By MARA LEE, email@example.com
The Hartford Courant
October 18, 2011
The Connecticut economy is no worse than the national economy — a far different story than in the late ’80s and early ’90s — but that sameness is hardly heartening, especially with misdiagnoses of the problem and the solution, state economists told the Hartford Area Business Economists Tuesday.
Daniel W. Kennedy, senior economist at the state Department of Labor, said a system that sent a smaller share of salaries and benefits to workers and a higher share to corporate profits and the wealthiest 5 percent of households created the Great Recession, and is the reason recovery will take many more years.
With stagnating wages, most people needed over-easy credit to maintain their standard of living, eventually borrowing so much from home equity and credit cards that the country’s population was spending more than it earned.
Kennedy said the pattern of overextended borrowers and societal inequity has been seen before — in both 1928 and 2007, the top 5 percent in the United States earned 34 percent of the income.
He said this kind of recession — where bad debt in homes and banks takes years to unwind — can’t be fixed by tax cuts and the Federal Reserve keeping interest rates low. Because of that, “many think the problem is structural,” he said — that there are lots of unemployed people whose skills are outdated and they can’t be hired again until they’re retrained.
He said that’s the wrong diagnosis — but he despairs of a fix, because a little more than half of Congress doesn’t believe that federal spending can or should provide the demand to start businesses hiring again.
“Businesses aren’t hiring because NOBODY’S BUYING,” his slide said. “I keep hearing it’s all regulation, it’s all uncertainty,” he said, adding that those explanations for lack of hiring are nonsense. “If you got orders coming through the doors, you’re going to try to fill them.”
Economist Patrick Flaherty tried to pierce the belief that Connecticut’s young people are fleeing. He compared the state’s demographics at the 2010 Census with the 2000 Census, and found that the state gained about 16,000 25- to 34-year-olds compared with the size of that cohort when it was 15-24 in 2000. That puts Connecticut in the top half of states for that demographic.
Flaherty said the country as a whole is getting older (with the exception of states that attract huge numbers of immigrants from south of the border), and employers need to adjust their attitudes. He said employers say they don’t want to hire someone over 50, because they’re not going to stay long, but he said statistics show young people job hop sooner than a 55-year-old is going to retire.
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