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Labor Force Shrinks in N.E.

In Vt. and N.H. Population Growth, Retirement Contribute to Numbers

Hartford, Conn. — Sometime last summer, Andrew Beck says he stopped looking for work, stymied as he got nowhere in his job search.

The Wethersfield, Conn., resident was laid off in March 2009 as a vice president of marketing and communications at a health care system. After more than three years of unsuccessfully looking for a job, Beck, 61, said he believed he was repeatedly passed over by employers hiring younger workers who had not been jobless for years.

“It is very frustrating. It is very disheartening,” he said. “It’s not what I planned to do.”

Beck is one of more than 47,000 unemployed people in Connecticut who have stopped looking for work, surrendering to a labor market that is failing to produce enough jobs.

Every month, Connecticut’s stubbornly high unemployment rate gets much of the attention when the state releases labor data. But what’s causing alarm among economists is the steadily shrinking state labor force as workers drop out, giving up their job search.

In a trend across New England, the drop in Connecticut’s labor force is the largest. Economists in the six states cited reasons including an aging workforce in Rhode Island, a slow-growing population in New Hampshire and a “pent-up demand” to retire in Vermont. But in Connecticut, they’re stumped.

Whatever the cause there, “the suddenness is like nothing we’ve seen before,” said Andy Condon, director of research at the Connecticut Department of Labor.

The state’s labor force contracted in each of the last six months of 2012, with about 2.5 percent exiting between 2010 and 2012, a steeper drop than elsewhere in New England or nationally, according to the federal Bureau of Labor Statistics. Those who quit looking affect the unemployment rate because the government only counts as unemployed those actively searching for work.

The startling statistic prompted Condon to call a meeting in December of other economists from around the state to consider what might be happening.

The experts have rejected several theories, such as workers taking early retirement. Those quitting are 40 to 60 years old, too young to retire, Condon said. Statisticians also haven’t seen evidence that workers are leaving Connecticut, he said.

Even with the smaller labor force, Connecticut’s unemployment rate in December was 8.6 percent, above the U.S. rate of 7.8 percent. Condon expects revisions in March will add several thousand jobs, but that would not affect the number of workers who quit the labor force.

“We can’t find any reason why Connecticut should be this phenomenon of a labor force declining,” he said. “We’re just not different enough.”

Nationally, the share of workers participating in the labor force fell from 66 percent before the start of the recession to less than 64 percent as millions of workers quit looking for jobs.

In New England, only Vermont’s declining labor force participation comes close to Connecticut. The workforce there shrunk about 1 percent between 2008 and 2012.

The drop in Vermont’s labor force is the result of “pent-up demand” to retire, said Mathew Barewicz, economic and labor market information chief at the Vermont Department of Labor. He said the labor force expanded during the recession as older workers stayed on the job longer to boost retirement accounts or young people found work and put off college.

In Rhode Island, with an unemployment rate of 10.2 percent in December, the highest in the region and tied with Nevada for No. 1 in the United States, the labor force shrank just 0.4 percent, according to federal data.

Rhode Island’s older workers are dropping out of the labor force and, if able, living off savings or incomes of spouses, said Edward Mazze, distinguished university professor of business administration at the University of Rhode Island. In addition, many Rhode Island workers are employed in businesses bordering Connecticut and Massachusetts and are counted in the states where they work, he said.

In Massachusetts, home to the region’s largest economy, the labor force contracted only 0.1 percent since the recession. Rena Kottcamp, director of economic research for the Massachusetts Department of Unemployment Assistance, said the state has benefited from “some recovery” as data show an increase in the number of people seeking work.

New Hampshire’s workforce declined by fewer than 4,000 workers, or a half-percent, between 2008 and 2012. It’s still a concern, said Bruce DeMay, director of the economic and labor market information bureau at the state’s Employment Security office.

He attributed the loss of workers to a slow-growing population in the state. Discouraged workers who have quit seeking a job are few, amounting to about 3,000, he said.

“Most people, if they’re unemployed, are out there looking,” DeMay said.

Maine’s labor force has remained largely unchanged.

Connecticut’s labor force decline, if it holds after a possible federal revision, spells trouble for years, said Donald Klepper-Smith, an economic adviser to former Republican Gov. M. Jodi Rell.

“The labor force represents economic vitality and to the extent we lose workers, we lose economic growth down the road,” he said.

Beck, who volunteers as an usher at a New York theater and makes a few dollars writing online theater reviews, says he’s finding some fulfillment in unemployment financed by his pension that he’s tapped early.

“I’m taking a hobby and living it,” he said. “It’s rewarding.”