Foundation of ‘eds and meds’ has helped to shield Elm City from recession’s worst woes
Residents of greater New Haven have suffered during the recession that is generally agreed to have started in December 2007, but the area has weathered these troubled economic times better than the rest of Connecticut and most of the nation, economists agree.
The same advantages that have carried the New Haven region through the past two years of economic turmoil should continue to help the region’s economy over the next couple of years as well, as the national economy slowly regains its health.
New Haven is blessed with large educational and medical institutions that tend to withstand economic downturns more robustly than industries such as finance, insurance, manufacturing and transportation. The educational and medical industries here also have continued to support new construction to a greater degree than in other cities, as evidenced by the large number of building projects going up or recently completed around town. And while manufacturing is off in the region, it’s held up better than in the rest of the state, partly because educational institutions drive much of the area’s high-tech manufacturing activity.
The region also is home to dozens of arts organizations and nonprofit groups, and while these entities are coping with serious revenue declines — often through layoffs — they continue to support a significant portion of the area’s employment base.
“Connecticut’s unemployment rate has remained below that of the nation. The emphasis on health care and education has kept the New Haven economy somewhat insulated,” says Donald L. Klepper-Smith, chief economist of DataCore Partners in New Haven and chairman of the Governor’s Council of Economic Advisors.
Between October 2008 and October 2009, the New Haven Labor Market Area lost 5,000 jobs, or 1.8 percent of the total, according to the Connecticut Department of Labor. That was by far the mildest job loss in the state over the period, as the Danbury region lost 3.9 percent of its jobs (2,700 jobs), Hartford 3.3 percent (18,300 jobs), and Bridgeport-Stamford 3.3 percent (13,900 jobs).
New Haven’s unemployment rate stood at 8.3 percent in October, compared with 8.8 percent in Connecticut as a whole and 10.2 percent nationwide.
“Hartford is driven by insurance and finance, both hit hard by the recession,” Klepper-Smith says. “In New Haven, Yale University is the hub — you have a lot of start-ups coming out of the university, and so Yale is a primary engine of economic activity.”
Building Boom
While Yale has placed a couple of building projects on hold, the university has largely continued its physical growth over the past two years, most notably opening a new building for the Yale School of Forestry & Environmental Studies and renovating the David S. Ingalls Hockey Rink. Yale is also moving ahead with plans to build a new, 237,000-square-foot School of Management building on Whitney Avenue and recently submitted the design to the City Plan Commission.
Yale also is renovating the former U.S. Repeating Arms Co. building in Science Park and plans to occupy most of the massive, 266,000-square-foot factory while leasing out the rest.
Another major driver has been the recent opening of Yale-New Haven Hospital’s $450 million Smilow Cancer Hospital, which will treat cancer patients from all over the country. And Covidien Surgical Devices recently announced it will consolidate its headquarters in New Haven, relocating 400 employees from Norwalk and North Haven to the Long Wharf Maritime Center.
“The city is fortunate in that it has Yale, major health-care facilities and research labs,” observes Joseph Slepski, a research analyst for the state’s Department of Labor. “The area has suffered along with all the other areas in the state, but not as much. For instance, the number of manufacturing jobs has dropped statewide, but in New Haven the rate of decrease has been much less than in other areas.”
Slepski says that’s partly because Yale University, Yale-New Haven Hospital and the Hospital of St. Raphael act as magnets to attract high-tech and biotech firms, and partly because city officials have worked to provide support services through Science Park and other incentives to keep manufacturers in town.
Several other area universities also are keeping construction workers busy and creating new facilities that will employ hundreds of area residents. Quinnipiac University in Hamden recently opened a new campus in North Haven, renovating buildings previously owned by Anthem Blue Cross & Blue Shield, and is also building a new 85,000-square-foot student center and a new residence hall. However, the recession has led Quinnipiac to delay plans to renovate the Mt. Carmel Athletic Center on the Hamden campus.
At the University of New Haven, the new Henry C. Lee Institute of Forensic Science is slated to open in autumn 2010. Southern Connecticut State University is expanding Engleman Hall and recently doubled the size of its Hilton C. Buley Library, major aspects of a $230 million campus-wide expansion project. However, state budget cuts have forced SCSU to delay some other renovation plans.
In addition, Gateway Community College is proceeding with a $200 million plan to relocate from Long Wharf to downtown New Haven, with a planned opening in autumn 2012.
Anthony P. Rescigno, president of the Greater New Haven Chamber of Commerce, says area corporations and even construction firms have remained strong throughout the downturn. “Everybody’s feeling a pinch, but for the most part companies have maintained a good amount of business,” he says. “We have great universities and two major hospitals. Lots of companies feed off of those two industries, and that has helped sustain us.”
Rescigno also points to the ongoing construction of a 500-apartment residential tower at 360 State Street as evidence the construction industry remains vigorous locally. The $180 million project, which will also include some retail space, is slated to open in fall 2010 and will be New Haven’s largest building, at 700,000 square feet.
“We do have a lot to boast about at the moment, and we’re working really hard to keep it going,” Rescigno says.
An Uncertain Outlook
Looking to the future, Rescigno points out that retail business is down and the arts and nonprofit sectors have been hit with budget cutbacks and sharp declines in corporate contributions, which has led to layoffs at many organizations.
“I think it’s going to be more of the same — not a robust recovery but not remaining in the doldrums, either,” he says. “Any recovery is going to be moderate and slow-going. The jobs market and consumer spending drive the economy, and until people are confident their jobs are not in jeopardy there is going to be a lot of caution.”
Klepper-Smith is similarly cautious in his outlook for the local economy. “Going forward, I expect the public sector to consolidate, as we’ve seen in the private sector,” he says. “Hospital reimbursement rates are going down, and governments are consolidating in health care and education. With the state and cities cutting back we’re also going to see more cutbacks in tourism and the arts. We’re not out of the woods yet.”
Robert Santy, president and CEO of the Connecticut Economic Resource Center (CERC), says cities need to focus their marketing efforts efficiently, pushing areas of competitive strength. For New Haven that involves education, medical, arts and nonprofit organizations, he says.
“The educational and medical communities have helped create jobs in the New Haven region and they will continue to be critical drivers,” he says. “The three legs of the job-creation stool are large research institutions, major companies and entrepreneurs, and in New Haven that exists in the medical area, so we have to build on that. Cities should market in areas they already have strength, where you’ll get the biggest bang for your buck.”
In New Haven that also includes what Santy calls the “creative industry,” which includes everything from theaters and arts centers to graphic design and architectural firms. “Everybody knows the arts provide a great amenity, but they also can be an economic driver, particularly because of the film tax credit the state offers,” Santy says. “We need to take advantage of these opportunities.”
| < Prev | Next > |
|---|
