Lembo Says Connecticut Has Trouble Keeping Recent College Graduates

By Scott Benjamin

State Comptroller Kevin Lembo (D-Guilford) says “part of the core problem” in Connecticut’s economy is that college graduates are facing unprecedented student loan debt in a suburban state that can’t compete with the thick-labor-market innovation hubs where jobs are plentiful.

“An increasing number of those people want to live in the big cities and be near public transportation,” he said in phone interview. “Generally, we can’t offer that here, although we have pockets of that kind of economic activity.”

Republican pollster Kristen Soltis Anderson, who is 32 and authored “The Selfie Vote” in 2015 that analyzed how young people vote, told Recode.net that the 2008 financial crisis has made many mellenials reconsider the goals of getting a college degree or buying a house.

“You mean I have to start in an unpaid internship after graduation?” she said. “Hang on. Wait, you told me I should buy a house, but now the bank just took our neighbors’ house.”

Lembo, who is expected to be a contender for the Democratic gubernatorial nomination next year if Lt. Gov. Nancy Wyman of Tolland doesn’t enter the race, said Connecticut is “probably” further stymied since it doesn’t have forceful regional planning like some other states.

“We’re a diverse state where there can be different land-use regulations from one municipality to the next,” said the comptroller who is in his second term.

Donald Klepper-Smith, the chief economist at DataCore Partners in New Haven, has said that Connecticut continues to have the slowest recovery among the six New England states from the 2008 economic recession.

The Wall Street Journal reported last month that in the finance and insurance sector, Connecticut has only recaptured 20 percent of the jobs that were loss, compared to rates of 77 percent in Massachusetts, which features the Route 128 corridor brain hub – and 69 percent in New York state.

“The answer to why that has happened is multi-faceted,” Lembo said. “But part of it is that we say that we’re open for business and then send inconsistent messages. Businesses are concerned about changes in the tax code and they see that the state budget keeps going into deficit.”

Earlier this month, Lembo projected a $44.6 million deficit for the fiscal year that ends in June. There is a projected $1.7 billion deficit for the fiscal year that starts in July.

Plus, the state has huge unpaid pension obligations that are crowding out funding for existing programs.

He said he gives “real credit” to Gov. Dannel Malloy (D-Stamford) for significantly increasing the pension fund payments since taking office six years ago. “It had been a long time since a governor made that kind of commitment. The funding had been kicked down the road. It had been as though you get your credit card statement each month and you only pay part of the bill.”

Malloy, who announced earlier this month that he would not seek a third term, has been engaged in informal negotiations with the state employee collective bargaining units for months on restructuring their pension system.

Regarding future job growth, former U.S. Sen. Joe Lieberman (D-Stamford) said during his 2006 re-election campaign that in 25 years there would be more people employed in fuel cell technology than any other sector of Connecticut’s economy.

Since then, UTC Power in South Windsor, which had taken fuel cell technology out of the laboratory and into consumer applications when it annexed the contract with NASA in 1966, was purchased by an Oregon company in 2013 and closed its Connecticut operations. Late last year, Fuel Cell Energy, with facilities in Danbury and Torrington that had been growing in recent years, laid off 96 employees.

Lembo said fuel cell technology could still become a large part of Connecticut’s economy, noting that, for example, there are still several companies in the state doing research and development in the field and the University of Connecticut Center for Clean Energy Engineering is an established research facility.

Lembo said, in general, businesses and consumers have become more cautious since the financial crisis.

“There are some people who never want to own anything again,” he said regarding the impact of the subprime mortgage crisis, which has created negative equity in many houses.

“There appear to be more appropriately-priced homes now,” Lembo added. “But there is concern among some people about making any kind of big purchase for a consumer item.”

The comptroller said even if the Federal Reserve Board continues to increase interest rates after a long period during the recession in which they remained low, he doesn’t expect them to go to the double-digits of nearly 40 years ago.

“It’s going to stay in the single digits,” Lembo said. “But there is a genuine concern that if they remain low for too long you could have a wave of inflation.”

Washington Post economics columnist Robert Samuelson has stated that could be at the nation’s peril.

“The lesson of the double-digit inflation of the late 1970s and early ‘80s is that, once higher inflation captures popular psychology it takes a crushing recession to purge it,” he wrote last month. “That’s probably still true.”