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Shrinking Labor Force A Trend Across New England

The startling statistic prompted Condon to call a meeting in December of other economists from around the state to consider what might be happening.

The experts have rejected several theories, such as workers taking early retirement. Those quitting are 40 to 60 years old, too young to retire, Condon said. Statisticians also haven't seen evidence that workers are leaving Connecticut, he said.

Even with the smaller labor force, Connecticut's unemployment rate in December was 8.6 percent, above the U.S. rate of 7.8 percent. Condon expects revisions in March will add several thousand jobs, but that would not affect the number of workers who quit the labor force.

"We can't find any reason why Connecticut should be this phenomenon of a labor force declining," he said. "We're just not different enough."

Nationally, the share of workers participating in the labor force fell from 66 percent before the start of the recession to less than 64 percent as millions of workers quit looking for jobs.

In New England, only Vermont's declining labor force participation comes close to Connecticut. The workforce there shrunk about 1 percent between 2008 and 2012.

The drop in Vermont's labor force is the result of "pent-up demand" to retire, said Mathew Barewicz, economic and labor market information chief at the Vermont Department of Labor. He said the labor force expanded during the recession as older workers stayed on the job longer to boost retirement accounts or young people found work and put off college.

In Rhode Island, with an unemployment rate of 10.2 percent in December, the highest in the region and tied with Nevada for No. 1 in the United States, the labor force shrank just 0.4 percent, according to federal data.

Rhode Island's older workers are dropping out of the labor force and, if able, living off savings or incomes of spouses, said Edward Mazze, distinguished university professor of business administration at the University of Rhode Island. In addition, many Rhode Island workers are employed in businesses bordering Connecticut and Massachusetts and are counted in the states where they work, he said.

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