persistence and the land of steady habits

So the unemployment rate in Connecticut (5.4 percent) is finally thinking about beginning to think about thinking of catching up to the national average (5.3 percent); here is the department of labor report.  Predictably, Harford is throwing a party; here’s Senate President Martin Looney and Senate Majority leader Bob Duff, quoted in the CT News Junkie – August 21 in a report by Christine Stuart:

“Today’s jobs report reinforces what we already knew to be true; Connecticut’s economy continues to make steady progress,” Looney said. “Connecticut’s economic development policies are helping businesses create jobs and the state’s job training programs like STEP-Up are preparing workers for a 21st century economy. There’s more work to do but this is extremely positive news.”

Duff added: “The fact remains that Connecticut is great place to live, work and raise a family. We have a great quality of life and a talented, educated workforce which is why companies are hiring our residents.”

Looney and Duff are the same guys who brought you the recent jobs-eviscerating state budget (read Kleeper-Smith’s comment in the same News Junkie article above).  The same guys presiding over an ongoing massive exodus of people and firms (see here and here) from Connecticut.  And the same guys who supervise my favorite official harassment and job-killer team of crack government workers: the Department of Labor Wage and Workplace Standards division: resolutely impairing entrepreneurship and risk-taking under the guise of … whatever; read about the crack team in action here and here.

Looney and Duff deserve some rain on their parade: despite the seeming good news (at least for now) we have one of the worst unemployment persistence problems in the nation.  That means that our job market has grown inflexible and rigid, sputtering along, in spite of them. 

I explain: let’s take a historical look at the unemployment performance for the state of Connecticut.

Figure 1

Bureau of Labor Statistics, Annual, Seasonally Adjusted

CT New England City and Town Areas.

Figure 1 displays the unemployment rate performance of Connecticut’s 6 metropolitan districts over the last 2-1/2 decades; the districts are Waterbury, New Haven, Hartford-West Hartford-East Hartford, Bridgeport-South Norwalk , Norwich-New London, and Danbury. 

The graph reveals that during this period –two and one half decades – the ranking of unemployment rates across metropolitan areas did not change much.  For example, Waterbury, which had the worst unemployment both in 1990 and in 2014 – remained the basement-dweller over the entire period; Danbury, persisted at the other end.  The other 4 districts barely drifted away from their relative positions.  Moreover, the variation among the regional unemployment rates is huge: the average difference over the period between the highest and lowest unemployment rate was 2.6 percentage points.   This is – give or take – about 40,000 jobs.  Celebrating the seeming decline in state-wide unemployment masks the persistent and problematic asymmetry among Connecticut’s regions.

Another instructive persistence statistic to look at is the correlation in unemployment rates between 1990 and various points since: Table 1.

Table 1

	Period		Correlation
	1990-1995		0.7735
	1990-2000		0.8875
	1990-2005		0.8332
	1990-2010		0.9447
	1990-2014		0.9570

Thus, the correlation in unemployment rates between those existing in 1990 and those existing in 2014 was 0.9570.  By comparison, here is the equivalent exercise for (the states) of the United States:

Table 2

	Period		Correlation
	1990-1995		0.594
	1990-2000		0.513
	1990-2005		0.586
	1990-2010		0.437
	1990-2015		0.544

This contrast between the national and Connecticut’s experience indicates not only a high degree of persistence in unemployment in Connecticut but a worsening one at that: note the increase in the correlation over the time periods.  Rather than labor markets becoming more flexible as one would expect with growth – it appears that our labor market is becoming less so.   

Peace

arod