William McEachern

English

Research Papers in Economics

New England Check-Up 
The Long View 
In the 19th century, agriculture was the
primary industry, manufacturing the sec-
ondary, and services the tertiary. In 1850,
well over half, 63%, of the U.S. work force
was in agriculture, growing enough food to
feed the nation.  Remaining workers split
between manufacturing with 18%, and
services with 19%. In New England, only
34% of the work force in 1850 was in agri-
culture, with 38% in manufacturing and
28% in services. So manufacturing’s share
was twice as large in New England as in
the nation. Because water power was the
primary energy source used in manufactur-
ing, New England’s many rivers, streams,
and waterfalls offered the region a compar-
ative advantage, while rocky soil put agri-
culture here at a disadvantage. 
The chart below shows the distribution
of labor between 1850 and 1998, dividing
the work force into: (1) agriculture, which
also includes forestry and fishing; (2) man-
ufacturing, which also includes construc-
tion and mining; and (3) services, which
includes everything else. As the economy
developed, two forces increased the
demand for service workers. First, rising
productivity in both agriculture and manu-
facturing stimulated demand for trans-
portation, communication, financial ser-
vices, wholesale and retail trade, and the
other business services needed to support
a growing economy. Second, the higher
personal income that resulted from
enhanced productivity stimulated the
demand for dentists, lawyers, entertainers,
cooks, and others workers in services.
Historically, those nations with the highest
income per capita also had the highest
share of workers in the service occupa-
tions. Thus, as far back as 1850, New
England led the nation in economic devel-
opment.
Employment Shares Converge
Between 1850 and 1950, agriculture’s
share of U.S. employment dropped from
63% to 12%; in New England the share
plunged from 34% to 4%. The relative
share of manufacturing employment nearly
doubled nationally from 18% in 1850 to
34% in 1950. Manufacturing expanded in
New England, but more modestly from
38% to 44%.  The service sector in the
nation more than doubled as a share of
employment from 19% to 54%; in New
England it nearly doubled from 28% to
52%. Service growth occurred primarily in
trade, financial, and professional services.
By 1998, U.S. employment consisted of 3%
in agriculture, 19% in manufacturing, and
78% in services. New England’s distribu-
tion was 2% in agriculture, 20% in manu-
facturing, and 78% in services. 
Though not shown in the bar chart,
Connecticut’s employment distribution in
1950 was 3% in agriculture, 49% in manu-
facturing, and 48% in services. By 1998
Connecticut’s distribution converged fur-
ther toward the U.S. and New England dis-
tributions, with 1% in agriculture, 21% in
manufacturing, and 78% in services. 
New England Income Differences 
The nation is divided into eight census
regions. New England led the nation in
per capita income in 1997, 20.0% above
average. Connecticut was the top state,
exceeding the national average by 42.2%,
one of the largest leads any state ever
had. At the same time, Maine ranked
36th nationally at 13.7% below the
national average. Vermont ranked 30th
nationally at 8.6% below the national
average.  Put another way, Connecticut’s
per capita income was 55.0% above
Vermont’s average and 64.2% above
Maine’s average. The income disparity
among New England states was the great-
est of any census region in the country. 
New England’s per capita income in
1950 was only 6.7% above the national
average, ranking the region fourth highest
among the census regions. Connecticut’s
per capita income was 23.2% above the
national average, fifth highest in the
nation.  Was per capita income more even-
ly distributed among the New England
states back then?  Not really.
Connecticut’s per capita income was
59.4% above that of the poorest New
England state, Vermont, and 54.3% above
the second poorest state, Maine. Vermont
and Maine ranked 40th  and 37th in the
nation. The income disparity among New
England states was the greatest among the
eight census regions in 1950.
Although New England states are often
viewed as relatively homogeneous, cross-
state income differences have been, and
still are, greater in New England than any
other part of the country.   The difference
in per capita income between Connecticut
and Maine in 1997 was comparable to the
difference between New Jersey and
Arkansas or between New York and
Mississippi. 
Comparing Poverty Rates
Although Connecticut has high per capi-
ta income, the state still has its share of
poverty.  The chart below compares recent
poverty rates for Connecticut, other New
England states, and the nation.  Because
state samples are small, the Census
Bureau reports a two-year moving average.
In 1996-1997, an estimated 10.1% of
Connecticut’s population was in poverty,
down slightly from 10.7% in 1995-1996,
lowering the number in poverty by about
20,000 people. Connecticut’s rate was sec-
ond lowest among New England states.
New Hampshire had the lowest poverty
rate in New England and in the nation.
The national average was 13.5% in 1996-
1997, down a bit from 13.8% in 1995-
1996.   
Two States Dominate New England
Few realize how much Connecticut and
Massachusetts dominate New England’s
economy. Connecticut accounts for 24.4%
of New England’s population, 24.2% of
the labor force, and 28.9% of its personal
income.  Massachusetts accounts for
45.7% of New England’s population,
45.8% of the labor force, and 46.9% of
the personal income. The two states com-
bined make up 70.1% of the population,
70.0% of the labor force, and 75.8% of
the personal income.  
The four other New England states
together account for only 29.9% of the
population, 30.0% of the labor force, and
24.2% of the personal income.
Connecticut’s population falls below the
combined populations of Maine, New
Hampshire, Rhode Island, and Vermont,
but its total personal income exceeds by
one fifth the total for those four states. 
18 The Connecticut Economy Fall 1998
WILL MC EACHERN’S STRAWS IN THE WIND
Poverty Rates in New England 
Developed by The Connecticut Economy based on estimates of poverty
rates published in Poverty in the United States:  1997, Current Pop. Re-
ports P60-201 (September 1998), U.S. Bureau of Census.
Work Force Share in New England
and U.S. in 1850, 1950, and 1998
P
e
r
c
e
n
t
 
o
f
 
W
o
r
k
 
F
o
r
c
e
Based on estimates for 1850 and 1950 from The Economic State of New Eng-
land,Committee of New England (Yale University Press, 1954); figures for 1998
are from U.S. Labor Dept. and staff estimates.
Percent in PovertyDon't Forget to Visit Us On The Internet  -  http://www.lib.uconn.edu/ccea/quarterly.htm
Job and Labor Force Growth
Recent issues of The Connecticut
Economy have underscored problems that
a flat labor force create for continued job
growth.  The chart below compares
Connecticut’s job growth and labor force
growth with other New England states and
with the U.S. average.  Between 1995 and
the middle of 1998, jobs in Connecticut
grew a total of 5.4% but the labor force
grew only 0.4%.  For New England, jobs
grew 6.4% and the labor force 2.2%.
Connecticut ranked third among New
England states in job growth and last in
labor force growth.   Massachusetts experi-
enced the highest job growth and
Vermont, the highest labor force growth.
National job growth was 7.3%; labor force
growth was 3.9%.  Hence, for Connecticut,
New England, and the nation, the growth
rate in jobs exceeded the growth rate in
the labor force, though the difference was
greatest in Connecticut.
Economy 
THE CONNECTICUT
A University of Connecticut Quarterly Review
Connecticut Travel
and Tourism Index
The overall index increased
8.6% in the third quarter com-
pared to the same quarter the
year before.  The index consists
of hotel-motel revenues, hotel-
motel occupancy rates, atten-
dance at six major tourist
attractions, and traffic on five
tourist roads.
Hotel/Motel Rev. H 16.1%
Occupancy Rate H 0.9%
Attendance H 16.1%
Traffic H 2.6%
Overall H 8.8%
Job Totals
(not seasonally adjusted)
Weekly
Manufacturing
Hours
(not seasonally adjusted)
Service Jobs
(not seasonally adjusted)
Labor Force
(not seasonally adjusted)
Indexed so 1990 = 100
G
r
o
w
t
h
 
R
a
t
e
Growth Rate in Jobs and Labor
Force Between 1995 and 1998
Developed by The Connecticut Economy based on U.S. Bureau of Labor
Statistics estimates published in New England Economic Indicators.
ECONOMIC SCORECARD

New England Check-Up

http://cteconomy.uconn.edu/articles/WMb_F1998.pdf

New England Check-Up

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics