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Long considered as having a
manufacturing driven
economy, the Waterbury area
began to undergo some major
changes during the eighties. It
was during that decade that long
established companies such as
Century Brass, Scovill, Timex
and the Anaconda American
Company either greatly reduced
their workforce or shut their
doors completely leaving thousands
of workers jobless. Even
though this was devastating to
the local economy, the area still
was able to hold its own during
the mid to later eighties. Construction,
retail trade and the
service industry were thriving.
Area residents were still able to
shop at modern malls and shopping
centers such as the
Naugatuck Valley Mall and the
Colonial Plaza; people could take
in a minor league baseball game
at Municipal Stadium; and due to
employee stock options many
manufacturing firms were able to
remain in production. In 1989,
almost 88,000 jobs existed in the
Waterbury Labor Market Area,
with one-third of these being in
the manufacturing industries.
Point Of No Return
The recession of the early
nineties would be devastating for
the area and the "Brass City" in
particular. Between 1989 and
1992, approximately 10,000 area
jobs were lost, with half of these
being manufacturing jobs. Last
ditch efforts to save the old
factories failed, leaving employees
not only without a job but also
minus the money that they
personally invested in many of
these businesses to help keep
them afloat. It was also during
this time that declining business
led many downtown and suburban
retail merchants to shut
their doors, which in turn led to
the neglect of many of these
properties. Mall and shopping
center operators were in such
desperate straits that in order to
entice merchants, leases were on
a month-to-month basis. Despite
these efforts, empty stores were
still the norm. After years of
disrepair, the Eastern League
pulled their baseball team out of
Waterbury. The area had major
problems. The sites where the
old factories stood were virtually
useless to developers because of
the astronomical environmental
clean-up costs. In 1992, the area
unemployment rate reached 10.9
percent, while in the city of
Waterbury, the rate would top out
at 12.3 percent of the labor force.
People were also leaving the area.
By 1994, close to 2,000 fewer
people were residing in the
Waterbury area than in 1989. An
even more somber statistic,
however, occurred in the city of
Waterbury where the population
decreased by 4,000 during this
five year period. Making matters
worse were a municipal corruption
scandal that engulfed the
city of Waterbury, and the
shutting down of local train
service.
The Transformation
When it seemed that the area
had reached the point of no
return, the economy began to
turn around, helped by efforts
involving both the private and
public sectors. Waterbury-based
Centerbank began the new show
of faith by acquiring North Carolina-
based First Union Bank.
This initially led to layoffs in a
financial industry that had
already lost 600 employees, but
in the past two years alone 500
new jobs have been created.
Within the past year, strong
volunteerism has enabled the
Naugatuck Railroad to resume
operations on a limited basis. If
successful, this long abandoned
route of transportation will be
expanded. Government employment
has regained almost all of
the 600 jobs lost earlier in the
decade, as jobs have increased at
Naugatuck Valley Community-
Technical College and at the
Waterbury-based branch of the
University of Connecticut. A new
courthouse is being built on the
site of the former Anaconda
American building and a new
office building is under construction
for the Department of Public
Works. In addition to being a
source of hundreds of construction
jobs in the area, these state
projects, which carry a $52
million price tag, will provide
future jobs in state government.
As a result of financing by the
city of Waterbury and the state of
Connecticut, two million dollars
were committed to the renovation
of Waterbury's Municipal Stadium.
The end result of this
effort was the birth of the Waterbury
Spirit professional baseball
team in the Northeast League. At
the end of their first season of
operation, over 30,000 fans had
come through the gates to watch baseball.
The single biggest happening
in the Waterbury area, however,
occurred at the 90 acre site that
formerly housed the Scovill
Manufacturing Company. Facing
a costly environmental cleanup,
the city of Waterbury along
with the state of Connecticut and
the United States Environmental
Protection Agency jointly financed
this operation. It was at this
point that General Growth Corporation
proposed building a major
shopping mall at this site, strategically
located off Interstate 84.
The Brass Mill Center Mall which
opened in September 1997 has
more than 2,500 employees
working at 150 stores which
include national retailers and
restaurants such as Old Navy,
J.C. Penney, Ruby Tuesday, Toys
R Us, Littman Jewelers and
Bertucci's along with a 12-screen
Hoyts Cinema. This explosion in
retailing has also led to the
construction of the Brass Mill
Commons Shopping Plaza, which
means additional stores and jobs.
Brighter Future Ahead
Even without the mall, the
Waterbury area has been rebounding.
More than half of the jobs lost during the recession
were already regained by June
1997, including 1,000 new construction jobs and 1,000 new
wholesale and retail trade positions.
The service industry actually expanded during the
recession and employment in the
sector has grown by 3,000 during
this decade. The unemployment
rate in August 1997, has gone
down to 5.2 percent in the area
and 6.4 percent in the city of
Waterbury, a far cry from the
double-digit rates of just a few
years ago. Also promising is the
fact that people are coming back
to live in the area. In the last two
years, 1,000 people have returned
to the city of Waterbury and an additional 1,000 are
projected to reside in this city by
the turn of the century. Population
in the Labor Market Area has
also increased by 4,000 during
the last two years, with an additional
8,000 projected to live in the area by the year 2000. The
jobs are back, the people are
back and the economy is back.
The start of the twenty-first
century looks very promising
indeed for the Waterbury area.
The computer services industry
in Connecticut has been
growing rapidly since the start of
this decade. From 1990 to 1996,
this dynamic and everexpanding
industry's employment grew by 82 percent,
adding almost 9,000 jobs. Workers in that
industry also were paid well, with an annual average
salary of $60,555 in 1996, considerably higher
than the $36,590 average for all nonfarm workers.
In each of the last six years, the computer services
industry has been adding jobs in
both the nation and Connecticut.
Connecticut's job growth rate was
above the nation's during 1991
and 1992. Even though 1991
was the worst year of the latest
recession in the State, the computer
industry countered the trend with an almost 10 percent
job growth that year. U.S. employment
then grew faster during 1993 and 1994, but the State
came back stronger in 1995 and 1996. Overall, between
1990 and 1996, Connecticut's computer
services industry employment
grew 82 percent, much faster than the
nation's 58 percent growth.
The computer services
industry is a small but
rapidly increasing part of
the services sector. Its
employment made up 2.6 percent of
total services sector employment
in 1990, but it grew to 4.2
percent in 1996 to a workforce
almost 20,000. The extent of
growth in both employment and
wages in the computer services
industry is uncanny. Between
1990 and 1996, Connecticut lost
almost 55,000 jobs, or 3.4 percent,
while experiencing a 26.3
percent increase in wages (during
which time inflation grew 16.6%).
The total services sector, on the
other hand, gained 14.8 percent
in jobs and 25.8 percent in
wages. During that same period,
the computer services industry
experienced a whopping 82.1
percent rise in jobs, and an
explosive 43.7 percent growth in wages.
Looking at the components of
the computer services industry,
the largest number of new jobs
since 1990 occurred in the other
computer related services sector
(+4,700, +225%). This sector's
growth reflects the great increase
in the number of computer
consultants and data base developers.
Computer programming
services came in second in most
jobs created (+2,370, +131%).
However, computer rental and
leasing (-16%), and computer
maintenance (-24%) businesses
actually shrank as the sharply
declining cost of computers
enabled more and more consumers
to buy rather than lease or
fix. Employees in these industries
had the highest wage rate,
though, close to $100,000 a year.
The fastest growth in wages since
1990 transpired in other computer
related services category (+50%),
while the weakest growth was in
computer maintenance (+9%).
Data preparation and processing
industry workers were paid the
lowest annual wage of $34,542 in
1996, which was still above the
total services industry average of
$32,300.
Computer services is a relatively
young industry that has experienced rapid growth in
employment and wages in the
last six years. As computers are
increasingly relied on by individuals
and businesses, the demand for computer services
should continue to be high. The
Connecticut Labor Department
projects this industry's employment
to grow by 19 percent by
2005, faster than the total services
and the all industries' rates
of 14 and 9 percent, respectively.
Commissioner James F.
Abromaitis of the Connecticut
Department of Economic and
Community Development announced
that Connecticut communities
authorized 740 new
housing units in September 1997,
a 3.2 percent increase compared
to September of 1996 when 717
were authorized.
The Department further
indicated that the 740 units
permitted in September 1997
represent a decrease of 6.6
percent from the 792 units
permitted in August 1997. The
year-to-date permits are up 23.7
percent, however, from 5,672
through September 1996, to 7,019
through September 1997.
"The 23 percent rise in permits
from last year suggests that the
housing sector continues to enjoy
significant strength," Commissioner
Abromaitis said, "Connecticut's economy is strong
and growing and we will certainly
conclude 1997 with the largest
percentage increase in permits in
recent years."
Reports from municipal officials
throughout the state indicate that
Middlesex County with 67.4 percent showed the greatest
percentage increase in September
compared to the same month a year ago. Fairfield County
followed with a 44.2 percent increase.
Fairfield County documented
the largest number of new,
authorized units in September
with 173. Hartford County
followed with 161 units and New
Haven County had 130 units.
Danbury led all Connecticut
communities with 25 units,
followed by Hartford with 23,
and Stamford with 20.
The Connecticut coincident
and leading employment indexes continue an upward
pattern begun about one-and-ahalf-
years ago. The coincident
index, a barometer of current
employment activity, exhibits
healthy growth compared to the
earlier part of the current recovery.
The most recent observation
represents another new peak in
the current expansion. The
recent upward movement in the
coincident index now matches
more closely its movements in
prior recoveries, unlike the first part of the current
expansion.
The leading index, a barometer
of future employment activity,
continues to move up and down, although overall it maintains
a modest upward trend. The leading index also reached its
peak in the current expansion
with the release of the (preliminary)
August data. As mentioned last month, we 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 noted previously on these
pages, the recovery of the Connecticut
economy relies on the
strength of the national recovery.
Connecticut's recovery from the
last recession lagged behind the
national recovery for several
years. More recently,
Connecticut's recovery has
gained much more strength. Can
this continue? Some economy
watchers argue that the U.S.
economy has entered a "new era"
- low unemployment, low inflation,
low interest rates, and
healthy corporate profits. These
new-era optimists foresee a
bright economic future. The
Federal Reserve, however, keeps
close watch for any sign of inflation.
If and when such a sign
emerges, the Federal Reserve will
apply the monetary brakes and
the Connecticut economy may go
into a skid.
In summary, the coincident
employment index rose from 85.8
in August 1996 to 92.7 in August
1997. All four index components
continue to point in a positive
direction on a year-over-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 88.6 in August 1996 to
90.0 in August 1997. Four index
components sent positive signals
on a year-over-year basis with a
lower short-duration (less than
15 weeks) unemployment rate,
higher total housing permits,
lower initial claims for unemployment
insurance, and higher
Hartford help-wanted advertising.
Finally, the fifth component of
the index, the average workweek
of manufacturing production
workers, sent a negative signal as
it fell on year-over-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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