After three years of surveying employers to classify
their business activity using the North American Industry Classification
System (NAICS) principles, the Connecticut Department of Labor and
the U.S. Bureau of Labor Statistics (BLS) have completed the conversion from the
Standard Industrial Classification (SIC) system. Beginning with data for 2001,
employment and wages covered by unemployment insurance will be compiled under
NAICS. To help our data users make the transition from SIC to NAICS, the
Connecticut Department of Labor will also compile 2001 data using the SIC
system. The 2001 national data series compiled by BLS, however, will be on a
NAICS basis only.
The following table on page 3 shows Connecticut's
employment compiled by major industrial grouping under the two classification
systems. These principles should be kept in mind as you review the data:
1. The NAICS is a production-oriented system.
Production units that use identical or similar processes are grouped together.
The SIC groups businesses by their end products and services.
2. NAICS industry sectors were developed giving
attention to new and emerging industries, service industries in general, and
industries engaged in the production of advanced technologies.
3. There are twenty NAICS industry sectors
identified with a six digit numerical code, compared with ten SIC major
industry divisions that used a four digit numerical code.
4. Although time series continuity was maintained
wherever possible, there will be breaks in series with the implementation of
Recognizing the expansion and growing economic
importance of the Service industries, NAICS provides a more detailed picture of
these industries than was possible under SIC. Forty percent of Connecticut's
employment is classified as in the Service industry division under SIC. Using
the production-oriented principles of NAICS, some business activities that were
not considered service activities under SIC are now classified in one of the
nine NAICS service sectors. In addition, the corporate headquarters of companies
are now classified as service activities under NAICS. Formerly, under SIC these
business establishments were classified according to the business activity of
the enterprise they served. Collectively, the nine NAICS service sectors make up
one half of Connecticut's employment. Of the service sectors, Healthcare and
Social Assistance (13.7%) and Educational Services (9.1%) account for the
largest shares of statewide employment.
Impact on Industry Employment
This shifting of employment to service sectors under
NAICS results in declines in other sectors of Connecticut's economy. The
biggest effect is in Retail Trade with the reclassification of restaurants and
other food service into the service sector. Under NAICS, Retail Trade makes up
11.6 percent of total employment compared with 16.6 percent under SIC.
Changes in the definition of Wholesale Trade
establishments result in a small decline (4.8% down to 4.1%) in this sector's
share of total employment under NAICS. Retail Trade and the service sectors
picked up most of these reclassified firms.
The SIC industry division Transportation,
Communications and Public Utilities (5.6% of total employment) is broken out
into two sectors, Utilities, and Transportation and Warehousing, which combine
to make up 3.9 percent of employment under NAICS. The communications component
has been moved to the NAICS Information Services sector. This sector, which also
received Publishing from the SIC manufacturing division, accounts for 3.0
percent of employment. Manufacturing's share of total employment drops from
15.8 percent under SIC to 14.1 percent under NAICS.
Landscaping and Veterinary Services are treated as
service activities under NAICS, rather than agricultural as under SIC. In
Connecticut, with limited agricultural activities, the result is a significant
decline in the number of firms (-88%) and employment (-70%) classified as
agricultural under NAICS.
The proportion of total employment remains about the
same for the remaining industry groups under NAICS. Although Finance, Insurance
and Real Estate is broken out into two sectors under NAICS, combined they
continue to represent 8.7 percent of total employment. Construction (3.8%) and
Public Administration (3.7%) also retain the same portions of total employment.
Mining continues to make up a very small part of the State's employment.
Impact on Industry Wages
Industry wage studies will also be enhanced under NAICS,
especially in the important service sectors. The detailed breakout of services
under NAICS gives a much clearer picture of the range of wages paid in these
sectors, from a low of $289 in Accommodation and Food Services to a high of
$2,228 for Management of Companies and Enterprises. Under SIC, the average
weekly wage for Services is $755.
The change in classification of corporate headquarters
and administrative offices into the service sectors should also help to improve
wage analyses in the other sectors, as their occupational make-up is different
than that of the operating establishments. In addition, it should also help
eliminate some of the problems associated with executive bonuses that tend to
skew wages upward. This effect is most apparent in Mining, a small industry in
Connecticut that shows an average weekly wage of $1,245 under SIC that drops to
$857 with the move of corporate headquarters out of the division.
The breakout of Transportation, Communications and
Public Utilities also results in a clearer picture of wages in those industries.
Under SIC the average weekly wage is $1,035, while separately the average weekly
wages paid range from $1,754 for Utilities and $747 for Transportation and
Warehousing workers. The breakout of Finance, Insurance and Real Estate, with an
average weekly wage of $2,561, into two sectors also highlights the difference
in wages paid, from $2,752 in the Finance and Insurance sector to $880 in Real
Estate, Rental and Leasing.
The restructuring of industry groups under NAICS
results in a decline in the average weekly wage for manufacturing by $90, but an
increase of $74 in retail trade. The remaining industry groups show slight
changes in average weekly wage under NAICS. Agriculture, Forestry and Fishing
and Public Administration wages are slightly lower, while Construction and
Wholesale Trade are somewhat higher.
Eventually, all industry data will be produced based on
NAICS. Our monthly nonfarm employment estimates will be made using the new
industry classification structure beginning in January 2003. Data on
occupational employment and mass layoffs will, in time, also use NAICS. The
transition period is likely to present some challenges. Despite plans to
reconstruct data time series under NAICS, in some cases, the NAICS changes are
so significant that developing historical data on the new system will be
difficult and there will be breaks in many time series. In the long run,
however, the implementation of NAICS will allow us to present a more accurate
picture of Connecticut's changing economy. We plan to highlight some of these
new industry sectors in future issues of The Connecticut Economic Digest.
For an explanation of how the Bureau of Labor
Statistics is implementing NAICS in its statistical programs and a look at
national employment and wage data under NAICS, please see the articles,
"Implementing the North American Industry Classification System at BLS,"
and "A First Look at Employment and Wages using NAICS," in the
December 2001 issue of the Bureau of Labor Statistics' publication, Monthly
Labor Review, at http://stats.bls.gov/opub/mlr/mlrhome.htm.
In the Beginning
Every large city in Connecticut had at least one of them, a huge
manufacturing complex. The site would encompass hundreds of acres. The
operations would often run around the clock, twenty-four hours a day, seven days
a week, 365 days a year. Every resident of that city worked or had a relative
who worked at that complex. The companies manufactured products that were
essential to the nation and even the world. Aircraft, submarines, ball bearings,
military weapons, instruments and timepieces were just some the goods that were
rolled off the assembly lines of these factories. From the latter part of the
nineteenth century through most of the ensuing hundred years, these sprawling
complexes were the engines that drove the local economy and in many cases became
the host city's identity.
In the last three decades, though, circumstances changed. The end of the cold
war led to large decreases in defense spending. New technologies came about that
rendered old operations inefficient and/or impractical. Manufacturing operations
that remained were either greatly reduced or shipped out of state, or in some
cases, out of country for a wide variety of reasons. At the same time, better
roads, increased numbers of automobiles and suburban development led many
individuals and families to move out of the cities and into the suburbs. Many of
the old factories were therefore forced to go out of business. The cities were
then faced with a problem: what to do with these huge structures?
It was initially thought that there was little use for these complexes; after
all, manufacturing operations were down all over. Some of the buildings were
marketed solely for manufacturing, and in some cases small factories moved into
some of these large structures. As a whole, this approach did not work. The
cities were then stuck with these properties that were not generating tax
revenue or creating jobs. Another problem was that to attract non-industrial
businesses to these properties would entail massive clean-up costs that were
thought to be prohibitive. These factors created huge challenges.
The above mentioned occurrences led to unique collaboration between business
and all levels of government - federal, state and local. Clean-up costs were
shared and payment schedules were leveled off. The private and public sectors
then went about the business of trying to make these old facilities useful and
profitable again. Among the first projects was the reclamation of the Olin
building in New Haven. Behind the efforts of business and government came
Science Park. This facility, now more than twenty years old, is the home of more
than one hundred small companies in an incubator type setting. These companies
are all start-ups and are run by medium income level individuals. The companies
utilize a centralized staff, which handles all of the administrative functions.
Employees of the companies are residents of the neighborhood where Science Park
In 1997, the Brass Mill Center mall opened in Waterbury with more than 2,000
employees. This shopping mall is built on a former manufacturing complex which
many thought would be unusable for future business. In 1998, the former Jenkins
Valve site in Bridgeport was transformed into Harbor Yard, home of the
Bridgeport Bluefish baseball team. This stadium has drawn over one million fans
in just three years, and in October 2001, this site welcomed professional hockey's
Bridgeport Sound Tigers in the adjacent Bridgeport Arena.
In the summer of 2000, the old Veeder Root plant in Hartford became the site
of the seventeen-screen Crown Theater complex. In the fall of 2000, the former
Farrel operation in Derby became the home of a massive shopping plaza featuring
a Home Depot, creating hundreds of jobs. In June of 2001, the Pfizer
pharmaceutical company opened a 750,000 square-foot biomedical research facility
on a 22-acre former "brownfield" site on the Thames River in New
London. The area had been used for various industrial purposes in the past
century before Pfizer undertook its environmental remediation. Anyone driving
through East Hartford can see the construction of the football stadium for the
University of Connecticut. This site was the former location of the airport for
Pratt and Whitney Aircraft. These examples demonstrate how a joint effort
between the private and public sectors can lead to old, unused and unwanted
properties being transformed into entirely new enterprises, leading to increased
sales, tax revenues and jobs. The successes of these undertakings are leading an
ever increasing number of businesses to invest in similar properties.
Connecticut's old industrial complexes are not withering on the vine; they are
being reborn with grand plans and bright futures.
Connecticut's government sector employment has been growing along with the
private sector's over the years. Yet its share of total employment has not
really changed from a quarter of a century ago. This sector's employment made
up about 13 percent of the total for all industries - federal jobs, one percent;
State, four percent; and local, eight percent, in 2000 - essentially the same
proportion as in 1975.
This article will highlight government's employment and wage trends for the
State and counties, drawn from data collected from all employers registered with
the Unemployment Insurance (UI) program. Unlike the nonfarm employment estimates
developed monthly from a sample of employers, this source classifies Indian
tribal business employment, including casinos, in the private, rather than
Since 1975, overall government employment has grown significantly,
particularly at the State level (chart). Dramatic increases in the number of
jobs occurred in the mid-eighties. Then, employment fell in the early nineties,
during the statewide recession, before rebounding to its present level. Federal
government jobs increased and then declined to about the 1975 level. Local
government employment increased 22 percent between 1975 and 2000, but the
largest job gain in the last 25 years has been at the State level with a 37
percent increase. However, it is worth repeating, their shares of total State
employment in 2000 were roughly the same as they were in 1975.
Since 1996, the private sector's employment has increased 7.4 percent
(Table 1). The overall government sector in Connecticut gained jobs also, but
slightly below at 6.8 percent. The federal government actually reduced jobs
during the 1996-2000 period (-0.8 percent), mainly due to the shutdown of FDIC
offices that were set up during the banking crisis in the early nineties. Local
government, on the other hand, added jobs faster than the private sector, with
an increase of 9.5 percent.
All but New London County gained jobs between 1996 and 2000 (Table 2). The
fastest growth occurred in Tolland County, while the largest growth in the
number of jobs occurred in New Haven County. Hartford County had the largest
number of employees, accounting for nearly one third of total government jobs in
As Table 1 also shows, government's pay increase was slower than the
overall private sector's from 1996 to 2000. In 1996, the annual average wage
per worker in all of government was higher than the wage in the private sector,
led by the federal government sector. But by 2000, the private sector wage
surpassed that of government. In fact, the average annual wages of workers in
all levels of government were below the private sector's in 2000.
All the counties posted increases in annual average wages of government
employees since 1996, with Middlesex County leading the growth rate. In 1996,
Fairfield County government employees were paid the highest average wage of
$39,629, but Hartford County topped at $44,024 in 2000. In both years, Windham
County workers averaged the lowest wage rate.
The Governor's campaign
promoting Connecticut as a high-tech "hot spot," worthy of
California's Silicon Valley and Boston's Route 128, was announced in
December along with a new Office of BioScience. As part of Connecticut's
effort to boost the bioscience industry, the campaign highlights both the
bioscience and information technology (IT) industries that exhibit strong growth
in the State. Bioscience research and development expenditures alone exceed more
than $3 billion. The campaign extends the You Belong in Connecticut
The new Office will be one of the first in the country and led
by Harry H. Penner, Jr., former President and CEO of Neurogen Corporation,
former Co-Chair of CURE, and currently Vice Chair of the Board of Governors of
Higher Education and Chair of Rib-X Pharmaceuticals Inc. of New Haven. Housed
within DECD, the Office was catalyzed by participation in projects such as BIO
2002, the largest biotechnology event in the world.
Serving as full-time staff in the new office will be Kevin
Crowley, currently DECD Director of Business Recruitment. Gary Wilson,
Ph.D., CURE Managing Director, Scientific Programs and formerly Director of
Science and Technology for the North American Pharmaceutical Division of Bayer
Corporation, will serve the office on a part-time basis.
Commissioner James F.
Abromaitis of the Connecticut
Department of Economic and
Community Development (DECD)
announced that Connecticut
communities authorized 636 new
housing units in December 2001,
a 6.4 percent increase compared
to December of 2000 when 598
units were authorized.
The Department further
indicated that the 636 units
permitted in December 2001
represent a decrease of 9.9
percent from the 706 units
permitted in November 2001.
The year-to-date permits are
down 0.6 percent, from 9,311
through December 2000, to
9,254 through December 2001.
"Despite a slowdown in the
overall economy, housing permits
totals for 2001 showed remarkable
resiliency by nearly keeping
pace with 2000 levels," said
DECD Commissioner Abromaitis.
Half of the ten labor market
areas demonstrated increases in
new housing authorizations
compared to a year ago. At yearend,
Stamford led all Connecticut
communities with 394 units,
followed by Norwalk with 328
and Danbury with 236.
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