UConn Report Warns Unemployment May Be Worse Than Previously Reported

Connecticut’s real unemployment problem may be much worse than official statistics suggest. That’s one of the conclusions of a new economic forecast from the University of Connecticut. WNPR’s Harriet Jones reports.

Economists from UConn looked at the proportion of state residents who have traditionally participated in the labor force, and compared it to recent jobs figures. By this calculation say the researchers, there may now be 400,000 work age adults in the state who would like to have jobs, but don’t.  Not all of them show up in the unemployment rolls, says report author Peter Gunther.

"Discouraged workers, who have simply given up looking for a job. That clearly implies the reservoir of capable labor force participants is much bigger than indicated by the unemployment rate."

Gunther also modeled what might happen if the incoming administration decides on sweeping, across the board cuts to services in its quest to balance the state budget. He says there’s the risk that true savings may not materialize.

"Because you end up having to pay welfare to the newly unemployed, begin losing population so you start losing your tax base, as well as obviously some corporate revenue taxes, because of the downward spiral of the economy."

Gunther says a more rational approach may be to look for efficiency savings in the provision of services, as well as boosting private sector activity with tax credits for research and development.

For WNPR, I'm Harriet Jones.