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The GE-exit and its Impact

In January 2016, General Electric announced it was relocating its current headquarters from Fairfield to Boston.  General Electric’s departure was a “punch in the gut,” as the Hartford Courant characterized it (Singer, 2016).  The GExit – or Gexit - provided a powerful rallying cry for business groups and conservatives seeking to forestall the years of weak job growth in Connecticut and a sluggish economic expansion (Phaneuf, 2017).  Others dismissed it as (relatively) inconsequential –pointing to the fact that the relocation entailed about 200 jobs leaving Connecticut, a triviality when compared to a workforce of 4,000 (Singer, Despite Departure, GE Leaving 600 Jobs in Norwalk, 2016).  Indeed, the “200 jobs lost” refrain seems to have cemented itself in our collective understanding as the sole consequence of GE’s departure. 

But did GE’s departure cost us “only” 200 jobs?  To be sure, the true effects are still to be fully understood (Zimmerman, 2017).  But it is important to know the full impact of the Gexit because it’s true costs can serve to inform any future consideration of policies proposed by legislative leaders; policies likely to influence individual and business decisions.  Specifically, we examine the performance of Total Employment in the region where GE was once headquartered – the Bridgeport-Norwalk-Stamford metropolitan statistical area, the 58th largest in the nation.  We find that the impact on total employment was considerably higher than the oft-repeated “only 200 jobs.” In fact, we estimate that the cumulative job loss for the region over the period February 2016-through February 2017 amounts to approximately 66,000 jobs.

The following 3 graphs tell the whole story. Figure 1 shows Total Employment for the Bridgeport-Norwalk-Stamford (“BRD”) region and for the United States for the period January 2009 through February 2017.  The BRD region is where GE’s headquarters were located data Bureau of Labor Statistics data, seasonally adjusted and rebased to equal 100 in January 2010.  The vertical dashed line is set at January 2016, the date of the Gexit announcement. 

Two features stand out.   First, the US has dramatically outperformed the region over the last three or four years; and second, CT appears to have taken a turn for the worse before the January 2016 Gexit announcement.

 Figure 1

 

The second graph shows two time-series. The first, the darker, thicker line, is the original BRD employment data.  The second dashed times series is the predicted estimate of a statistical model fit on historical data for the BRD region.  The vertical dashed line is January 2016, the date of the Gexit announcement.  Past the vertical line – the period after the announcement, the line representing predicted Total Employment and the line representing actual Total Employment diverge.  The monthly difference between the two series represents the jobs that would have existed but-for the Gexit.  The cumulated sum of this difference represents the total impact of the GE move. 

 

Figure 2

 

Figure three is a visual depiction of the cumulated jobs lost in the region, following the announcement of GE’s departure on January 2016.  This amounts to a cumulative loss of 66,000 jobs.  Obviously, we cannot ascribe all 66,000 jobs to GE’s departure but it was certainly greater than 200 jobs.

Figure 3

 

 

The Source of  the GExit

 

Coming out of the great recession, Connecticut was outperforming the US.  So much is evident in Figure 1.  But at some point in its recent history Connecticut took a turn for the worse.  Here we examine statistically what can be inferred (and confirmed) visually, that there was a change-point in the Total Employment series in November 2013.  Figure 4 shows the historical Total Employment series expressed as percent change from year-to-year. It includes a vertical dashed line identifying the statistically determined change point of November 2013.

 

 

Figure 4

Notably, this change-point date is well before the GE announcement. Thus, it suggests that GE was just bailing from a flailing ship and perhaps just heightened the decline in jobs.

 

Works Cited

Phaneuf, K. M. (2017). Legacy of Debt- A Five-Part Series. The Connecticut Mirror. Retrieved April 20, 2017, from https://ctmirror.org/2017/01/30/a-legacy-of-debt-connecticut-standing-on-its-own-fiscal-cliff/

Singer, S. (2016, May 9). Despite Departure, GE Leaving 600 Jobs in Norwalk. Hartford Courant. Retrieved April 24, 2017, from http://www.courant.com/business/hc-general-electric-jobs-20160509-story.html

Singer, S. (2016, December 29). GE Moves Headquarters to Boston. Hartford Courant. Retrieved April 24, 2017, from http://www.courant.com/business/hc-top-10-stories-3-20161229-story.html

Singer, S. (2016, January 12). Possible GE Departure Called a 'Glaring Black Eye' for the State. The Hartford Courant. Retrieved April 24, 2017, from http://www.courant.com/hc-ge-fairfield-20160112-story.html

Zimmerman, K. (2017, April 13). GE Leaves `a Hole in Fairfield's Soul' - and Economy. Westfair Online. Retrieved April 16, 2017, from https://westfaironline.com/88187/fairfield-ge-panel-offers-many-questions-answers/

 

NB: This is a succinct version of a longer study conducted by the New Haven Economic Performance Laboratory staff; to be found here.

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