Hartford Business Journal

www.HartfordBusiness.com • May 4, 2020 • Hartford Business Journal 17 stagnant wages and the rise of dual- income households, higher internet speeds and other telecommuting technology have led to a national state of "permanent rootedness." Still, post-coronavirus migration potential bears watching, says Lehm- an, Brennan and other economic-de- velopment experts, though there are no plans right now to make that part of the state's formal marketing strat- egy, given the sensitivities around the pandemic and the fact that Lamont is working closely with New York Gov. Andrew Cuomo to deal with it. "I'm not sure it's something we should be promoting or going after right now, but the state and various regional and local levels of govern- ment should be prepared to accom- modate firms that are looking for space in Connecticut, regardless of what the reasoning is," said Donald Poland, an urban planner with real estate advisory firm Goman+York. David Griggs, CEO of the Metro- Hartford Alliance, which counts company recruitment among its aims, agrees that Connecticut should not try to exploit New York City, which has suffered from COVID-19 more than any other metro area, with nearly five times the infections per capita as Hartford, as of mid-April. Marketing the Greater Hartford region to New York and Boston firms has been and will continue to be part of the state's and region's strategy, but Griggs said the focus should re- main "who we are, what we're great at and who should be here." "We don't want to take advantage of New York getting hard-hit," he said. "We don't want to pirate. We need to be a good neighbor." Pandemic's impact on location, recruiting decisions When conditions return to some- thing more normal, many predict that workplaces as we knew them will not. Telecommuting is likely to become the new norm for more companies, many experts agree, which could change where businesses and talent locate and shift state and local governments' economic-development strategies. "I think everyone was testing the waters on remote working for the last 20 years, but now we are in a great experiment, and I think we are realizing the strengths of it as well as some of the limitations, but my feeling is that when we come out the other side of this, it's going to be more of a norm," said Poland, the urban plan- ner. "That really does change the landscape of where firms locate and where individuals locate." From a recruiting standpoint, he said, more telecommuting means firms will have a wider labor pool to draw from, while individuals no longer have to move for a new job. Workers are more likely to choose where they live based on what lifestyle they prefer, or where their families and social networks are, rather than job prospects. "That may further undermine the notion that we may need to cluster together in large cities," Poland said. Tom Stringer, managing director and practice leader of site selection and incentives at BDO, an internation- al accounting and consulting firm, said economic development has historically focused on attracting firms, and com- panies located places based on access to resources, talent and customers. But a rise in remote working could flip that notion on its head, es- pecially if people have the ability to live wherever they want, regardless of where their job is located. Com- munities, he said, might want to focus more on attracting highly paid individuals, rather than companies. "If you have more highly paid and skilled people working [in a community], that changes an economy maybe more so than an employer," in terms of its im- pact on a tax base, Stringer said. For employ- ers deciding where to base their people and infrastructure, the pandemic may also accelerate a trend that's already been occurring — spreading out operations across mul- tiple locations for purposes of disaster backup, redundancy and other factors. "The idea of operating from mul- tiple locations has been around for a long time for a whole host of rea- sons," said UConn economist Fred Carstensen. "And it's not just the coronavirus — it's flu, it's security reasons, having backup for critical functions so you can work 24/7." Diversifying corporate locations will ramp up moving forward, Carstensen predicts, and Connecticut's often-tout- ed proximity to New York and Boston may pay dividends as companies look to maintain locations nearby. But he worries any benefits to Con- necticut may be lost due to what he has long criticized as a lack of state investment in big data infrastructure. "If we had better IT infrastructure we would be able to do more," he said. Cooke said it makes sense that some employers will decide to further spread out after the pandemic, though he doesn't predict any massive migra- tion wave. "It could be an important hedge to make," he said. "Real estate values are prob- ably down and probably will go down." A return to 'normal' As Nutmeg- gers long to put COVID-19 in the rearview mirror, Carstensen and fellow economist Donald Klepper- Smith, of Data- Core Partners, say it's worth remembering that Connecticut's pre-pandemic economy wasn't doing great. The state never fully recovered the 120,000 jobs lost in the last recession, and its inflation-adjusted GDP growth has been nearly nonexistent since then. Klepper-Smith said Connecticut may lose more jobs per capita than other states in the coming (or current) COVID-19 recession, due to the state's reliance on financial services jobs. He expects at least as many lost jobs in Connecticut this time around as in the Great Recession, and he doesn't portend a snappy V-shaped recovery. "Consumption doesn't come back like that," he said. "There is a sea change in personal consumption af- ter this. You don't go back to things the way they were before." Carstensen said the state needs a new economic direction post- pandemic, one that will bring more high-paying jobs back to the state. "We were headed in the wrong direction for a decade, with job creation in low-wage, low-skill" sec- tors like tourism, hospitality, home health and nursing homes, he said. The ongoing slowdown is certain to be a "big net negative" for Connecticut in the short run, Carstensen said. The long run is what's up for grabs. "This is one of those moments where everything is on the table. So the ques- tion is, how do you respond?" he said. Klepper-Smith agrees. While the state may gain some jobs from New York in the wake of the pandemic, Connecticut may just as easily see some of its jobs move south. So, no one should count on post-pandemic migration solving the state's long- standing economic challenges. "If we can see the state of Connecti- cut making meaningful policy changes to promote business confidence, then it's very well within the realm of pos- sibility that we could see an influx of businesses," Klepper-Smith said. Major U.S. metro area population trends Population Size Annual population growth Rank Metro area 2019 7/14-7/15 7/15-7/16 7/16-7/17 7/17-7/18 7/18-7/19 1 New York-Newark-Jersey City, NY-NJ-PA 19,216,182 0.2 0.1 (0.1) (0.2) (0.3) 2 Los Angeles-Long Beach-Anaheim, CA 13,214,799 0.5 0.3 0.1 (0.2) (0.3) 3 Chicago-Naperville-Elgin, IL-IN-WI 9,458,539 (0.1) (0.2) (0.2) (0.3) (0.3) 4 Dallas-Fort Worth-Arlington, TX 7,573,136 2.2 2.2 2.0 1.6 1.6 5 Houston-The Woodlands-Sugar Land, TX 7,066,141 2.6 2.0 1.4 1.1 1.3 6 Washington-Arlington-Alexandria, DC-VA-MD-WV 6,280,487 1.0 0.9 1.0 0.6 0.5 7 Miami-Fort Lauderdale-Pompano Beach, FL 6,166,488 1.3 1.4 1.0 0.4 0.4 8 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 6,102,434 0.2 0.2 0.2 0.2 0.2 9 Atlanta-Sandy Springs-Alpharetta, GA 6,020,364 1.7 1.8 1.5 1.2 1.3 10 Phoenix-Mesa-Chandler, AZ 4,948,203 2.0 2.1 1.8 1.9 2.0 48 Hartford-East Hartford-Middletown, CT 1,204,877 (0.2) (0.3) (0.1) (0.1) (0.1) Source: William H Frey analysis of Census Bureau Population Estimates, released March 26, 2020 Joe Brennan, President and CEO, Connecticut Business & Industry Association David Griggs, CEO, MetroHartford Alliance

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