UI Covered Employment Approaches a Record Level
By Edward T. Doukas Jr., Research Analyst

Connecticut employment covered by unemployment insurance (UI) (see sidebar on page 2) increased 29,181 during 1999, a growth rate of 1.8 percent. The State's over-the-year increase fell short of the 1997-98 growth of 2.2 percent, but marked the seventh consecutive year of expansion following the recessionary period of the early 1990s. The employment figure posted for 1999, 1,652,315, was only 0.6 percent below the average of 1988, 1,662,044, when Connecticut's annual average UI covered employment reached its peak. Total private industry employment increased 1.5 percent while government employment rose 4.2 percent in 1999.

The average annual wage of Connecticut workers was $42,647 in 1999, a 4.2 percent increase over the previous year. Private industry workers, comprising 87.4 percent of the State's employment, recorded an average annual pay of $43,077, up 4.8 percent.

Employment

Among the nine major industry divisions, only manufacturing and wholesale trade experienced decreased employment during 1999 (see chart below). Employment in the manufacturing sector dropped 8,585 or 3.1 percent; durable goods employment decreased 7,596 or 3.9 percent and nondurable goods jobs fell 991 or 1.2 percent.

Reviewing employment figures at the two-digit Standard Industrial Classification (SIC) level shows transportation equipment manufacturing (SIC 37) had the most substantial decline in annual average employment, down 1,994 or 4.0 percent. Despite this decline, transportation equipment manufacturing still accounted for 18 percent of all manufacturing employment, the most of any two-digit industry group. The second largest manufacturing decline was found in industrial machinery & equipment (SIC 35), down 1,886 or 5.4 percent, followed by electronic & other electric equipment (SIC 36), down 1,419 or 5.0 percent.

Wholesale trade employment dipped by 950 or 1.1 percent. At the two digit level, wholesale trade jobs in both durable goods (SIC 50) and nondurable goods (SIC 51) trade dropped, 1.6 percent and 0.5 percent, respectively.

The smallest industry division, agriculture, forestry, and fishing, had the largest percentage increase in annual average employment, up 6.3 percent or 1,027. Agricultural services (SIC 07) employment bolstered this increase, expanding by 794 jobs, or 7.2 percent. The construction industry followed, growing by 4.3 percent or 2,516. Special trade contractors (SIC 17) led the expansion in the construction industry increasing employment by 2,329, or 5.8 percent.

Services ranked third among major industries, expanding its rolls by 3.2 percent or 16,221. Business services (SIC 73) jumped 6,658 or 6.3 percent; social services (SIC 83) expanded 2,722 or 6.5 percent; and educational services (SIC 82) increased 2,005 or 5.4 percent. The table on page 4 shows the number of establishments, employment and wages for each major industry division and two-digit SIC sub-division for 1998 and 1999.

Wages

During 1999, eight of the ten major industry divisions showed increases in average annual pay (front page chart). Transportation and public utilities (TPU) was one division that showed a decrease, $46,431 in 1999 compared to $46,883 in 1998, down 1.0 percent. This was traced to the timing of bonus payments in the transportation services (SIC 47) industry in 1998.

Average annual earnings varied widely by industry. Among major industries, workers in finance, insurance, and real estate (FIRE) experienced the highest average annual pay during 1999, $76,066, an increase of 8.8 percent from the previous year. The FIRE annual pay was 76.6 percent higher than the statewide average for all private sector workers in 1999. Within FIRE, security & commodity brokers (SIC 62) ranked first among two-digit SIC sub-divisions with an annual pay of $204,450, up 11.6 percent from 1998. This was the highest average wage for any industry subdivision, nearly five times higher than the average for private sector employees overall.

Finishing second was mining division workers with annual earnings of $60,164, while wholesale trade employees came in third with an annual wages of $58,156. Workers in other industry divisions had the following average annual pay: manufacturing, $56,629; construction, $43,251; services, $36,713; and agriculture, forestry, fishing, $25,020.

Retail trade, with a high percentage of part-time workers, experienced the lowest earnings level with average annual pay of $20,869. Workers in the retail trade industry, accounting for 19.2 percent of private sector employment in 1999, earned annual pay 52 percent below the average for all private sector employees.

Data Notes on UI

Covered Employment

Employers who are subject to state and federal unemployment insurance laws regularly report employment and wage data to the Connecticut Department of Labor. This information is first and foremost used to determine displaced worker benefit levels and employer tax rates, helping to ensure the efficient operation of the unemployment insurance program in the state.

Beyond that purpose, the DOL's Office of Research makes ongoing efforts to enhance the quality and detail of this data. The result is the largest available universe of employment and wage data by industry and area, representing approximately 96 percent of all Connecticut employment.

While the individual employer data is protected by law, this is a valuable resource for producing summary statistics on the economy. These administrative data allow us to provide a more detailed look at Connecticut industry than can be shown through our monthly sample-based estimates, but they are not as timely.

Due to the time required to review and process the volume of reports received each quarter, this data is not available until five to six months following the quarter it represents. The article in this month's Connecticut Economic Digest reports on summary data that recently became available for calendar year 1999.

Employment that is not covered by unemployment insurance includes some workers in agriculture, domestic services, railroad employees, student workers, elected officials, employees of religious organizations, and self employed and unpaid family workers.

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Industry Clusters
Inner City 10

The Initiative for a Competitive Inner City (ICIC) and the State of Connecticut are calling for entries for the first annual Connecticut Inner City 10 awards. In a press conference September 26, 2000, the Governor officially launched the program.

The initiative is a part of Governor Rowland's $5 million statewide business strategy to promote inner city revitalization through business development. Each year, the Connecticut Inner City 10 will identify and celebrate Connecticut's ten fastest growing inner city companies.

The winners will be honored at the Connecticut Inner City 10 Entrepreneurship Awards Reception in 2001. Winners will be automatically entered as Connecticut's top nominees in ICIC/Inc. Magazine's Inner City 100 national contest in April 2001. Last April, five Connecticut companies were identified as national winners in the ICIC/ Inc. Magazine Inner City 100 contest, which showcased the fastest growing companies from inner cities across America.

The Connecticut Inner City 10 concept was created by Harvard Business School professor, Dr. Michael Porter. Connecticut is the first state in the country to participate in the ICIC/Inc. Magazine Inner City 100 contest on a statewide basis. Nomination and application forms for the Connecticut Inner City 10 are available on-line, or send an e-mail to mayra.santana@po. state.ct.us or call (860) 270- 8062 for more information.

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HOUSING UPDATE
September Permits Down 3.3% From August

Commissioner James F. Abromaitis of the Connecticut Department of Economic and Community Development announced that Connecticut communities authorized 751 new housing units in September 2000, a 16 percent decrease compared to September of 1999 when 894 units were authorized.

The Department further indicated that the 751 units permitted in September 2000 represent a decrease of 3.3 percent from the 777 units permitted in August 2000. The year-to-date permits are down 15.5 percent, from 8,376 through September 1999, to 7,074 through September 2000.

New Haven County documented the largest number of new, authorized units in September with 158. Hartford County followed with 123 units and Fairfield County had 110 units. Cromwell led all Connecticut communities with 34 units, followed by Plainfield with 29 and Tolland with 27.

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Leading Index Flashes Yellow; Coincident Index Stays Green

As this column has noted for several months, the Connecticut coincident and leading employment indexes have marched to slightly different drummers. The coincident index, a gauge of current employment activity, continues to hold near its all-time peak in June, first backing- off a bit in July and then partially reversing course with the release of (preliminary) August data. The current expansion seemingly has legs of its own, and continues to roll along. The leading index, a barometer of future employment activity, however, has declined during four of the last five months, suggesting that some uncertainty surrounds the continued expansion over the next year or so.

Focusing more carefully on the components of the leading index, we note that each has contributed to some extent to triggering the yellow warning light that now flashes. Hartford help wanted advertising has inched steadily lower four of the last five months. The short-duration (less than 15 weeks) unemployment rate increased gradually in four of the last five months. The remaining three components each had a more balanced distribution of ups and downs, although the negative movements still outnumbered the positive ones. Initial claims for unemployment insurance were up three of the last five months, and now stand at their highest level since December 1998. Finally, total housing permits and the average workweek of manufacturing production workers both declined three of that last five months.

While the coincident index remains near its all-time peak, its components have taken a breather in recent months from their positive trends over recent years. To wit, total employment has not moved significantly up or down since March of this year. Nonfarm employment has also leveled off since June. Moreover, the total unemployment rate cannot go much lower than its August nadir of 2.5 percent. Finally, the insured unemployment rate also does not leave much room for further decreases from its August nadir of 1.73 percent.

In summary, the coincident employment index rose from 97.9 in August 1999 to 103.2 in August 2000. All four components of the index point in a positive direction on a year-over-year basis with higher nonfarm employment, higher total employment, a lower total unemployment rate, and a lower insured unemployment rate.

The leading employment index fell from 89.1 in August 1999 to 87.9 in August 2000. Only one index component sent a positive signal on a year-over-year basis with a lower short-duration (less than 15 weeks) unemployment rate. The remaining four components sent negative signals on a year-over-year basis with lower total housing permits, lower Hartford help wanted advertising, higher initial claims for unemployment insurance, and a lower average workweek of manufacturing production workers.

SOURCE: Connecticut Center for Economic Analysis, University of Connecticut. Developed by Pami Dua [Economic Cycle Research Institute; NY,NY] and Stephen M. Miller [(860) 486-3853, Storrs Campus]. Stan McMillen and Jingqui Zhu [(860) 486- 3022, Storrs Campus] pro provided vided research suppor support.

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