Connecticut hit a record 1.496 million private-sector payroll jobs in August. But another number in CT’s latest labor report is harder to celebrate: 72,400 fewer Connecticut residents were employed than a year earlier.
Those figures measure different things, and neither cancels out the other. The payroll numbers are strong. The resident numbers are not.
Compared with August 2025, Connecticut had 16,700 more private-sector payroll jobs and 15,700 more payroll jobs overall. August itself was essentially flat, with total payroll employment declining by 300 jobs.
Connecticut Department of Labor (CTDOL) Commissioner Danté Bartolomeo called the state’s economy “steady and stable,” pointing to job growth across multiple industries and payroll employment above 1.73 million.
There is good news in those numbers. Another part of the same report looks considerably less steady.
Connecticut’s labor force fell from roughly 1.933 million people in August 2025 to 1.879 million in August 2026, a decline of about 54,400 people, or 2.8%.
The estimated number of Connecticut residents employed fell from about 1.855 million to 1.783 million over the same period — approximately 72,400 fewer people, or 3.9%. The estimated number of unemployed residents increased by about 18,000.
That does not mean Connecticut lost 72,400 jobs.
The payroll survey counts jobs based on where people work. The household-based estimates track the employment status of Connecticut residents.
Someone who lives in Massachusetts but works in Connecticut can appear in Connecticut’s payroll count without being counted as an employed Connecticut resident. The resident stat also captures workers outside traditional nonfarm payrolls, including the self-employed and independent contractors.
CTDOL cautions that the two sets of numbers do not necessarily move in the same direction and should be judged over several months rather than by any single monthly swing.
But a 72,400-person year-over-year decline is difficult to dismiss as one bad month.
The Connecticut Business & Industry Association (CBIA), citing the Labor Department data, says it is the largest one-year decline in resident employment in 50 years outside the COVID-19 pandemic.
The resident figures are estimates, not a head count, and they can be revised as new data become available. But this is not just one unusual month: CBIA says resident employment has declined for eight consecutive months.
One obvious question is whether employers are laying off more workers.
Connecticut’s unemployment rate dipped from 5.2% in July to 5.1% in August. But it remains well above the 4.1% rate recorded in August 2025 and has been higher than the national unemployment rate for eight consecutive months.
In its August release, CTDOL said the rise in unemployment over the past year was “largely due to new entrants into the job market, not layoffs.”
In a statement provided to Yankee Institute (YI) on Sept. 18, a CTDOL spokesperson explained the department’s reasoning.
“New entrants to the labor market are generally not eligible for unemployment benefits; if the unemployment rate increases and unemployment benefit claims remain flat, it’s likely that the unemployment rate is impacted by new entrants than people who lost their job due to layoff,” the spokesperson said. “The CTDOL Research Unit generally sees the number of unemployment claims go up when layoffs are a factor.”
The claims numbers are consistent with that explanation. Initial unemployment claims averaged 3,030 per week in August, down from 4,066 per week in August 2025. CTDOL notes those figures are not seasonally adjusted and says comparisons with the same month in previous years are the better way to account for seasonal changes.
CTDOL Research Director Patrick Flaherty also provided YI with a closer look at who has accounted for the increase in unemployment over a longer period.
Using 12-month averages from the federal Current Population Survey, Flaherty compared the year ending August 2026 with the year ending August 2024. Over that period, the number of unemployed people increased by approximately 29,800.
Job losers accounted for about 4,500 of that increase. Another 8,800 were job leavers. About 8,200 were new entrants to the labor force, while 8,400 were reentrants — people returning after previously leaving the workforce.
Combined, new entrants and reentrants accounted for about 16,600 of the increase, more than half of the total. The individual categories add to 29,900 because of rounding, according to CTDOL.
There is a limit to what those figures tell us. CTDOL’s detailed breakdown covers a longer period than the one-year change cited in its August report, so it does not show exactly who accounted for the increase in unemployment over the past 12 months.
Nothing in those numbers suggests a major layoff wave. What they do not explain is why resident employment has fallen so sharply.
CTDOL noted that Connecticut is an aging state with a high number of retirements and that changes in federal immigration policy have been widely reported to affect labor-force participation.
Those factors may be part of the explanation. The August report does not quantify how much of the 54,400-person decline in the labor force, or the 72,400 drop in resident employment, can be attributed to retirements, immigration changes or any other single cause.
If state officials are going to celebrate record payrolls, the 72,400 fewer residents estimated to be working deserve just as much attention.
