Slumping Conn. wages expected to leave job report flat
Salaries across many industries are still recovering in the state and that's one reason economists expect the state's May job figures to be as disappointing as the nation's.
Last week, the U.S. Labor Department reported the nation gained about 54,000 jobs in May and the unemployment rate rose to 9.1 percent from 9 percent. Connecticut reports May hiring statistics on Thursday. But recent data on income and salaries doesn't bode well for that report, according to experts.
"It's going to be weak," said Pete Gioia, vice president and economist of the Connecticut Business and Industry Association. "I would be surprised if Connecticut added 2,000 jobs."
He said there's even a possibility the state will show a net loss of jobs. A number of factors are impeding hiring, he said, including a slow recovery in wages and a sustained rise in gasoline prices.
Connecticut consumers have been hit hard in the recession, as evidenced in a state Labor Department report on 2010 wages released this week. The department said the average weekly wage paid in Connecticut was $1,161 in 2010, up $23 from 2008. The report showed the recovery in wages hasn't been uniform, with 28 employment sectors showing workers were paid less on average in 2010 than they were in 2008.
Among those who still have not recovered are investment professionals, whose average weekly salary of more $6,274 was the highest of any industry in the state in 2010. In 2008, securities and investment professionals averaged $6,460 when there were also 300 more workers in this field than the 22,553 reported in 2010.
Food service workers, who had the lowest average weekly pay in 2010, earned on average $342 a week, up from the $328 average earned in 2008. Like investment professionals, there were fewer food servers in the state in 2010 than 2008. According to the department there were 99,260 servers in Connecticut last year, compared to 100,924 in 2008.
The income recovery rate acts as a brake on hiring, Gioia said.
"(Employers) need to see consistent demand for their products, before they hire more people," he said.
And that's not happening as some workers try to get by on less money and others worry about the slow rate of income growth, according to Donald Klepper-Smith, chief economist of New Haven-based DataCore Partners.
Klepper-Smith said real income in the U.S. has grown at anemic rate. That's why he said he expects the May jobs report in Connecticut will show a gain of 500 to 1,000 jobs. He said that's a trend he expects to hold for the next year or so.
"If you go to prior economic recoveries, we were generating average annual gains in real income of the 4 to 5 percent range. "Today, we're up all of one percent," he said.