Connecticut State Government, Economic Development, Economy, Layoffs, Malloy Corporate Welfare, Malloy, The Economy, Unemployment
The latest data from the Connecticut Department of Labor reveals that the state is making little progress when it comes to re-bounding from the Great Recession.
According to the more conservative unemployment measurement, 171,100 Connecticut residents are presently unemployed. However, using the federal government’s U-6 rate, which measures both the unemployed and those who are in a part-time job but actively looking for full-time employment, more than 15% of Connecticut’s workforce is without the jobs they need.
In addition, of the 117,500 jobs lost since the “recessionary downturn” began, Connecticut has only recovered about 30,000 jobs (25% of all jobs lost).
Despite the claim that the recovery began in February 2010, Connecticut’s government, financial, construction and manufacturing sectors have yet to even begin regaining jobs.
Still on the downside, Connecticut’s government sector remains down 11,100 jobs, while the number in the financial sector is down 4,200 positions, construction and mining is down 1,200 jobs and manufacturing is down 800 jobs.
Since much of the federal Stimulus Funds were not used to supplement government activity, but instead were used to substitute for existing spending, elected officials have failed to help those who lost their jobs in two of the sectors that leaders could actually have had an impact over – government and construction.
Since Governor Malloy took office, government positions have been further eliminated and despite his predilection for the Financial Sector, his First Five Corporate Welfare Program has yet to have any impact. Although considering those favored business need only create 200 jobs, and have five to ten years to do so, whatever impact the corporate welfare program does have will be limited in nature.
A related problem for Connecticut businesses is that as a result of the lengthy recession, the State of Connecticut has already borrowed more than $635 million from the Federal Government to help pay unemployment benefits. Borrowing was necessary because the amount of funds collected from employee unemployment taxes wasn’t enough to cover the costs associated with payments to the unemployed. Since these funds will need to be paid back, Connecticut businesses will be facing high unemployment taxes on an ongoing basis.
Corporate Welfare, Economic Development, Economy, Education Reform, Malloy College Education, Corporate Tax Breaks, Malloy, The Economy
File this one under: Speaking out for a dying breed – The American Middle Class
August 29, 2012
Having completed the task of dropping my child off at college, I’m reminded of the challenge that faces our chief elected officials, whether in Washington, or here at home in Connecticut.
In particular, as the effects of the Great Recession continue to take its toll on the nation; those of us in the trenches are left to ponder about what is the proper balance when it comes to using public resources to create quality jobs versus creating quality workers.
In one of my old college economic textbooks, I found a definition of a public subsidy as, “the provision of economic value by a public entity to a private entity for purposes beneficial to the public…”
That is, government, on behalf of the people, spends money, not to purchase goods and services, but to induce actions that have a longer-term benefit for society.
It might be providing grants, loans, or tax benefits to businesses to get them to maintain or expand the number of quality jobs they provide.
On the other hand, it might be providing grants, loans, or tax benefits to individuals, so they can go to college and have better, more productive lives and become part of a quality workforce that allows our economy to be successful.
Like many middle-class families, paying for college has eclipsed the challenge of buying and maintaining a home. Earlier this summer, I once again signed the federal government’s Parent Plus Loan promissory note to borrow $30,000 (at 5.9 percent); an amount the government formula said was my “share” of the bill. Grants and subsidized loans covered the rest.
At this point, it looks like I’ll need to borrow about $120,000 for the undergraduate degree. With interest, the total cost over ten years will be $159,000,000, just over $39,000 of which will be interest on the loan.
At about the same time, Connecticut’s governor signed a “promissory note” on behalf of Connecticut’s taxpayers to pay the world’s largest hedge fund, Bridgewater, $115,000,000. Although Bridgewater had enough money to pay its CEO $3.9 billion last year, making him the highest paid employee in the world, apparently the public funds were needed to persuade Bridgewater to stay in Connecticut, build a new headquarters and add 800 new jobs over the next ten years.
The public subsidy included a ten-year, $25 million forgivable loan, with an interest rate of one percent, $5 million in grant funds for job training, $5 million for an alternative energy system, and $80 million in Tax Credits.
If Bridgewater fails to create the 800 new jobs over the next decade, it will have to repay the $25 million dollar loan, but will be allowed to keep the other $90 million in public subsidies. The one percent interest rate on that $25 million loan means the company would have to pay about $1.3 million dollars in interest.
In the end, when you calculate the numbers, it really means that as a middle class family, I pay a carrying cost of 26 percent to get the funds I need while the world’s biggest hedge fund pays a carrying cost of 5 percent.
Or put a different way, to create that quality job, Connecticut’s taxpayers are giving Bridgewater about $150,000 per job, while I’m paying (after the various public subsidies) about $160,000 to help “create” a quality worker.
Truth be told, I’ve given up trying to figure out the fairness in all this, but as part of the ever-shrinking middle class, the modern phrase, “I’m just saying,” seems particularly appropriate.
I’m just saying…