the
year-over-year increase in construction
industry employment
was the relatively mild winter
Connecticut experienced in 1997.
The favorable building conditions
enabled contractors to continue
outside work throughout the early
months of the year as opposed to
1996 when the State was blanketed
with record snowfall. Building
permit figures compiled by the
Department of Economic and
Community Development illustrate
this point. The 1,858 new residential
housing units authorized for
construction during 1Q97 represented
a 44.9 percent increase
from the 1,282 units authorized in
1Q96. Construction contracts in
February 1997 also increased 23.8
percent from February 1996.
A look at major industry groups
with average employment of 1,000
or more during 1Q97 reveals that
business services showed the
greatest number growth from
1Q96, increasing by 8,610. Included
in business services is help
supply services, establishments
primarily engaged in providing
temporary or continuing help on a
contract or fee basis. Help supply
services registered an increase of
3,820 in average employment from
1Q96. Establishments that
provide temporary or continuing
help are becoming increasingly
significant in Connecticut. Employment
in help supply services
grew 30.4 percent from 1Q89,
while the number of establishments
increased 40.6 percent.
Quarterly Wages
During 1Q97, the average
weekly wage for all industries
increased 4.9 percent from 1Q96,
$746 compared to $711. The
weekly wage figure for private
sector industries increased 5.7
percent to $750. At $725, the
weekly wage for public sector
industries decreased 0.2 percent
from 1Q96.
All private industry divisions
showed increased average weekly
wages in 1Q97 compared to the
same period the prior year. With a
weekly average wage of $1,430, the
finance, insurance and real estate
division had the largest percentage
increase over 1Q96, 14.6 percent.
Manufacturing had the next
highest percentage increase at 6.9
percent and wholesale trade was
third, 4.3 percent. Table on the
front page displays weekly wages
in Connecticut by industry division
for 1Q97 and 1Q96.
Employment By Size Of Establishment
While 1Q97 total employment
remained five percent below the
level reached in 1Q89, the number
of establishments grew 3.2 percent.
A review of total employment
figures by employer size reveals
that employment in smaller establishments
has increased, while
employment in establishments
classified in larger size classes has
registered a notable decline. For
comparative purposes, 1Q89
employment by establishment size
data is utilized. One reason for
choosing 1Q89 is that first quarter
average employment peaked
during that period. Therefore, it is
interesting to see how employment
characteristics have evolved in
relation to the height of the State's
economic prosperity. A second
reason is that beginning in 1989,
the U.S. Bureau of Labor Statistics
placed increased emphasis on
collecting employment data on a
worksite basis. Worksite data
provides a more accurate assessment
of employment by size of
establishment. Comparing current
employment by size of establishment
data to periods prior to 1989
could give a misleading representation
of employment trends by the
size of establishment.
In March 1997, employment in
the four smallest size groupings
increased compared to March
1989. Employment in establishments
with less than five employees
showed the greatest percentage
increase from March 1989, expanding
9.6 percent. The number
of establishments in this size
classification grew 3.4 percent.
Establishments with less than five
employees accounted for 59.6
percent of total establishments in 1Q97.
Conversely, the three largest
size classes showed decreased
employment compared to March
1989. With a 22.4 percent decrease,
establishments with 1,000
or more employees showed the
greatest reduction. The
number of establishments
with 1,000 or more employees
dropped 19.5 percent.
In 1Q97, establishments
with 1,000 or more employees accounted
for only 0.1 percent of total establishments.
An analysis of wage data by
size of establishment reveals that
during 1Q97, the average weekly
wage in establishments with less
than five employees was $648,
13.1 percent below the weekly
wage for total covered industries.
The average weekly wage in establishments
with 1,000 or more employees was $978, 31.1 percent
higher than the weekly wage for
total industries and 50.9 percent
higher than the average weekly
wage in establishments with less
than five employees.
Clearly, the expansion of small
business establishments has
contributed significantly to Connecticut's
rebounding employment. It is also clear
that the employment opportunities small
establishments offer are vital to
Connecticut's economic stability. However, it is
disconcerting that the employer size class that
pays the highest weekly wage is also the one
showing the largest employment decreases.
Will the employment opportunities
small businesses offer be substantial
enough to compensate for the
diminishing positions in larger
establishments? Time will tell.
A new list of labor surplus
areas was recently released
by the U.S. Department of Labor,
Employment and Training Administration.
In effect from October 1,
1997 through September 30, 1998,
it includes the following 21 Connecticut
municipalities: Ansonia,
Bridgeport, Derby, East Hartford,
Hartford, Killingly,
Meriden, Middletown, New
Britain, New Haven, New
London, Norwich,
Plainfield, Plymouth,
Putnam, Sprague, Sterling,
Voluntown, Waterbury,
Winchester, and
Windham. This is the
first time since 1979 that
Middletown is on the list;
in contrast, the town of
Winchester has the
distinction of being listed
during 14 of the last 19 years.
The main objective of classifying
labor surplus areas is to direct
federal procurement contracts
toward areas that have experienced
high unemployment. Employers
located in such areas are
then eligible for preference in
bidding on federal government
contracts. Additionally, to aim
federal contract dollars more
precisely to locations experiencing
high unemployment, labor surplus
areas are determined on the basis
of civil jurisdictions (counties or
cities and towns with a population
of 25,000 or more) rather than on
the broader metropolitan or labor
market area basis.
The concept of classifying labor
surplus areas dates back to the
early 1950s. It was intended to
address concerns that high unemployment
rates and under-utilization
of plants and equipment in
some regions would lead to erosion
of the mobilization base and
adversely affect essential production
during the Korean War. Labor
surplus areas were at first determined
on a monthly basis, then
quarterly, and finally on an annual
basis beginning in June 1979.
Criteria for selection, as well as
area definitions, have also undergone
a number of legislative and
regulatory changes over the years.
The U.S. Department of Labor's
primary role has been to determine
the areas that qualify, and to
disseminate the list of labor
surplus areas to State Employment
Security Agencies via the
Area Trends in Employment and
Unemployment publication. Area
selection depends primarily on
national (for this purpose, the
national rate includes Puerto Rico)
and local area unemployment
rates during the prior two calendar
years, where the local area's
average unemployment rate for the
period must have been at least 20
percent above the national average.
In order to qualify for the
current list, an area's average
unemployment rate needed to be
at least 6.7 percent during the
period from January 1995 through
December 1996; the national
average unemployment rate was
5.6 percent for that period.
The U.S. Department of Labor,
at its discretion, may waive the
eligibility criteria in areas where a
sudden, unforeseen rise in unemployment
has occurred which is
not temporary or seasonal, and is
not reflected in the area's average
unemployment rate during the
reference period. The exceptional
circumstance criteria include
natural disasters, plant closings,
contract cancellations, etc., that
can have a substantial impact on
an area's unemployment. The
State Employment Security Agency
must then submit a petition
requesting such classification to
the U.S. Department of Labor's
Employment and Training Administration,
providing documented
information that the area meets
the current conditions and that
the exceptional circumstance event
has already occurred.
As the chart indicates, no
Connecticut areas were listed
during the three years beginning
October 1988, 1989 and 1990,
when statewide unemployment
rates on which eligibility was
based averaged below 4.0
percent during calendar
years 1986 through 1989.
Since then, the list has
included as many as 25
municipalities (during the
two years beginning
October 1993 and 1994),
the largest number of
Connecticut areas since 1979.
The current list includes
1,406 labor surplus
areas nationwide, up from
last year's total of 1,370. Only two
states (Delaware and Iowa) were
determined to have no qualifying
areas. California has the largest
number of areas, 146 in 1997.
Among New England states,
Massachusetts has the largest
number of labor surplus areas
listed; Connecticut is second.
Commissioner James F.
Abromaitis of the Connecticut
Department of Economic and
Community Development announced
that Connecticut communities authorized 852
new housing units in October
1997, a 14.2 percent increase
compared to October of 1996
when 746 were authorized.
The Department further
indicated that the 852 units
permitted in October 1997
represent an increase of 15.1
percent from the 740 units
permitted in September 1997.
The year-to-date permits also are
up; 22.6 percent, from 6,418
through October 1996, to 7,871
through October 1997.
"The housing sector is enjoying
significant strength," Commissioner
Abromaitis said. "The year-over-year increase in permits
indicates that long-term economic improvement is continuing."
Reports from municipal
officials throughout the state
indicate that Middlesex County
with 53.5 percent showed the
greatest percentage increase in
October compared to the same
month a year ago. Tolland
County followed with a 41.7
percent increase.
Hartford County documented
the largest number of
new, authorized units in October
with 236. Fairfield County
followed with 171 units and
New Haven County had 152
units. Southington led all
Connecticut communities with
45 units, followed by Avon with
33, and Shelton with 31.
The Connecticut coincident
and leading employment
indexes continue to sing an upbeat
tune about the current and
expected future states of the
Connecticut economy. The coincident
index, a barometer of current
employment activity,
reached another new peak with
the release of (preliminary)
September data. The recent
upward movement in the coincident
index indicates a much
stronger recovery than in the first
part of the current expansion
The leading index, a barometer
of future employment activity,
continues its modest upward
trend at a slower pace than the
coincident index. The leading
index also reached its peak in the
current expansion with the
release of the (preliminary)
September data. We will continue
to monitor carefully the leading
index as any sustained downward
movement in this index may
signal the next downturn in the
Connecticut economy.
As we write this report, the
stock market has recently celebrated
the 10th anniversary of
the October 1987 crash with an
over 500 point one-day drop in
the Dow Jones Industrial Average.
This one-day decline, although
large in absolute terms,
was not so big on a percentage
basis. That is, the October 1987
one-day fall in the Dow was
almost 24 percent. The one-day
drop in October 1997 was under
7 percent. The notable feature in
the recent stock market gyrations
was the low-key reaction of
Chairman Greenspan and the
Federal Reserve. In October 1987,
Greenspan immediately made a
public statement, pledging that
the Federal Reserve was ready to
provide any required liquidity.
The nearly non-response in 1997
indicated that Greenspan and the
Federal Reserve are not too
concerned about the current and
expected future state of the
national economy. If their view is
accurate, then this is good news
for the Connecticut economy.
In summary, the coincident
employment index rose from 85.6
in September 1996 to 93.0 in
September 1997. All four index
components continue to point in
a positive direction on a yearover-
year basis with higher
nonfarm employment, higher
total employment, a lower insured
unemployment rate, and a
lower total unemployment rate.
The leading employment index
rose from 89.4 in September
1996 to 90.1 in September 1997.
Three index components sent
positive signals on a year-overyear
basis with a lower shortduration
(less than 15 weeks)
unemployment rate, lower initial
claims for unemployment insurance,
and higher Hartford helpwanted
advertising. The other
two components of the index sent
negative signals with a lower
average workweek of manufacturing
production workers and lower
total housing permits on yearover-year basis.
Source: Connecticut Center for Economic Analysis, University of Connecticut. Developed by Pami Dua [(203) 461-6644,
Stamford Campus (on leave)] and Stephen M. Miller [(860) 486-3853, Storrs Campus]. Kathryn E. Parr [(860) 486-0485, Storrs
Campus] provided research support.
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