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Connecticut Economic Digest: January 2003 issue
The 2003 Economic Outlook | Business Services - Assisting Connecticut's Economy | Occupation Profile: Security Guards | Industry Clusters | Housing Update

The 2003 Economic Outlook
By Mark R. Prisloe, Chief Economist, DECD

A sluggish economic recovery and ongoing uncertainty have lowered expectations for Connecticut's economy in 2003. Employment remains at a stagnant 1.667 million, ten quarters after peaking in July 2000 at 1.701 million, and with a sustained loss of around 34,000 jobs. The latest unemployment rate, while still well below the national level of 6.0 percent, has increased to 4.4 percent. The Digest's own "barometers" of economic conditions, the CCEA-ECRI coincident and leading employment indexes, keep turning in a mixed performance, with the latest coincident index falling and the leading index rising. Despite an increase in Connecticut's latest housing permits, and the November 6 drop in the federal funds rate, the negative impact of layoffs and the State's own budget crisis will likely take a toll on what has been at best a struggling recovery.

Other Indicators

Other indicators also offer little comfort. Labor force growth is negligible at 1.1 percent. U.S. and New England consumer confidence were both down 0.9 and 0.8 percent, respectively. Connecticut stocks, measured by the Bloomberg Index, were down 16.5 percent over the past year.

If there were any reasons for optimism, one might find it encouraging that the latest retail sales were up 6.2 percent, construction was up 52.4 percent, third-quarter State exports were up 6.1 percent, and forecasted personal income remains up 3.5 percent. The strength in income, along with continuing low interest rates, might help explain the rise in retail sales and in housing permits, which were up 12.7 percent in October and 4.0 percent year to date. Net business formation, as measured by new business starts minus stops registered with the Secretary of the State, is also stronger than a year ago, up 20.6 percent.

However, the mixed performance of many indicators and a lack of consistency among them are the reasons for only guarded optimism. Construction, housing, and retail spending are undoubtedly important contributors to whatever economic activity has been sustained thus far, and the consensus seems to be that the U.S. and the State have entered a weak recovery. Yet persistent weaknesses in labor force and job growth do not bode well for the long run. The loss of 2,200 jobs in the month of November, for example, offset gains earlier in the year. Thus far, the job count at 1.667 million is behind the seasonally adjusted December 2001 level by about 5,200 jobs.


Forecasts for Connecticut's economy are prepared semi-annually by the New England Economic Project (NEEP), and quarterly by the Connecticut Center for Economic Analysis (CCEA). The latest NEEP forecast prepared by Fairfield University Economist, Dr. Ed Deak, calls for a modest job gain in 2003, up by 13,400 positions with the unemployment rate falling slightly to 3.7 percent. Professor Deak, speaking before the Connecticut Economic Conference Board (CECB) in November, predicted the U.S. recovery would continue without a "double dip" due to strong productivity, low interest rates, and federal fiscal stimulus. Connecticut would follow suit.

The CCEA's fall quarterly forecast was also only mildly optimistic. Dr. Steven P. Lanza's presentation of the "General Drift Indicator" (GDI), which gained at an annual rate of 1.8 percent in 2002-Q2, slipped 1.5 percent in 2002-Q3, but on a moving average basis was seen as gaining momentum.

Gross State Product

Perhaps the broadest measure of economic performance is gross state product (GSP) in real terms (adjusted for inflation). It is a measure of output, or the dollar value of all final goods and services produced in the state. The figure is similar to the national measure of output known as gross domestic product or GDP. Connecticut's real GSP was put at $154.4 billion in 2002 and forecasted to rise 2.6 percent to $158.4 billion in 2003. While this pattern of growth is positive, and better than the weak 0.8 percent gain in 2001 from the year before, it is substantially below the 4.0 percent averaged between 1996 and 2001. National growth in the real GDP was 4.0 percent in the third quarter.


The economic outlook for 2003 is not as bright as had been hoped for. Downside risks such as war with Iraq, rising energy prices, and the threat of terrorism have contributed to drops in business confidence. For Connecticut, despite some "bright spots" in housing permits, construction, exports, and even retail sales, prospects of a return to the booming 1990s seems unlikely any time soon.

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Business Services - Assisting Connecticut's Economy
By Edward T. Doukas Jr., Research Analyst, DOL

The recovery in Connecticut's employment following the recession of the early 1990s was fueled by growth in the service-producing industries. More specifically, business services have recorded unparalleled job growth, expanding 59.3 percent during the ten-year period of 1992 through 2001. In comparison, total private employment grew by 9.2 percent during the same period (see table on page 4). As the chart below shows, from 1993 to 2000 employment growth in business services was consistently higher than the growth in total private sector. Then, when the private sector employment declined in 2001, business services also shed jobs faster.

What are Business Services?

Business services include establishments primarily engaged in providing services to other business establishments on a contract or fee basis. These services are essentially activities that provide inputs for the production of goods or other services, rather than directly serving the final customers. There is a wide array of activities captured in business services and these activities take on many different forms. Business services is divided into eight industry groups: advertising; credit reporting and collection; mailing, reproduction, stenographic; services to buildings; miscellaneous equipment rental and leasing; personnel supply services; computer and data processing services; and miscellaneous business services. While this list of industry groups may help qualify the diverse nature of business services, it cannot convey the sheer volume of activities performed by such establishments.

Business services have a large and growing presence in Connecticut's economy. In 1992, business services had average annual employment of 70,688. This equated to 5.4 percent of the State's total private sector employment. By 2001, employment in business services industries had grown to 112,599, or 7.9 percent of private sector employment. Business services ranked as Connecticut's second leading private employer at the major industry group level during 2001 following only health services, which had average annual employment of 160,252.

Quality Jobs?

While job creation is important, job quality is of equal importance. Job quality can be measured in many different ways, one of them being level of compensation. The 2001 average annual wage for all private sector employees was $47,734, which was an increase of 46.9 percent from the 1992 level of $32,484. During the same time span, the earnings of business services workers have grown considerably faster. In 2001, business services workers brought home an average of $46,165, an increase of 71.1 percent from the 1992 earnings level of $26,988. Also, the gap between the earnings of business services employees and that of all private sector workers has narrowed. In 1992 the difference between the earnings of the two groups was 16.9 percent; by 2001 it had closed to 3.3 percent.

However, the earnings among the eight industry groups that compose business services vary widely. Found on the low end of the pay scale are services to buildings with an average annual wage of $15,880. Examples of activities in this industry group include the disinfecting of dwellings and other buildings, pest control, chimney cleaning, janitorial and maid services. At the high end of the spectrum is computer and data processing services. On average, workers in this industry earned $83,195 annually in 2001. Examples of activities in computer and data processing services industries include computer consulting, custom computer programming, integrated systems design and analysis, and on-line data base information retrieval services.

Two industry groups, personnel supply services and computer programming and data processing, dominate the business services industry in Connecticut. Combined, these two industry groups accounted for 57.6 percent of business services employment and 53.9 percent of business services establishments in 2001.

Personnel Supply Services

Personnel supply services has been one of the fastest growing components of the business services sector as companies have increased their hiring of temporary workers to maintain productivity and keep costs down. This is one aspect in the evolving employer-employee relationship that indicates that the likelihood of working for the same employer through one's working life is fading. The shift is being made towards attaching loyalty to one's occupation rather than to one's employer. The growing presence of personnel supply services can also be explained from the employee and employer perspective. From the worker's view, the industry permits increased flexibility in work schedule, the ability to search for suitable permanent employment, and access to low-cost or free training and experience. From the employer's perspective, incentives to use personnel supply services include lower wage rates, lower benefit levels per worker, and the opportunity to screen potential permanent employees. Personnel supply services consists of employment agencies and help supply services. Employment agencies primarily provide employment services by assisting either employers or those seeking employment. Examples include executive placement agencies, and nurse, teacher, and model registries. Help supply services includes firms that are primarily engaged in supplying temporary or continuing help on a contract or fee basis.

Average annual employment in Connecticut's personnel supply services industry increased by 81.7 percent between 1992 and 2001. At the end of 2001, personnel supply services employed 33,745. The average annual wage for these workers grew by 56.9 percent between 1992 and 2001, to $27,571. However, personnel supply workers still earned 40.3 percent less than the average wage for all business services workers and 42.2 percent less than private sector workers overall.

Personnel supply services employment has been widely regarded as a leading indicator of the economy since firms tend to either hire temporary workers first to test a strengthening economy, and conversely, to first release temporary workers as the economy weakens. This is evident in 2001 employment data. Between 2000 and 2001 total private employment declined 2.1 percent while employment in the personnel supply industry dropped 8.7 percent.

Computer Programming and Data Processing

Computer programming and data processing has become one of Connecticut's most dynamic industries. Employment in this industry has expanded 132.1 percent between 1992 and 2001. At the end of 2001, computer programming and data processing services employed 31,112. The average annual wage for workers in this industry increased 63.5 percent between 1992 and 2001, reaching $83,195. Computer programming and data processing workers earned 80.2 percent more, on average, than all business services workers and 74.3 percent more than private sector workers during 2001.

Reasons behind the rapid rise in the computer programming and data processing industry employment include the spread of personal computers in the home, computer networks in the workplace, and the appearance of the World Wide Web over the Internet. The labor force for this industry is composed of highly skilled professional and technical workers including computer engineers, programmers, system analysts, and technical writers and editors.


Over the past ten years business services has been among the fastest growing sectors of Connecticut's economy. This growth is expected to remain strong into the future. Projections by the Office of Research at the Connecticut Department of Labor show that for the period of 1998 through 2008 employment in business services is expected to grow by almost 33,000 jobs, or 32 percent. Particularly noticeable are employment increases expected in computer programming and software design and development, computer data processing, and staffing supply services.

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Occupation Profile: Security Guards
By Noreen P. Passardi, Economist, DOL


The threat of terrorists' attacks at any time or place has led to the implementation or expansion of security measures in many areas. For security guards, as one human component of these measures, the level of responsibility has taken on a deeper dimension.

What Do They Do?

In general, security guards patrol and inspect property to protect their employer's investment against fire, theft, vandalism and illegal activity. Specific duties vary based on whether the guard works in a "static" security position or on a mobile patrol. Likewise, specific job responsibilities also vary with the size, type and location of an employer.

As a static position, department store guards protect employees and customers, records, merchandise, money and equipment, while the mobile guards in a parking lot deter car theft and robberies. Guards who work at museums or art galleries protect paintings and exhibits by inspecting people and packages entering and leaving the building. While any security post could be susceptible to a terrorist attack, particular emphasis is placed on the screening of passengers and visitors for weapons and explosives at air, sea and rail terminals. In factories, laboratories, government buildings, data processing centers, and military bases, security officers protect information, products, computer codes, defense secrets, and check the credentials of people entering and leaving the premises. Guards working at universities, parks and sports stadiums perform crowd control. Guards employed by armored truck services wear bullet proof vests and are armed, as carrying money between the truck and business can be extremely hazardous and has resulted in a number of guards having been robbed and shot in recent years.

Education & Training

The education and training requirements for guards depend upon the state and the type of position. Most states require that guards be licensed. To be licensed as an unarmed guard individuals must be at least 18 years of age, pass a background check, and complete classroom training in subjects such as property rights, emergency procedures, and detention of suspected criminals. Drug testing is often required and may be random and ongoing once employed.

It is becoming the norm for armed guard positions that applicants hold a high school degree or equivalency certificate and undergo a rigorous hiring and screening process consisting of background, criminal record, fingerprint, and drug testing. Employers provide formal training to armed guards in areas such as weapons retention and laws covering the use of force, as armed guards must meet requirements for certification by the appropriate government authority. A number of states are making ongoing training a legal requirement for retention of certification.

In general, applicants are expected to have good character references, no serious police record, good health, should be mentally alert, emotionally stable, and physically fit in order to cope with emergencies. Guards who have frequent contact with the public should communicate well. Applicants for federal government positions must have prior experience in the occupation, pass a written examination, qualify in the use of firearms and pass a first aid test. Guards at nuclear power plants undergo several months of training before being placed on duty.


At the national level the average annual earnings of security guards were $19,470 in 2000. As the chart indicates, guards in Connecticut averaged $21,180 in 2001. Guards working in the Waterbury area earned the most at $24,915, while those in New London area earned the least, $19,735.

Employment Outlook

The nation had 1,106,000 security guards in 2000 and a forecasted demand totaling 1,497,000 jobs by 2010. Connecticut had 14,800 guard positions in 2001 with 5,480 jobs in the Hartford area and 2,570 in the Stamford area. Connecticut is expected to have over 500 security guard job openings annually through 2008. And under the current requirements, security guards should make up an even more highly trained and technically sophisticated force across the nation.

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Industry Clusters
12th Business Training Network Focuses on Attracting Maritime Workers

In what is yet another milestone for Connecticut Business Training Networks (CBTN) program, a collaborative workforce development initiative among representatives of Connecticut's maritime industry has been unveiled: the Marina and Boat Yard Training Network. This constitutes the twelfth CBTN organization.

Under the guidance of the Connecticut Maritime Coalition (CMC) and the Connecticut Marine Trades Association (CMTA), the network will allow members to explore training solutions, including programs at the associate's and bachelor's degree levels. Aimed at increasing the overall workforce, efforts will be focused on incentives to attract more women and career changers to marine trades.

A 2002 report prepared for the CMC noted that in 1997, the maritime industry cluster accounted for 349 businesses, 12,225 jobs, with aggregate sales of $2.61 billion. In 2000, Connecticut's ports handled 19.2 million short tons of cargo representing a 12.5 percent increase over the previous year primarily at the three major ports of Bridgeport, New Haven, and New London. Federal Highway Administration data show there were over 2.1 million passenger and nearly 852,000 vehicle boardings of ferries servicing Connecticut's ports.

As one component of the Industry Cluster Initiative, the CBTN program promotes industry working with government to overcome barriers to growth and develop cost-effective solutions for improving worker skills.

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Housing Update
Year-to-Date November Permits Up 4.5 Percent

Commissioner James F. Abromaitis of the Connecticut Department of Economic and Community Development (DECD) announced that Connecticut communities authorized 771 new housing units in November 2002, a 9.2 percent increase compared to November of 2001 when 706 units were authorized.

The Department further indicated that the 771 units permitted in November 2002 represent a decrease of 16.6 percent from the 924 units permitted in October 2002. The year-to-date permits are up 4.5 percent, from 8,618 through November 2001, to 9,002 through November 2002.

The Hartford Labor Market Area (LMA) showed the largest gain of 479 units (or 15.1%), followed by the New London Labor Market Area with a gain of 178 units (or 27.1%) on a year-to-date basis. Canton led all Connecticut communities with 104 units, followed by Newtown and Danbury both woth 20. From a County perspective, Hartford County had the largest gain of 124 units compared to a year ago.

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Published by the Connecticut Department of Labor, Office of Research
Last Updated: January 6, 2003