Connecticut lagged the nation in personal income growth in 2020. That’s according to a new Pew Charitable Trusts study. It finds that most states recorded last year their highest personal income growth in 20 years. Those gains were due to historically high unemployment benefits during the pandemic.
Fred Carstensen is an economist at UConn. He said he’s not surprised by the Pew findings.
“The federal stimulus has been immensely beneficial in the short run in terms of Connecticut households having a lot more disposable income. But the hard reality is the Connecticut economy is in very bad shape,” Carstensen said.
Carstensen blames that on a slow recovery from the 2008 recession, in which many high paying financial services and manufacturing jobs were replaced by lower paying jobs.
“Connecticut was systematically losing jobs that paid more than 80,000. And it was gaining jobs that paid less than 40,000,” Carstensen said.
According to the Pew study, Connecticut had a personal income growth of 1.7% in 2020, one of only three states to record a less than 3% growth. Rhode Island was the fourth highest in the nation with a 6.4% growth.
Carstensen said that’s because Rhode Island had invested strongly in IT infrastructure to take advantage of economic growth out of Boston.
“Because Boston is such an expensive environment to try to expand," Carstensen said.
He said Connecticut might be able to do the same if it creates high-speed data centers to take advantage of its location between Boston and New York City.
