Economists expect AI to erode some jobs but shortages in these areas persist in CT

While the stock market is still running hot, the jobs market is cooling slightly heading into 2026 in Connecticut and across the country. But while artificial intelligence is expected to erode positions in some industries, others in the state have seen longtime shortages, including nursing, police, and special education.

While the national unemployment rate is now 4.6%, Connecticut’s job market is even tighter at 3.8% in a trend that has endured in recent years. The 4.6% national rate is the highest in four years and an increase from the 4% rate when Republican Donald J. Trump became president.

Gov. Ned Lamont said it’s a mixed bag as officials try to make progress in an expensive state.

“The good news is we have a lower unemployment rate than the national average and our wages are higher,” Lamont said when asked by The Courant. “We particularly increased wages for working families and essential workers. But to the bigger point, we’re making sure that we train people who otherwise may be losing their job or do not have a job. We can provide them free job training with no out-of-pocket cost and virtually guarantee them a job. It’s getting tougher now because the job market is getting softer than it was a year ago.”

Under changes that were signed into state law in 2019 by Lamont, the Connecticut minimum wage has been increasing steadily for years — going from $10.10 per hour in September 2019 to nearly $17 per hour soon on New Year’s Day. The spike represents one of the sharpest increases in the nation at nearly 70% in less than seven years. The wage increases annually because it is indexed to inflation and now competes for the nation’s highest with Washington D.C. at $17.95 per hour, Washington state at $17.13 per hour, and New York City and Long Island at $17 per hour.

The federal minimum wage remains at $7.25, meaning that Connecticut is more than double the national average.

At times, the state has had some difficulty in recruiting for specific jobs, such as state troopers, correction officers, and nurses in psychiatric hospitals.

“A year or two ago, when the job market was very tight, we were having a hard time recruiting,” Lamont said. “You think, hey, the pay is OK, and you’ve got the pension. But we were not that competitive in some areas, compared to the private sector. Again, with the softening job market, I think you’ll see more people coming in.”

Connecticut Business and Industry Association, the state’s largest business lobby, notes that the job openings have fallen from recent years when there were 80,000 to 100,000 available jobs at any given moment. The available jobs have included thousands in the health care industry that range broadly from laboratory technicians to nurses and doctors. Others include manufacturing, in addition to truck drivers with a commercial driver’s license as the warehouse and transportation industries have been expanding. Jobs have also been available in the “fintech” industry of new financial technology companies, which has been growing in lower Fairfield County.

“There’s still a lot of job openings out there in Connecticut,” said Chris DiPentima, CBIA’s chief executive officer. “It’s come down over the last 12 months to 68,000 job openings. But that’s still a lot of jobs, given the fact that there are probably about 70,000 unemployed people — so it’s almost one to one for the number of job openings versus the number of unemployed.”

Based on those numbers, workers with the right skills should be able to find a job, he said.

“If you have the skills, you should be able to find the job that you’re looking for,” DiPentima said. “If you don’t have the skills, the state of Connecticut has invested in a lot of workforce development programs, post-pandemic, that were set up specifically to give at least some level of skills so that you can get an entry level job in a career and then work their way up.”

Artificial intelligence

The state’s economic development director, Daniel H. O’Keefe of New Canaan, says that the growing field of artificial intelligence will have a direct impact on Connecticut jobs in the future.

“I am worried about the acceleration of displacement that I expect will come with things like AI,” O’Keefe told The Courant. “That happens every time there is a massive technological shift. I’m confident we’ll eventually have more jobs than fewer, but you still have to work through that dislocation. So this is a real area of focus for us.”

Many predictions have been made, for example, that there will be a reduced need for paralegals to conduct legal research and fewer radiologists because AI can read X-rays and MRIs. But radiologists are still employed because some insurance companies will refuse to pay claims unless they are overseen by radiologists and cannot be done exclusively by AI, officials said.

“I predict there will be an economic dislocation in the short term,” said O’Keefe, a former longtime technology investor who graduated from Brown University and Harvard Business School. “If you go back over the first-order innovations — the printing press, the steam engine, the telephone, the big ones — there is oftentimes concern about work being fundamentally re-architected. Every single time, we’ve leveraged these new tools to grow our economy. I remain confident it’s going to happen here. We, as a state and a country, need to get in front of it.”

He added, “It’s moving incredibly quickly. The impact on our economy — I know, not think — is going to be profound. What I believe is it’s going to be a radiologist, assisted by AI, as opposed to AI itself. So the key is to understand how to leverage these much like we used the calculator and the spreadsheet in my old job in finance. They became tools of productivity, while we still applied our own judgement and experience. That’s where I want to keep us focused on how do we make sure this is a tool we can leverage so that we are the strong state competitor and geo-political competitor versus getting left behind.”

For now, he said he is also focused on the labor participation rate, which at 64% in Connecticut is better than the national average of about 62%. Some economists focus on the participation rate as a broader view of the overall jobs picture.

“The challenge that we are working on is that GDP is growing faster than jobs,” O’Keefe said. “My job is to create good, well-paying jobs.”

Teaching

Some of the professions that employ thousands of workers, such as teaching and police, have their own recruiting problems.

At the start of the current school year, the state’s largest teachers’ union released its annual survey in which many teachers expressed their concerns about the changing profession.

Dealing with stress and student behavioral problems, teachers are facing difficulties in the public schools, particularly in urban systems like Hartford that has had high turnover of teachers for years.

“The problems in our schools are growing more severe, and teachers’ calls for action are being ignored, leaving students to pay the price,” said Kate Dias, president of the Connecticut Education Association. “Our educators are underpaid, disrespected, and stretched beyond their limits — and many are being driven out of the profession in search of careers that value their work, pay them fairly, and treat them with dignity — leaving many classrooms without certified educators to teach our children.”

The concerns stretch throughout the industry, rather than stemming from a small group.

“Almost all of our educators (98%) say stress and burnout is their top issue, up from 97% last year, yet nothing is being done to address the crisis and keep our dedicated educators in the classroom,” said Dias. “Growing demands, constant changes, lack of meaningful support, and compensation that is not competitive with the level of education and skill required for the profession have made the job unsustainable. We have a high level of commitment in our profession, and educators love and believe in the work that they do, but if we want to retain them and attract the next generation into the classroom, our leaders and school districts must stop ignoring the problem and start collaborating on real, lasting solutions.”

Further, the survey stated that “nearly half of all teachers surveyed (45%) and 47% of special education and urban teachers are considering early retirement or leaving the profession.”

In addition, when asked whether they would recommend a teaching career to family and friends, 60% of all teachers surveyed said they would not.

In the post-pandemic world, some teachers said the students have changed, making it more difficult in the classroom. In the survey, the behavioral changes that teachers reported in their students included increased stress, less concentration, and increased aggression, among other problems.

Concerning physical clashes with students, 39% of all teachers surveyed said they “have been harmed by a student,” while 74% of special education teachers said they had been harmed by a student.

Nursing

In another hands-on profession with stress, nursing has seen difficulties in recent years.

While hospitals, nursing homes, public schools, and other sites serve as major employers, the nursing profession has come under strain as a difficult job for multiple reasons. In Connecticut, the health care system needs to hire about 3,000 nurses annually to replenish the ranks because of retirements, departures, and burnout in the profession, officials said. But only 2,682 new nurses enrolled last year — a trend that has repeated through the years, officials said.

“America is facing a nursing shortage of over 195,000 unfilled positions, projected to grow to 400,000 by the end of this decade,” said U.S. Rep. Rosa DeLauro, a New Haven Democrat who serves as ranking member of the powerful House Appropriations Committee. “Nurses do the vital and difficult day-to-day work of caring for patients while making sure exam rooms, operating rooms, and ER’s are functioning for when we need them most. We should be investing in every stage of our nursing development pipeline — from high school to college to post-graduate degrees and certifications — to address this shortfall, not making it more difficult to train and retain nurses in our hospitals. We also must address the skyrocketing cost of education in this country.”

The nursing shortage has led directly to high amounts of overtime in the Connecticut state budget, officials said.

Statistics from the state comptroller’s office show that the state spent $378 million for overtime during the 2024 calendar year across nearly 50 departments in state government. The highest amounts were in the state prison system with $113 million in overtime, followed by the Department of Mental Health and Addiction Services at $62 million and the state police at $60 million, according to the records.

Among the top 25 individuals with the most overtime, 17 work for the state police, while six work in mental health facilities. Three of the top five employees, at more than $230,000 each for overtime alone, work at the Whiting Forensic Institute, an inpatient psychiatric facility for those in the criminal justice system who require 24-hour care and have been committed by the Psychiatric Security Review Board or need to have their competency restored before trial.

The high amount of overtime at the mental health department is related mainly to nurses working at Whiting and Connecticut Valley Hospital, both in Middletown. Amid the nationwide nursing shortage, the hospitals are paying overtime to nurses in order to fill shifts, officials said. In addition, the staffing ratios need to be higher for the patients who have more complex needs than those in general hospitals, officials said.

Economy

Longtime Connecticut economist Don Klepper-Smith, who has since moved to South Carolina, closely tracks the national economy and searches for both the good news and the bad news.

“Consumer sentiment in the U.S. is at a 50-year low,” Klepper-Smith said. “It’s never been this low without a recession. Job layoffs are up by 65% year to date, the highest in 22 years. Tariffs are costing households in the U.S. $1,800 annually.”

He added that 22 states are currently in recession, saying, “The U.S. likely entered a recession at the beginning of the fourth quarter.”

Another problem, he said, is that the previously official government data “has been politicized and is no longer credible.” While the ‘official’ inflation rate is 2.7%, private data places the rate at a much higher level, he said.

The odds of a recession during the next 12 months, Klepper Smith predicts, are 70%. While the United States has avoided a recession for years, he says that downturns are to be expected.

“Recessions are the ‘cleansing mechanism’ that help rid our economy of excesses, and they’ve been going on for the last 250 years,” he said. “The ‘creative destruction’ of the domestic economy, with new engines of economic growth coming to the fore, and others receding, is all part of the U.S. business cycle.”

The American economy has avoided a major recession since the huge financial downturn in 2008-2009 that included the collapse of the Lehman Brothers investment banking firm and a huge drop on Wall Street.

The U.S. then suffered a brief recession during the coronavirus pandemic, but the economy bounced back sharply when businesses started opening up as conditions improved.

Looking ahead, artificial intelligence is expected to play a bigger role in the Connecticut economy, but it has not happened yet in some areas.

In a recent CBIA survey, 67% of companies that responded were not using AI in the workplace, including many small and mid-size businesses.

“We’re not hearing a layoff associated with AI,” DiPentima said. “AI is making the workflow more efficient, more streamlined. But we are at the infancy. There’s a lot more to come.”

Connecticut’s bread and butter industries — finance and insurance, as well as manufacturing — are labor intensive industries.

“AI is not going to be able to come in and do the job of a welder or a machinist or a toolmaker,” DiPentima said. “We can use AI to make those industries more efficient and grow, but they’re not going to replace an individual’s job.”

Christopher Keating can be reached at [email protected]