Are We Still the Land of Yankee Ingenuity?

Jan 18, 2013

Economists and policymakershave been shaking their heads at the lackluster job growth in the aftermath of the Great Recession. But economic downturns are nothing new. With ingenuity, the state has bounced back through some very tough times in the past. WNPR’s Sujata Srinivasan takes a look at the nature of the recovery from an historical perspective.

The poet P.B. Shelly said: “History is a cyclic poem.” That may well hold true for the land of steady habits, which – since Colonial times – has reinvented its economy repeatedly to meet the needs of the day.

“I don’t think I’ve ever felt this strongly that what we are seeing in the Connecticut economy right now is what Connecticut has seen in the past on several occasions.”

That’s State Historian Walter Woodward. He traces Connecticut’s role in America’s rapid transition from an agrarian, to an industrial and post-industrial economic superpower. In the early 19th century, when agriculture was no longer enough to support economic growth, Nutmeggers learnt to harness water power, creating factory villages that became industrial centers. These early factories created remarkably skilled technicians – a talent pool that attracted entrepreneurship in the machine tool industry. By 1880, Hartford was one of the richest cities in the nation.

“Between 1880 and 1930, we lived on the fruits of that industrial revolution. But that machine tool-driven manufacturing had peaked. And in-fact as we moved into the late twenties, we were shimmering on another transition.”

This time, Connecticut transitioned into the high-tech aerospace industry, whose seeds were sown in the early 20th century, when Albert Augustus Pope founded Pope Manufacturing in Hartford – maker of bicycles and later, automobiles. During the transition to aerospace, the state was led by Governor John Harper Trumbull, who piloted his own plane, and Senator Hiram Bingham, also a pilot. Woodward says it’s an old Yankee trait to go out and find new opportunities.

“In the early 1800s, Connecticut got a reputation for the Yankee peddler. These were the sons of farmers who would work all year on the farm and then when fall came and the crops were in, they would get on a steamboat or they’d head out with a suitcase full of goods manufactured in Connecticut. And they would go all across the country, and they would spend the winter, wheeling and dealing, selling Connecticut goods.”

The state still retains that spirit, Woodward says.

“I think it’s this combination of high energy, high intelligence, the willingness to go out to find your market, and the charm to cut the deal.” 

The Industrial Revolution displaced manual labor in farming. But it also created the demand for skilled machine operators. Now, like back then, skills are a differentiator, says economist Alissa DeJonge of the Connecticut Economic Resource Center – or CERC.

“Where Connecticut can be competitive is in these areas that require a more educated workforce where we are creating more customized products and services.”

In this current recovery, the state is doing quite well in creating high value goods and services. Connecticut Department of Labor economist Patrick Flaherty.

“We’re seeing development of a big variety of industries from pharmaceuticals to computer technology-based businesses to of course our leadership role in bio-medical and of course education services. People come to Connecticut from all over the world to go to college.”

In spite of these new opportunities, job growth has been sluggish. One reason could be the steady increase in U.S. productivity, among the highest in the world. Higher productivity results in higher economic output – companies get more out of less labor because of workforce and technology efficiencies. Economists say another factor in the slow job growth is the cyclical nature of the labor market. As the economy picks up, businesses will produce more in response to increased consumption. There will be more demand for labor.

“Fundamentally it’s a cyclical problem. I think that some of the constipation we’re seeing within the labor market is just due to a lack of overall demand. On the other hand, the cyclical can become structural, meaning that the people that lost a job, that if the economy had bounced back right away would have been right back to work have now been out of work long enough that their skills have begun to become a little out of date.”

CERC economist DeJonge says some of the structural changes may be even more fundamental.

“I think some of it is cyclical in nature just because of the ups and downs of the economy.  However we are seeing also some structural changes, which means that there are some shifts in the economy where those jobs that are lost aren’t necessarily going to come back once the economy recovers.”

That’s because, once again, there are deep changes in the economy itself. And that’s a very difficult and painful process. But State Historian Woodward says these changes could also create job opportunities in other areas of employment, just as it has in the past.

“Since the early 19thcentury, Connecticut has displayed a remarkable ability to adapt to a changing environment. At each step along the way when things dipped, this state had the foresight and the ability to build on the best skills of that period and find the next thing.”

The hope now, is that this extraordinary history or resilience and reinvention, will repeat itself.

For WNPR, I’m Sujata Srinivasan.