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Article In The Atlantic Asks: "What On Earth Is Wrong With Connecticut?"

Jul 7, 2017

The state of Connecticut is mired in a financial crisis. Facing a projected $1.7 billion deficit over the next two years, the General Assembly has yet to agree on a new budget to cover that gap while maintaining crucial services. Earlier this week, an article published in The Atlantic asked the question, "What on Earth is Wrong with Connecticut?"

WNPR's Ray Hardman spoke with senior editor Derek Thompson, who wrote the piece. Thompson said Connecticut is in many ways a "Rorschach state" -- everyone sees something different when it comes to the state's finances.

Derek Thompson: Conservatives look at the state, and they see its high taxes, underfunded pensions, the high deficit, and they think this is the apotheosis of liberal policy. And then liberals look at the state, and look at its incredible income inequality, and say: this is what happens when wealth inequality wreaks havoc on any state's fiscal picture.

Yes, taxes are important. Yes, income inequality is important. But one thing that's often missed about Connecticut is the simple out-migration rate. The number of people that are leaving Connecticut is really extraordinarily high, and I think in many ways, this comes down to the fact that although it does have many corporations, it's not a place where young college graduates typically want to cluster unless they absolutely have to work in Stamford for a hedge fund or private equity firm.

As a result, its cities and its near-city suburbs have trouble attracting young talent, and that has a feedback loop where it discourages corporations from wanting to stay here.

I think that right now, the fiscal situation that we're seeing, the crisis that we're seeing, is very much a result of a failure of the state to attract young talent, to attract new families.

WNPR's Ray Hardman: What's changed? Let's go back a little bit into Connecticut history. First, how did Connecticut become such a successful state, and why is it lagging now?

It's sort of exactly like the United States, but more so. In the 1950s, it was a manufacturing state. Half of jobs in Connecticut were in manufacturing in the 1950s.

It then became a finance hub in the '70s. In the 1970s, New York was grim. It was dangerous. There were a lot of corporations -- dozens of corporations -- trying to leave Manhattan, and Connecticut welcomed them into its leafy suburbs with open arms, and this was fantastic for the city's economy and for its per-capita wage growth.

But in the last few years, New York City and Boston have had a bit of a renaissance, particularly when it comes to corporate relocations and young people wanting to move into those metros. And so as I say in the piece, at the end of the 20th century, New York's pain was Connecticut's gain.

But now it's the converse. New York and Boston again is Connecticut's pain.

I think a lot of people have kind of resigned themselves to the fact that there's not much that Connecticut can do to out-compete a revitalized Boston, or a revitalized New York City. Where does that leave Connecticut, then?

It's a really interesting question, and a really difficult question. You know, I looked at a Connecticut tax study that was prepared, and it made a couple of really interesting points.

One is that when you compare per-capita Connecticut state spending to other states, you find that they overspend on education; they overspend on Medicaid. Connecticut has a lot of older residents. But they underspend on things like colleges, on things like highways, transportation infrastructure, public parks. It's really good for children; really good for older residents; but not great for people in their 20s, 30s, and 40s.

You write that Connecticut is not fitting in with new migration trends, where people tend to be migrating to revitalized cities and cheap suburbs in warmer climates. It seems Connecticut is really the opposite of all that.

Yeah, as I say in the piece, the hottest trend in America today is moving south, moving west, and moving cheap. And that is the opposite of Connecticut.

Of the 20 fastest-growing metros in the U.S., none of them are in the Northeast. So it's not just that Connecticut's prime age population, some of its most talented workers, are more likely now to go to Boston and New York. It's also that some of its slightly older workers might now be more likely to go to the South and West to hotter climes.

And so I think that you add all of this together, and it creates a bit of a perfect storm for Connecticut's long-term demographics.