Economic Loss East Hartford, Connecticut Term Paper

The national unemployment average was 7,591,000 in 2005. Therefore, an addition of 8,500 people would represent a.11% change in unemployment. Factor in additional domestic job losses from the closing of that company, and it is very possible that the closing of Pratt & Whitney would be enough to cause a reversal in the current trend, which is a decline in unemployment rates.

Connecticut's unemployment compensation would experience the most immediate and dramatic impact. For example, if all of Pratt & Whitney's employees are entitled to full unemployment benefits, then the first unemployment cycle for those employees would result in over $4 million in unemployment benefit payments. If all of those employees remain eligible for unemployment for the full benefit period, those payments would total over $104 million. Those estimates may be high, because not all employees would qualify for the full benefit payment or for the entire benefit period. In addition, many of the employees might find other employment. However, even if the total payments are only half of the estimated totals, it is clear that the unemployment insurance system would experience a tremendous strain if Pratt & Whitney closed.

Unemployment is a state program, but local government finances would also suffer tremendously. Although Pratt & Whitney's local taxes were not available, it is clear that a multi-million dollar facility is going to have a property tax liability that exceeds the hundreds of thousands. In addition, if Pratt & Whitney is paying all of its 8,500 employees at least minimum wage, then it is paying out $2,516,000 in wages each week, which yields just under $1 million in federal, state, and local tax revenue. Therefore, it is clear that Pratt & Whitney's closing would have a dramatic impact on the state and local economy.

It is impossible to assess the financial impact to the social service sector if an employer the size of Pratt & Whitney closed in a city the size of East Hartford. First, lower wage workers and workers in rental facilities would be likely to relocate to more favorable employment locations within a relatively short period of time. However, those people who own their homes and need to relocate to find employment would find themselves in a precarious position because the housing market would be flooded. As a result, people may find themselves unable to sell their homes or keep up current house payments. The stress and strain could lead to thousands of people experiencing additional physical and mental health problems. Furthermore, many of these people may be left without insurance because of an inability to make Cobra insurance payments. The fact is that East Hartford's social service sector could not handle the strain without some type of assistance from the state, because even if each person only placed an additional $100 burden on the social service sector, that would amount to almost $1 million. Social service agencies simply do not have that type of excess operating budget. Therefore, it should be clear that…