Last Updated: April 9, 2022

What Do State of Connecticut Contracts and Work Rules Have To Do With Real Estate?

Written By: Barbara L. Pearce
people sitting at a desk looking at a report

Connecticut recently completed new contracts with State workers, and confirmed new work rules in arbitration.  Why do those things matter to the real estate market?  The short answer is that everything affects everything.  The longer answers are more complicated.

Let's look at supply and demand

More than a third of retiree State employee checks are mailed out to other states.  That means that lots of people who retire from the State move away.  Since the State is such a large employer, more retirees mean more supply.  However, the new contract gives workers bonuses, whether they stay or go, but more if they stay, and big pay increases.  Is that going to keep some of them in the workforce longer?  It could.  Will it make more of them, with higher earnings, buy new homes?  That seems less likely, but it's possible.  

What seems more likely is that the inflationary effect of higher wages will add to upward price increases in other sectors of the economy, making it harder for non-State employees, who may not have bonuses and increases, to purchase homes.  Combined with higher interest rates, and higher gas prices, that may have a chilling, or at least cooling, effect on the heated market for homes.

How about the new work rules? 

The Governor lost in arbitration, and now cannot force State workers to spend more than one day a week in the office.  That's somewhat of an oversimplification, but the basic idea is that work flows, which are already slow due to COVID, may well stay that way.  Permits, inspections, approvals, and licenses may all be held up longer.  That slows down the whole real estate sector, but may be the greatest problem for commercial real estate.  Businesses may take longer to get into space, or renovate it.  They may also take longer to do every kind of transaction, meaning that expansion of their businesses will be slower, and they won't need as much real estate.  Connecticut's attempt to become a more business-friendly place can take a hit unintentionally--you don't need to be rude to someone to be unhelpful.  If you aren't there at all to answer the phone, or process a piece of paper, that isn't helpful to anyone.

One upside of the mass exodus from State offices is the positive effect on traffic, especially around Hartford.  If other people can get to work faster, or move goods more easily, that helps the State economy, and saves money with roads that need fewer lanes, or suffer less wear and tear.  Of course, the State is not the only employer to go remote, or partially remote, but it does add to this trend in a big way, for a small state.

Will it cost more to process required paperwork at the State? 

Inevitably, it will.  Upward pressure on wages will lead to price increases.  Since business has to file when others do not, the attention won't be on what it needs.  Instead, legislators will worry about how long it takes to get a license at DMV, or other areas that affect the average citizen more. They will try to automate, or reduce, those requirements, because of constituent complaints. While commercial establishments care about DMV waits also, there are many other filings and questions that will take longer, and won't be addressed.

Can anything be done? 

Yes!  Management and employees, as well as other citizens, should keep in touch with legislators about these issues.  Writing or texting counts.  Business Day at the Capitol is coming soon, and showing up counts even more.   Pay attention to what is written about State contracts and work rules, so that they can be compared to private industry.  The latter has upward wage pressure too, as well as relaxed work rules in many cases.  They, however, still have to get the job done.  Let's all help to make sure that Connecticut as a whole also gets the job done.  Your voice matters. 

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