Posted 9/24/12

Jobs, Jobs, Jobs

Labor Dept. HQ
Photo by Steve Kotchko

In a major election year such as this one, and in the still recessionary economy, stop anywhere along the campaign trail from the State House to the White House and you will hear some candidate say that the paramount issue is: “jobs, jobs, jobs.”

So last week when the State Labor Department’s August jobs report came out, filled with troubling and surprising news, there was no surprise that the data quickly turned into a political hot potato.

The report showed that the Connecticut unemployment rate increased from 8.5% in July to 9% in August.  To put things in perspective, that is the largest monthly jump in the jobless rate in 36 years.  Also, the U.S. unemployment rate right now is much lower than Connecticut at 8.1%.

In addition, the report not only revealed that the state lost 6800 jobs in August, a supposed increase of 5100 positions in July had to be revised downward to 3500.  This means that in the first eight months of this year, Connecticut gained just 1300 jobs, compared to 8000 jobs during the same period last year.

The State Labor Department’s director of research, Andy Condon, finds the data mystifying because he claims there is no “corroborating evidence that the record losses in employment and increases in unemployment are occurring at this magnitude.”  Condon explained that indicators such as unemployment insurance claims, layoff events, and reports on business contraction “do not support the sudden and steep decline.”

For months, Condon has warned that changes in the way data is collected and other factors in the shaky economy could cast doubt on the monthly jobs reports, but he never expected anomalies of this nature.

Knowing that the sudden negativity of the August report would trigger strong political reactions, Condon was asked if his comments questioning the validity of the data could be viewed as softening the blow of bad news.  “I am an academic economist and I could not do such a thing,” Condon replied.  “Our job is to produce these reports and try to help the citizens and decision makers in Connecticut understand what they mean, and we are struggling with that right now.”

Democratic Gov. Dannel Malloy, who in the past has taken some credit when the jobs reports looked positive, also expressed doubts about the troubling August report.  “I’m skeptical about these numbers,” said Malloy.  “We haven’t seen an increase in the initial number of people filing for unemployment benefits—in fact, claims are down from this time last year,” he continued, “and tax withholdings are up 3.6% after adjustment.”

The Governor claimed “those two trends are the opposite of what you would expect to see if the state was losing jobs at the rate suggested in this report.”  Malloy admitted that “we continue to battle strong headwinds at the national and international levels” and noted that recent reports indicate “the recession was far worse than we thought.”

Repeating an oft-voiced message that Connecticut’s economic woes are not the products of his administration, Malloy said “we’re not going to reverse 22 years of job stagnation (in Connecticut) in 20 months.”

Malloy maintains his job growth programs, including the so-called “First Five” initiative, awarding state loans and grants to major firms willing to promise significant job growth are working and will “create or retain more than 15,000 jobs and encourage $1.3 billion in private investment in our state.”

The Governor concluded:  “While we’re making progress, it’s also clear we have a long way to go.  But I believe in Connecticut, I believe in its people, and I know we will get there.”

On the other side of the political fence, there was a far different view of the new labor data expressed by State House Republican leader Lawrence Cafero (R-Norwalk), who has in the past, and may in the near future, consider a run for governor.
“This (the August jobs report) is bad news for Connecticut and those who are looking for work,” said Cafero.  “We must acknowledge that the policies that have been put in place have not succeeded in creating jobs and we have to re-direct our efforts,” he said.

The GOP leader looked askance at the claims by Malloy and the Labor Department that the data looks weird and unrealistic.  Said Cafero:  “The Malloy administration can try to spin this any way they want, but their policies are not working.  They never look for ‘corroborating’ evidence when the news is good.”

Cafero maintained that “if Gov. Malloy is going to take credit for success (in job growth) then he must also admit when he has not succeeded.”

The Republican official said if the Governor wants to stimulate the state’s economy he should do more to improve state government’s attitude toward business, especially small business.  Cafero explained that means “eliminating meddlesome regulations, lowering taxes for small businesses and not favoring public employee unions over the private sector.”

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