PERSPECTIVE: The Rise of the Full-Time Freelancer

by Melissa Harris Four months in, it still feels a bit strange when I come home after dropping off the kids at school. I’d been a full-time employee for 14 years—Going to work meant going somewhere else, not back home.

But here I am, at home, working. And I am so grateful.

My children are 4 and 6 years old, so predictability (and avoiding germs at school) is a laughable idea. And long days in before- and after-care were not only very expensive, but also exhausting for them. I needed to work and wanted to stay in my profession, but I also wanted the flexibility to work around the needs of my family. Office life just wasn’t right for me, or us, anymore.

When I shared the news that I was striking out on my own, many people encouraged me with their own stories of going freelance or running a small business from home. Some did it for their family, and some did it to pursue their career and passions on their own terms. They all said it was really, really hard—but none of them regretted it. It was right for them.

Just like anything else, becoming an independent consultant has its pros and cons. Over the last four months, I’ve already learned that it’s not a better way, rather a different way to juggle career, income, and family needs. I’m working hard (and lots of odd hours), but around life. So, it’s right for me.

And it’s right for a steadily increasing number of people.

An annual study commissioned by Freelancers Union and Upwork estimates that 19.1 million professionals, or about 12% of the U.S. workforce, are independent contractors who freelance full time. Other studies more conservatively estimate the full-time independent workforce at about 8%. That’s still about 12.5 million Americans.

The Upwork study also found that 63% of freelancers do so by choice, up from 53% in 2014.* Full-time freelancers indicated they feel empowered and engaged by their work, and that flexibility and freedom are the biggest reasons they chose to freelance. (It also doesn’t hurt that 77% of full-time freelancers reported that within a year, they were making as much or more than when they were full-time employees.)

This dynamic is consistent with research done by the McKinsey Global Institute (MGI), and by Field Nation. Field Nation cited a recent Gallup Poll that found 70% of traditional W-2 employees are disengaged in their workplace. By comparison, Field Nation found that 88% of independent contractors see themselves as highly engaged entrepreneurs who feel ownership and enjoyment in what they do. And 90% feel deeply committed to their clients’ success.

Who is freelancing may or may not surprise you. Upwork estimates that Baby Boomers reluctant to retire account for about 30 percent of U.S. freelancers. And a 2015 survey by economists Lawrence Katz and Alan Krueger found that freelance work is especially on the rise among older workers, women, and minorities.

Of course, technology is a huge enabler of freelancing, but there are also other factors that are creating a greater demand for freelancers.

Simply put, employee benefits are very expensive, and many large corporations are already accustomed to managing teams spread out over multiple locations. More companies are therefore moving towards a “blended workforce,” with leaner W-2 staffing supplemented by readily available and skilled freelancers (1099s).

In this labor equation, the biggest risk for the American worker is taking on the cost of health insurance. If more employers staff lean, then more individuals and families will be on the hook for their healthcare. (Cue the partisan bickering.) Saving for retirement could similarly become more difficult.

Another risk of freelancing is not getting paid for the work you do. New York City is leading the way with new a labor law called the “Freelance Isn’t Free Act,” which protects freelancers from wage theft.

Other labor policies will similarly need to be examined. Katz and Krueger raise red flags around protections for a reasonable workweek, vacation and sick days, gender parity, and fair wages. Access to credit is another concern.

As the full-time independent workforce continues to grow, employers and policymakers will need to evolve practices and protections so that the dynamic continues to be mutually beneficial.

But in the meantime, I’m going to get my daughter off the school bus.

_________________________

Melissa Harris a strategist and copywriter with over 10 years of experience developing meaningful brands, engagement programs, and communications. She now freelances full time as Forthwrite Strategies.

* If 63% of freelancers do so by choice, then 37% do not. This is where Krueger and Katz point to “involuntary part time” workers who want full time, traditional employment. They see the rise of nonstandard work as a consequence of the recession. As prime examples, they cite young graduates who take temp jobs, and people forced to supplement part-time jobs with freelance or gig work.

PERSPECTIVE: A New Direction for Shopping Malls

by Valerie Dugan It used to be, when I was young, that a trip to the local mall was a real treat, with lunch at the food court and perhaps a Disney movie in the plush new cinemas. In summer we could cool off with ice cream, and before Christmas, we’d enjoy the trees and wreaths with their giant ornaments, battle the crowds, and sit on Santa’s lap for a picture in front of his castle.

These days, with the phenomena of e-commerce, giant box stores, and shopping clubs, the mall as we knew it seems to be changing. While many landmark malls around the nation are plagued by empty retail space and a significant drop in visitors and revenues, others have added attractions that continue to bring retail traffic.

E-commerce sales in the U.S. last year totaled over $341 billion, a more than 14 percent increase over the year before, and spiked in November and December for pre-holiday sales.^[1] Some experts project the e-commerce space will grow to $548 billion by 2019.^[2]

What will that trend mean for traditional retail? According to some analysts, over the next decade, about fifteen percent of the nation’s malls will either go bankrupt or will be converted into non-retail space, and the numbers are rising.^[3] One retail consultant even predicts that in the next fifteen to twenty years, up to half of America’s shopping malls will close, especially those that house lower end to midlevel stores.^[4] The ones that survive will be those that successfully adapt to changing consumer demands.

Mini-golf courses, skating rinks, gym facilities, laser tag, mazes, and even go-kart raceways are all within the spectrum of entertaining additions to malls these days.

In Connecticut, one furniture retailer has incorporated a giant, indoor rope-climbing attraction coupled with entertainment^[5]. While not in a mall, this retailer is a perfect example of the kinds of things that malls may need to do to maintain their foot traffic.

Another successful approach to damming the tide of dying malls has been the addition of grocery stores: developers bank on the philosophy that “everyone needs to buy food, so why not entice them to look at other items, too?”^[6]

Some malls replace slumping anchor stores with restaurants, movie theatres and discount shops. This may be a short term fix, but if two or more anchors fail at the same time, chances are the entire mall will go out of business, researchers found.^[7]

The research results further predict that the space would likely be replaced with business offices, health care facilities and community colleges.^[8]

What are other nations doing? In China, futuristic new high-end malls target “smart” shoppers with technology, such as touch-screens and interactive mirrors in fitting rooms that can change lighting, reach a sales associate, or display a selection of other items of interest.^[9]

At the same time, these malls-of-the-future provide consumers with “experiential” reasons to visit, reasons that cannot be found online. For instance, one mall offers a Christmas headquarters which sends out texts to guests advising them when Santa is available for a visit.^[10]  Once there, guests also can superimpose themselves into a selection of “selfie” videos with unique backgrounds and themes.^[11]

As American malls look for anchor stores, and innovations, to attract shoppers, investors simultaneously look for interesting opportunities for their portfolios.

Open-air retail space, such as strip malls, seem to fare well because their tenants often include discount stores, grocers and drug stores – staples of every economy.^[12] In fact, open-air shopping centers make up a larger proportion of the country’s total square footage for retail than do enclosed malls.^[13]

And, tenant occupancy for existing properties is reportedly high as new construction decreases in a slow growth economy.^[14] The dearth of supply means that landlords can push rents up.

Investors should discuss the sector with their financial advisors and consider it as part of a well-balanced portfolio. As with any other investment, of course, there may be risks involved, and each individual should evaluate based on their long term financial plan.

While visits to the malls as we remember them from childhood may be a thing of the past, the malls of the future certainly hold promise.

_________________________________

Valerie B. Dugan, CFP, is a Senior Vice President and Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Hartford. For more information, please contact Valerie at 860-275-0779.

The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives.  Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. Morgan Stanley Smith Barney, LLC, member SIPC.

[1] https://www.internetretailer.com/2016/02/17/us-e-commerce-grows-146-2015

[2] https://www.statista.com/topics/2443/us-ecommerce/

[3] http://www.businessinsider.com/shopping-malls-are-going-extinct-2014-1

[4] ibid

[5] http://www.jordans.com/attractions/it

[6] http://www.sandiegouniontribune.com/sdut-why-your-mall-putting-grocery-store-2012aug04-htmlstory.html

[7] http://www.businessinsider.com/shopping-malls-are-going-extinct-2014-1

[8] ibid

[9] http://www.businessinsider.com/what-the-mall-of-the-future-looks-like-2016-1

[10] http://www.businessinsider.com/what-the-mall-of-the-future-looks-like-2016-1

[11] http://www.businessinsider.com/what-the-mall-of-the-future-looks-like-2016-1

[12] http://www.wsj.com/articles/mall-reits-are-on-many-investors-shopping-lists-1457456123

[13] http://www.wsj.com/articles/mall-reits-are-on-many-investors-shopping-lists-1457456123

[14] ibid

PERSPECTIVE: Paving a Path to Postsecondary Attainment in Connecticut and Beyond

by Jamie Merisotis I was raised in Manchester. My father arrived in Connecticut almost 70 years ago after serving his country in World War II. Although he and my mother never made it to college, they instilled a strong belief in the value of education. Two generations of us – most still living here – have benefited from the state’s public schools, and colleges and universities.

So, as leader of a national foundation focused on increasing Americans’ success in higher education, Connecticut’s success is always on my mind. Last month, Lumina Foundation released its 2017-20 Strategic Plan. The plan describes what must happen for to achieve Goal 2025. Within the next eight years we must reach our goal for 60 percent of working-age Americans to earn college degrees or credentials, effectively creating a universal learning system beyond high school. We need a system that improves people’s lives and enables the nation to meet the rising demand for talent.

Since 2011, the U.S. economy has grown by 11.5 million jobs for workers with more than a high school education. In contrast, only 80,000 jobs have been added for those with a high school diploma or less. This disparity is projected to grow. By 2020, nearly two-thirds of jobs will require more than a high school diploma. Yet almost every state has an average level of education among working-age residents that is too low.

When the Foundation began reporting on the share of people with college degrees eight years ago, Connecticut stood at 46.6 percent. In 2014, the most recent year for which data is available, the rate reached 48.2 percent.

This year, Lumina added data about people with certificates and industry certifications. We believe an expanded focus on these credentials is vital for creating a better-educated country. Quality credentials have clearly stated, easy-to-grasp learning outcomes that create paths to good jobs and further education. In Connecticut, one of every 20 working-age residents has these types of certificates, bringing the share of people with meaningful credentials to 53.2 percent.

To reach the national goal of 60 percent by 2025, all of us have to do more to ensure fairer results for students who fare poorly today. The Foundation has been focused over the last several years on both traditional-age students and those who previously have gone to college but never finished.  Yet increasingly, we’ve come to recognize that we must do more and better for the nearly 64 million adults with no education beyond high school. This population is mostly made up of people from poorly represented racial and ethnic groups, immigrants with limited English-speaking skills, people who have lost middle-income jobs, and prisoners.

Others are faring better. In Connecticut, whites and Asian/Pacific Islanders with education beyond high school represent 53.6 percent and 71.9 percent of those populations, respectively. Yet for people who are African-American, Hispanic and American Indian, the percentages range from 22.5 percent to 32.8 percent. These numbers mean the system is not serving these learners who desperately need quality credentials to have better lives and jobs.

Eliminating disparities in outcomes across racial and ethnic groups and by socioeconomic status will require civic leaders, education leaders, policymakers, and employers to participate in a large-scale effort to redesign the system. To build tomorrow’s workforce, we must build a system that works for today’s diverse students. In the same way communities banded together to make universal high school a reality, it will take broad, coordinated action to ensure education beyond high school becomes a reality for all Americans.

This movement is underway, led by states setting goals to dramatically increase the number of people with education beyond high school. Connecticut is one of 26 states that set challenging, sustainable, and measurable goals in support of fair outcomes for students of all racial and ethnic backgrounds. My hope is that other states will follow Connecticut’s lead to ensure the country has the talented people it needs to address future civic, economic, and social challenges.

________________________

Jamie Merisotis is President and CEO of the Lumina Foundation,  an independent, private foundation committed to increasing the proportion of Americans with degrees, certificates and other high-quality credentials to 60 percent by 2025. Lumina’s outcomes-based approach focuses on helping to design and build an equitable, accessible, responsive and accountable higher education system while fostering a national sense of urgency for action to achieve Goal 2025.  Lumina operates from Indianapolis. 

1. America’s Divided Recovery, Georgetown University Center on Education and the Workforce, https://cew.georgetown.edu/cew-reports/americas-divided-recovery/
2. Recovery: Job Growth and Education Requirements Through 2020, State Report, Georgetown University Center on Education and the Workforce, https://cew.georgetown.edu/wp-content/uploads/StateProjections_6.1.15_agc_v2.pdf
3. A Stronger Nation: Postsecondary Learning Builds the Talent that Helps Us Rise, Lumina Foundation, http://strongernation.luminafoundation.org/report/2016/#connecticut

PERSPECTIVE: At the Next Presidential Election, the Popular Vote Must Win Out

by John R. Koza The state-based winner-take-all system no longer serves the citizens of the country and we must act to reform it now.

The fact that it appears the winner of the 2016 election, Donald Trump, was not supported by a majority of voters dictates that we elect our next president by popular vote. We can no longer endure presidential elections that primarily focus on the issues and outcomes in a shrinking number of battleground states, while the rest of us feel marginalized and muted in the political process.

The reason five of our nation’s 45 incoming presidents have entered office after losing the national popular vote is that most states have winner-take-all laws that award all the state’s electoral votes to the candidate receiving the most popular votes in that state.

Given that the average national popular vote has been close in the last eight presidential elections (an average margin of less than 5%), it is likely that the nation will continue to experience elections in which the president wins the electoral college, but loses the nationwide popular vote.

These same state winner-take-all laws force presidential candidates to focus 94% of their general-election campaign events in 12 closely divided “battleground” states – with the remaining states receiving little or no attention. In 2012, they concentrated all of their campaign events in 12 states. As presidential candidate and Wisconsin governor Scott Walker publicly observed a year ago: “The nation as a whole is not going to elect the next president. Twelve states are.”

When presidential candidates devote virtually all of their attention to 12 states (representing just 30% of the nation’s voters), it is not just about TV advertising and rallies. It has a real impact on public policy. Battleground states receive 7% more presidentially controlled grants, twice as many disaster declarations, considerably more Superfund and No Child Left Behind exemptions, and benefit from many other major presidential policy decisions. For example, in 2016, both party’s nominees catered to Michigan, Wisconsin, Ohio and Pennsylvania on the issue of trade treaties.

Former presidential spokesman Ari Fleischer said, “If people don’t like it, they can move from a safe state to a swing state.”

Fortunately, the Founding Fathers provided us with a better way to improve the system than mass migration. Article II, section I of the US constitution empowers state legislatures to change their method of awarding electoral votes. National Popular Vote asks the legislatures if they want to join together as states to make every vote matter throughout the country.

The National Popular Vote bill would guarantee the presidency to the candidate who receives the most popular votes in all 50 states and the District of Columbia. This interstate compact will go into effect after it is enacted by states possessing a majority of the electoral votes – that is, enough to elect a president (270 of 538). Under this system, the compacting states award all of their electoral votes (in block) to the candidate who received the most popular votes in all 50 states (and the District of Columbia). This guarantees the presidency to the national popular vote winner and makes every voter, in every state, politically relevant in every presidential election.

Eleven states possessing 165 electoral votes have already enacted the National Popular Vote bill into law. In addition, the bill has made significant progress by passing one legislative chamber in 12 additional states with 96 electoral votes. The bill was recently approved by a bipartisan 40-16 vote in the Republican-controlled Arizona house, a 28-18 vote in the Republican-controlled Oklahoma senate, a 37-21 vote in the Democratic-controlled Oregon House, and unanimously by legislative committees in Georgia and Missouri. A total of 2,794 state legislators have endorsed it.

The National Popular Vote bill offers the additional benefit of preventing a presidential election from being thrown into the US House of Representatives.

We cannot expect a system that makes every voter happy with the end result of every election. We can, however, demand a system where all citizens feel that their vote mattered and voice was heard. National Popular Vote will deliver this promise in every presidential election.

_______________________

John R. Koza is the founder of National Popular Vote.  A plurality of voters in Connecticut and in the United States voted for presidential candidate Hillary Clinton in 2016.  Connecticut's legislature considered, but did not approve, legislation proposed by National Popular Vote in 2015, 2014, 2013, 2012, 2011, and 2009.  The Connecticut House, but not the State Senate, approved NPV legislation in 2009, the same year that a statewide poll indicated that three-quarters of state residents were of the view that the presidential candidate receiving the most votes nationwide should be elected president.  This article first appeared in The Guardian.

PERSPECTIVE: Living in an Aging Connecticut

In Connecticut, a person born today can expect to live an average of 80.8 years, the third highest life expectancy in the nation. However, there are significant disparities in life expectancy between racial and ethnic groups.  Life expectancy is 89.1 years for Asian Americans; 83.1 years for Latinos; 81.0 years for Whites, and 77.8 years for African Americans.

Between 2010 and 2040, Connecticut’s population of people age 65 and older is projected to grow by 57 percent, but its population of people age 20 to 64 is projected to grow by less than 2 percent.

We live in an aging Connecticut.  More than one-third of Connecticut’s population is over the age of 50, and that proportion continues to rise.  Nearly every facet of our society will be impacted.

Increasing numbers of older adults will play pivotal roles, both as caregivers and as recipients of care in both families of origin and of choice.  They will prompt municipal and state leaders and their partners to ensure that communities have the features, services and funds to support aging in place.  And they will challenge our state’s creativity, polities and budgets as they increasingly outlive their financial resources, despite working longer.

Connecticut’s demographic transformation has been spurred by medical, social and economic advances.  And it has been buoyed by baby boomers, people born between the years 1946 and 1964, who were part of the noticeable increase in birth rate post-World War II.

At every stage, baby boomers have been changing this country, and now is no exception.  Not only are their sheer numbers larger than any other previous generation, but they are also longer-lived.

Overwhelmingly, these growing numbers of older adults what to stay in their communities and to have choice, independence and dignity.  By 2025, older adults will comprise at least 20 percent of the population of almost every town in Connecticut.

This perspective first appeared on the website of the now-defunct Connecticut Legislative Commission on Aging, with research and data analysis in conjunction with the Connecticut Data Collaborative.

PERSPECTIVE: All Ways Able Best Describes Deaf and Hard-of-Hearing

by Jeffrey S. Bravin This is a pivotal time for the American School for the Deaf.

In April, we celebrate 200 years of deaf education in the United States and ASD’s bicentennial anniversary.  While much has changed since our early days, ASD’s dedication to providing a quality education for all deaf and hard of hearing children has remained the same. 

We continue to explore innovative teaching methods while incorporating state-of-the-art technology into our classrooms.  ASD is equipped with the latest technology to provide students with total access to language – this includes signing, captioning, and advanced digital systems to assist students with hearing aids and cochlear implants.

We firmly believe that the use of sign language is also critical to ensure that our students benefit from communication access in all environments.  Exposing children to a communicatively accessible environment at the earliest possible age results in language development and academic success.  The bilingual approach will foster this accessible environment while providing our students with the tools to achieve fluency in two languages. 

Now in the second year of our three year strategic plan, we are hard at work growing our enrollment, raising our academic rigor, and integrating the American Sign Language/English Bilingual Approach on campus.

With our eyes to the future, we are also completing a comprehensive branding and marketing effort to reposition ASD as the first choice in education for all deaf and hard of hearing students.

We have unveiled a new logo, tag line (ALL Ways Able), and credo (see below) for the school that not only captures ASD’s centuries of excellence, but also translates our visions for the future as we embark on our next 200 years. Our credo:

What does it mean to be able?

It means you can.

You have what it takes.

To think.

Question.

Decide.

Dream.

Achieve.

Not just in a classroom, but in the world.

So we prepare deaf and hard-of-hearing students

not only for diplomas,

but for their whole lives.

By nurturing the whole child:

Intellectually.  Emotionally.  Physically.  And socially.

and by giving every student everything they need

to focus not on obstacles or challenges,

but on opportunities and potential.

Our students and their families find we’re more than a school -

we’re a true community, made up of passionate professionals

And, using a holistic ASL/English bilingual approach,

we help students and their families be well-prepared

To participate in everything tomorrow will bring.

Because we want all our students

To look forward to futures in which they’re…

ALL ways able.

_______________________

Jeffrey S. Bravin is Executive Director of the American School for the Deaf, located in West Hartford.  Founded in 1817, the American School for the Deaf was the first permanent school for the deaf in the United States and a nationally renowned leader in providing comprehensive educational programs and services for deaf and hard-of-hearing students.

https://youtu.be/MaMJ_sXbnc4

PERSPECTIVE: Move over Oprah - Giving to Women’s and Girls’ Causes is Growing (and is a Rising Force for Good)

by Carol Buckheit What role do philanthropic funds supporting women’s and girls’ causes play in creating change in Connecticut communities? Increasingly, a big one.

According to the Connecticut Council for Philanthropy, the first women’s fund in Connecticut was established in 1993, formed to gather and distribute dollars to improve the lives of women and girls and inform women about the most pressing issues affecting them in their local communities. Connecticut Community Foundation’s  Women’s Fund, serving the Greater Waterbury and Litchfield Hills region, is one of 12 such funds in the Nutmeg State. The Council reported that the combined assets of these women’s funds in Connecticut have grown dramatically, increasing more than six-fold from $2.9 million in 2002 to $18.7 million in 2011.

Nationally, the numbers are even more startling. Between 1990 and 2006, U.S. foundation giving to benefit women and girls (including international grants) grew from $412 million to $2.1 billion, an increase that surpassed the rate of growth for all foundation giving.

Connecticut funders (nearly all of them community foundations) have granted millions of dollars from women’s and girls’ funds to organizations tackling issues uniquely affecting women and girls, including prevention and treatment of eating disorders, dating violence, teenage pregnancy and domestic violence.

Our work, and focus, continues.

In the 21-town Greater Waterbury and Litchfield Hills area served by Connecticut Community Foundation, recent Women’s Fund grantees have included the Susan B. Anthony Project and Waterbury Youth Services. Each endeavors to build girls’ self-esteem and resiliency through programs sensitively developed just for girls, whether through supportive group therapy for girls in residential care or ensuring girls are connected to strong female role models in fulfilling careers.

New research bodes well for the continued growth of women’s funds and, most importantly, their influence in improving the lives of women and girls.

Data from a new study—the first academic research examining who gives to women and girls causes and what motivates donors to give—was released in May 2016 by the Women’s Philanthropy Institute (WPI) at the Indiana University Lilly Family School of Philanthropy.

The encouraging news: Large percentages of female and male survey respondents (50% and 40%, respectively) reported donating to causes primarily affecting women and girls.  Women reported investing in these causes based on their personal experiences, including experiencing discrimination and having children, and because they believe that supporting those causes leads to the greatest social return to all of society.

An in-depth analysis of giving to women’s funds by the Foundation Center and Women’s Funding Network suggests this belief is valid, pointing to real and significant systemic changes worldwide in areas such as education, health and economic growth.

But, there’s even better news from WPI’s research for the women’s funds in Connecticut, particularly those hosted by community foundations like ours: donors trust us and are looking to us to gain a deeper understanding of issues affecting women and girls in local communities.

The authors discussed, “Our research showed that existing donors were highly complimentary of the women’s funds they supported, seeing them as a locus of expertise in their communities with the ability to make both local and systemic changes.”(p. 35).  Donors indicated that they were intentional about their giving, sought specific impacts, and trusted the women’s funds to deliver desired results.

“As more and more people make the connection between giving to women and societal change, we can see that giving to women and girls is not just a temporary trend but is here to stay,” said lead author of the study, Debra Mesch, Ph.D., director of the Women’s Philanthropy Institute. “Understanding the demographics and motivations of those who are giving to women’s and girls’ causes is increasingly important if we are to improve the lives of women and girls, and their families and communities.”

Indeed.

______________________________________

Carol Buckheit is Senior Communications Officer at the Connecticut Community Foundation.  Established in 1923, Connecticut Community Foundation fosters creative partnerships that build rewarding lives and thriving communities in 21 towns in Greater Waterbury and the Litchfield Hills. The Foundation provides leadership in addressing the region’s critical issues, strengthens local nonprofit organizations through grants and technical assistance programs, and works with individuals, families and corporations to establish and steward scholarships and charitable funds.

PERSPECTIVE commentaries by contributing writers appear each Sunday on Connecticut by the Numbers.

PERSPECTIVE: The Connecticut Job Swap – An Economy in Transition

by Derek Thomas and Ray Noonan During the past 15 years, Connecticut’s economy has experienced a “job swap” – jobs lost in high-wage industries were replaced with jobs gained in low-wage ones.

As a result, from 2001 to 2015, the share of Connecticut’s private sector jobs in low-wage industries increased by 20 percent, while the share in high-wage industries decreased by 13 percent. This helps explain why a growing number of families, even after a full week of hard work, are forced to choose between groceries and rent, or between childcare and transportation costs.

Why did this shift occur? Like many Northeastern and Midwestern states, Connecticut lost tens-of-thousands of manufacturing jobs before the recession, as a result of several factors, including currency manipulation and technological improvements in response to global competition. Although jobs in manufacturing industries accounted for 15 percent of Connecticut’s private sector jobs in 2001, they accounted for two-thirds of net losses in high-wage industries from 2001–2007. The nearly 22,000 jobs lost in high-wage manufacturing industries during this period dwarfed the growth of less than 1,500 jobs added in the financial and insurance industry.

During the recession, industries across all wage categories experienced net losses with a total net loss of more than 85,000 jobs – nearly 6 percent of total private sector jobs. More than 97 percent of total losses were in mid- and high-wage industries. Manufacturing continued to experience disproportionate losses, accounting for almost 30 percent of all jobs lost during this period. The construction industry accounted for another 20 percent, with administrative and waste services industries (composed largely of janitors, laborers, office clerks) accounting for 13 percent of losses.

This leaves us where we are today. The most recent data, from 2015, indicates that 24.5 percent of Connecticut’s private sector jobs are in low-wage industries, paying on average less than $15 per hour ($31,200 annually). That’s barely enough to be considered a living wage for a single adult in Connecticut, let alone enough to support a family. These jobs are concentrated in the food services, social assistance, and retail industries, and they offer fewer benefits, predictability, and flexibility as well as little opportunity for career growth.

Jobs in high-wage industries, paying at least $33.95 per hour ($70,616 annually) on average accounted for 31.4 percent of total private sector jobs in 2015. Since 2001, the state experienced a net loss of 66,000 positions in these industries, including 33,225 jobs before and 38,617 jobs during the recession.

The good news is that, in spite of the high-wage for low-wage job swap, the share of mid-wage industries in Connecticut has remained constant over the last 15 years – accounting for 44.1 percent of total private sector jobs in 2015.

Other recent trends are also encouraging. As of 2015, the rate at which jobs in high-wage industries declined as a share of all private sector jobs was closer to zero last year than at any point since 2010. Similarly, the rate at which jobs in low-wage industries grew as a share of all private sector jobs was near zero in 2015. These trends, along with recent announcements from Electric Boat, Pratt & Whitney, and Sikorsky suggest the 15-year trend could be reversing.

 These recent trends also demonstrate that, in spite of the shifting economy, a strong foundation of mid- and high-wage jobs exists moving forward: as a result of investments in human capital, the state still boasts a high-quality workforce. Moreover, a greater share of the state’s workforce participates in the labor force (meaning they are working or looking for work) than the U.S. and all peer states. Our workers are the fourth most productive in the nation.

Nonetheless, this decade-and-a-half long swap should be matched with equivalent policy responses. For starters, lawmakers should give careful consideration to workforce investments that stimulate growth in high-wage industries when setting upcoming budget priorities. In addition, to help working families close the gap between low wages and the cost of supporting a family, lawmakers should strengthen investments in childcare, restore the state’s full EITC, and raise the minimum wage to $15 per hour. Lastly, scarce resources mandate that state spending of more than $7 billion on tax expenditures should be evaluated and subject to routine public scrutiny  just as it is for spending on schools, transportation and services.

________________________________________

Derek Thomas is the Fiscal Policy Fellow at Connecticut Voices for Children. Ray Noonan is an Associate Policy Fellow at Connecticut Voices for Children. Their research is focused on how Connecticut’s fiscal policies and budget trends affect children and families. This article is based on their work on the “State of Working Connecticut” report. All the data is available at Connecticut Voices for Children’s website.

PERSPECTIVE commentaries by contributing writers appear each Sunday on Connecticut by the Numbers.

PERSPECTIVE: New Economic Perspectives on the I-91 Knowledge Corridor

by Don Klepper-Smith Today, as I look out over our economic landscape in mid-2016, and given recent developments, I believe there is enough evidence to suggest that the odds of a U.S. recession over the next 12-18 months have risen to roughly 30-40 percent.

During our last recession, the National Bureau of Economic Research (NBER) did not make the official call until December 2008, a full year after the recession began, and after the November 2008 presidential election. So given the 2016 presidential election and the current political environment, it is highly unlikely that the so called "R- word" will be formally uttered by NBER before the end of 2016.

If there's one thing I've learned in my 35 years of being a professional economist, it's that once the dominos start falling in a given direction, either to the upside or the downside, expect them to do more of the same. In other words, the economic status quo always perpetuates itself.

Good news begets good news, and bad news begets more bad news. The trick is in discerning the "turning point", which has so many intangibles attached to it. Bottom line: We are clearly starting to see cracks in our economic recovery, but recession is not a foregone conclusion.

Essentially, structural change relates to those factors within the domestic economy which are NOT related to, and operate independent of, the U.S. business cycle. Structural changes have to be understood in their scope and magnitude in impacting today’s economy because many of these same factors will also be affecting future levels of growth.

Often unappreciated by federal and state policymakers, these structural changes have had profound and significant effects on levels of economic growth and have vastly reshaped our economic landscape over time. As a result, policy options are far more complicated and challenging.

The good news is that the current U.S. expansion is seven years old this summer, a bit longer than the average post-war recovery of five years. Despite all the rhetoric and cheerleading, the domestic economy grew just 1.7%, 2.4% and 2.6% respectively over the last three years, about a half a percent below our long-term average. In fact, the last time we saw “average growth of 3%” was in 2005. Today, the economic fundamentals clearly argue for another year of “modest growth” in the range of 2%, but red flags are starting to appear.

Importantly, the traditional tools for stimulating the domestic economy - monetary and fiscal policy - have either been exhausted, or are politically unpalatable as of mid-2016.  Here’s the bottom line:  With little means to stimulate the U.S. economy, the overall economy is poised for just modest, below-average, real GDP growth in the 2%-2.5% range for both 2016 and 2017.

In Connecticut, there's clearly been an escalating "crisis of confidence" in the state's business community that's been long ignored, and it's not going to turn around quickly. Research shows that both business confidence and consumer confidence don't turn on a dime, and that it takes many years to rebuild confidence once it's lost.

The present lack of fiscal discipline in state and local finances is clearly one contributing factor. With State and local budgets climbing three, four and five percent annually, and those on fixed incomes earning one to two percent, it doesn't take a degree in math to understand that "mounting fiscal stress" is already baked into Connecticut's fiscal picture over the next ten to fifteen years.

Inform CT is a public-private partnership that provides independent, nonpartisan research, analysis and public outreach.  Highlights of the August 2016 Inform CT survey results include:

• 40% of the state’s residents say they are likely to move out of state within the next five years.
• More significantly, more than half of those between 18-25 also said they will leave in the coming years, adversely impacting the local labor supply in the years ahead

The issues cited include lack of economic growth, lack of jobs, health insurance costs, declining business conditions, high S&L taxes, and a transportation system that cannot support the needs of its workforce.

Look at the key economic metrics, Connecticut vs. Massachusetts:

• Unemployment: CT at 5.6% in August 2016; MA at 3.9%; US at 4.9%
• Unemployed: CT up 5,500 over last year; MA down 30,300
• State Tax Revenue: CT up 0.8%; MA up 1.9%
• Single Family Housing Sales: CT up 9.9% year-to-date; MA up 14.2%

The Connecticut economy is expected to see growth of about 1%-1.5% in both 2016 and 2017, well below our long-term average annual growth rate of 2.5%.

Four recommendations for Connecticut:

1. To promote fiscal discipline, adopt a state spending cap tied to the CPI-U with accountability, adhere to the present spending cap laws on the books, which has been circumvented, and seek full accountability and visibility, making it known to the public when spending caps are exceeded.
2. Privatize where it makes sense.
3. Reconfigure wage and benefit packages for state and local workers to reflect what the private sector is paying.
4. Promote regionalism and the sharing of resources with the idea of increasing productivity.

If the region wishes to be competitive in a global marketplace that is increasingly competitive and subject to profound structural changes, then emphasis on the STEM skills- science, technology, engineering and math provides a gateway for growth.

STEM skills set the table for expansion in our manufacturing sector, which carries significant economic multipliers. It’s manufacturing which begets non-manufacturing, not the other way around. For every manufacturing job created, there are another 1.5 jobs created elsewhere in the local economy.

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Don Klepper Smith is Chief Economist & Director of Research at DataCore Partners LLC and Economic Advisor to Farmington Bank.  This is adapted from his presentation to the New England Knowledge Corridor Mayors’ Economic Forum on October 5, 2016. 

PERSPECTIVE commentaries by contributing writers appear each Sunday on Connecticut by the Numbers.

PERSPECTIVE: Hostility Instigated by Pride, Ambition, and Other Sinister and Pernicious Motives

by George Washington The period for a new election of a citizen to administer the executive government of the United States being not far distant, and the time actually arrived when your thoughts must be employed in designating the person who is to be clothed with that important trust, it appears to me proper, especially as it may conduce to a more distinct expression of the public voice, that I should now apprise you of the resolution I have formed, to decline being considered among the number of those out of whom a choice is to be made…

Observe good faith and justice towards all nations; cultivate peace and harmony with all. Religion and morality enjoin this conduct; and can it be, that good policy does not equally enjoin it - It will be worthy of a free, enlightened, and at no distant period, a great nation, to give to mankind the magnanimous and too novel example of a people always guided by an exalted justice and benevolence.

Who can doubt that, in the course of time and things, the fruits of such a plan would richly repay any temporary advantages which might be lost by a steady adherence to it? Can it be that Providence has not connected the permanent felicity of a nation with its virtue? The experiment, at least, is recommended by every sentiment which ennobles human nature. Alas! is it rendered impossible by its vices?

In the execution of such a plan, nothing is more essential than that permanent, inveterate antipathies against particular nations, and passionate attachments for others, should be excluded; and that, in place of them, just and amicable feelings towards all should be cultivated…

The nation which indulges towards another a habitual hatred or a habitual fondness is in some degree a slave. It is a slave to its animosity or to its affection, either of which is sufficient to lead it astray from its duty and its interest.

Antipathy in one nation against another disposes each more readily to offer insult and injury, to lay hold of slight causes of umbrage, and to be haughty and intractable, when accidental or trifling occasions of dispute occur. Hence, frequent collisions, obstinate, envenomed, and bloody contests. The nation, prompted by ill-will and resentment, sometimes impels to war the government, contrary to the best calculations of policy. The government sometimes participates in the national propensity, and adopts through passion what reason would reject; at other times it makes the animosity of the nation subservient to projects of hostility instigated by pride, ambition, and other sinister and pernicious motives. The peace often, sometimes perhaps the liberty, of nations, has been the victim.

So likewise, a passionate attachment of one nation for another produces a variety of evils. Sympathy for the favorite nation, facilitating the illusion of an imaginary common interest in cases where no real common interest exists, and infusing into one the enmities of the other, betrays the former into a participation in the quarrels and wars of the latter without adequate inducement or justification. It leads also to concessions to the favorite nation of privileges denied to others which is apt doubly to injure the nation making the concessions; by unnecessarily parting with what ought to have been retained, and by exciting jealousy, ill-will, and a disposition to retaliate, in the parties from whom equal privileges are withheld.

And it gives to ambitious, corrupted, or deluded citizens (who devote themselves to the favorite nation), facility to betray or sacrifice the interests of their own country, without odium, sometimes even with popularity; gilding, with the appearances of a virtuous sense of obligation, a commendable deference for public opinion, or a laudable zeal for public good, the base or foolish compliances of ambition, corruption, or infatuation.

As avenues to foreign influence in innumerable ways, such attachments are particularly alarming to the truly enlightened and independent patriot. How many opportunities do they afford to tamper with domestic factions, to practice the arts of seduction, to mislead public opinion, to influence or awe the public councils. Such an attachment of a small or weak towards a great and powerful nation dooms the former to be the satellite of the latter…

Excessive partiality for one foreign nation and excessive dislike of another cause those whom they actuate to see danger only on one side, and serve to veil and even second the arts of influence on the other. Real patriots who may resist the intrigues of the favorite are liable to become suspected and odious, while its tools and dupes usurp the applause and confidence of the people, to surrender their interests.

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George Washington was the first President of the United States, serving from 1789 to 1797.  This is an excerpt from his 6,000 word 1796 Farewell Address to the nation.  The full address appears on the website of the Lillian Goldman Law Library of Yale Law School, http://avalon.law.yale.edu/18th_century/washing.asp