As published as an OpEd in the New Haven Register, March 22, 2009.

State Must Create Good Jobs to Stop Its Decline. Here’s How

By Fred V. Carstensen

Connecticut is in decline. No, I speak not of the current economic and fiscal crisis. I speak of Connecticut’s 20-year economic decline. The casinos brought thousands of jobs. Stamford emerged as a center for financial services and welcomed the arrival of major international banks. The state invested billions in Connecticut’s public educational system — significantly increasing the share of our best high school graduates staying in Connecticut for college.

The state and municipalities have taken multiple development initiatives. Yet Connecticut’s economy has failed to create more jobs in 20 years. Worse, high-wage, high-skill jobs are disappearing; low-wage, low skill jobs growing. And, Connecticut has seen no increase to the number of its business establishments — the poorest performance in the nation. The result is that Connecticut has the largest out-migration of young professionals in the nation.

Unless we take the initiative to change these trends and the underlying structure of the state’s economy, when Connecticut emerges from this recession, we will confront an enduring crisis: a poorly performing economy, unable to compete in the regional, national or global economy, unable to create jobs that keep our best and brightest here, unable to generate the tax revenues to sustain the quality and breadth of state and local government services we not only expect but increasingly need.

We can not look to our traditional sectors of manufacturing, financial services, insurance, or defense to restore the state’s economic health. But Connecticut already has made a strategic investment in exactly the right sector — life sciences. The funding for stem cell research is already bearing fruit. Clearly, life sciences is a growing sector, one in which Connecticut has the potential to be become a far more significant player.

Developing the partnership between the University of Connecticut School of Medicine, a new John Dempsey Hospital, and Hartford Hospital — creating the University Hospital on two campuses — in conjunction with the Health Collaborative that brings six Hartford region hospitals into a coordinated clinical framework, would fulfill this potential.

Governor Rell, as part of her response to the short-term fiscal crisis, proposed halting nearly $400 million in bonding for projects that create short-term construction jobs, but fail to enhance directly our long-term competitiveness. The governor’s recommendation clearly argues for focusing capital expenditures on building a more dynamic economy that creates those high-skill, high-wage jobs Connecticut has failed to create for 20 years.

The University Hospital partnership meets this standard. It offers the opportunity to build a world-class center for research in the life sciences, to create a major health complex, and to become a magnet for biomedical firms. These developments would capture the full benefit of Connecticut’s innovative stem cell research initiative. More important, given both the current situation and long-term trends, the University Hospital partnership and the associated Health Collaborative will create thousands upon thousands of new, quality jobs.

This investment pays for itself through new tax revenue; the study by the Connecticut Center for Economic Analysis shows a positive cash flow for the state from completion of construction of the new Dempsey Hospital. Ultimately, this initiative returns to the state twice the cost of the bonding in new revenue.

More important, creation of the University Hospital and the Health Collaborative elevates the UConn School of Medicine into the top ranks. It would not just deliver significantly improved health services to the state; it builds a health sciences complex able to compete successfully for a major share of the billions of dollars flowing into medical research annually.

UConn currently ranks 63rd in National Institutes of Health medical school funding; reaching the top 20 would expand research funding more than threefold — by more than $100 million; reaching the top 10 would mean bringing in an additional $200 million.

I have tracked the performance of Connecticut’s economy and participated in evaluating the economic potential of most major economic development projects proposed for the state for a dozen years. The University Hospital proposal simply ranks above every other initiative. The new Dempsey Hospital, the Health Collaborative, and the University Hospital partnership would transform the economic foundation of central Connecticut. It would benefit every hospital in the region, and, ultimately, all medical care in the state.

The conservative CCEA analysis anticipates this project generating more than 18,000 new jobs — without inclusion of the economic impact that will flow from the life science firms drawn to this complex. For the state, the project pays for itself — twice over.

Connecticut must chart a new path to avoid an enduring fiscal crisis and to secure a better economic future. Even as we struggle for a balanced response to the current, short-term budget challenges, we have before us this remarkable opportunity to make a signal investment that will pay large dividends for generations to come.