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New Business Creation in Connecticut Up 2.6 Percent in 2020 Despite Pandemic

  • Connecticut Department of Labor publishes data on establishment and job growth during 2020
  • Establishment creation was more robust than in 2019 despite the COVID-19 pandemic
  • Social assistance company formation skyrocketed in 2020 while private household service businesses and jobs plummeted

Summary by Dirk Langeveld

Connecticut experienced increased growth in new business starts during 2020 despite the COVID-19 pandemic, according to Quarterly Census of Employment and Wages data published by the Connecticut Department of Labor. At the same time, the state was down nearly 125,000 jobs compared to 2019.

Overall jobs in Connecticut were down by 124,908, or 7.5 percent. The workforce in the private sector, which accounts for 86.2 percent of employment in the state, fell by 7.8 percent between 2019 and 2020. Government employment fell 5.3 percent.

Between July and December, 5,927 new businesses were started in Connecticut – an increase from 4,908 in the same period in 2019. Overall, the number of businesses in Connecticut increased 2.6 percent to 127,003 in 2020. Nearly all of these were private companies, while the number of government worksites rose 0.6 percent to 3,368.

Average annual wages increased 8.1 percent to $75,411, including an 8.2 percent jump to 76,341 in the private sector and a 7.3 percent increase to $69,594 in government. However, the Connecticut Department of Labor cautioned that the perceived wage increases were largely skewed by the loss of jobs at the lower end of the pay scale.

Business trends

Most sectors in Connecticut suffered net job losses between 2019 and 2020. Accommodation and food service jobs suffered the worst blow amid pandemic-related lockdowns and were down 31,418 positions, or 24.4 percent. Jobs in the “other services” category were down by 18,314, while retail shed 15,099 positions.

The Connecticut Department of Labor noted how these figures can be misleading due to the strange circumstances of 2020, namely how the first quarter was largely unaffected by the pandemic, the second quarter experienced the worst impact, and the third and fourth quarters reflected economic recovery due to easing business restrictions. The department noted how retail has already recovered to its pre-pandemic levels, although accommodation and food service continues to struggle.

Sectors that experienced across-the-board job losses included manufacturing, wholesale trade, and finance and insurance. In addition to transportation and warehousing, the agricultural sector saw a modest improvement in employment due to gains in animal and crop production jobs.

In individual businesses, social assistance companies rocketed up 259.9 percent between 2019 and 2020, from 2,561 establishments to 9,218. Jobs in this category increased by 2,966, or 5.1 percent.

ISPs, search portals, and data processing companies increased by 50.5 percent, from 507 to 763. This industry had the second most significant gain in jobs, which increased by 387, or 19.4 percent.

Establishments in mining (excluding oil and gas) had the second most significant increase, rising 63.6 percent between 2019 and 2020. However, this field saw its number of establishments increase from just 44 to 72, while employment fell 2.9 percent – a year-over-year loss of just 14 jobs.

Major employment gains occurred in warehousing and storage (up 40.2 percent, or 5,659 jobs), couriers and messengers (up 24.9 percent, or 2,360 jobs) and federal government (up 5.4 percent, or 990 jobs). Numerically, the largest job losses between 2019 and 2020 occurred in food services and drinking places (down 26,849) and local government (down 12,317).

Private household services saw a major decline, with these establishments falling 60 percent from 9,674 to 3,873. The number of people employed in this field dropped by 66 percent, with a loss of 9,375 jobs.

Water transportation lost just four companies, falling from 30 to 26, but employment in this industry was nearly halved, with 473 job losses representing a 49.3 percent reduction. In the performing arts and spectator sports sector, a total of 1,932 jobs were lost between 2019 and 2020 – a drop of 46.8 percent.


Average annual wages were highest in the finance and insurance sector at $183,574, or 2.4 times the start average. Workers in the securities, commodity contracts, and investments subsector earned an average of $351,377 a year during 2020. Managers earned an average annual wage of $154,043.

Wages in goods-producing jobs rose 3.3 percent to $83,177, putting them 10 percent above the annual wage for all industries. Service-producing wages increased 8.9 percent to $74,121.

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