Layoffs at People’s United Bank associated with its acquisition by Buffalo, N.Y.-based M&T Bank will have a devastating effect on economy in Bridgeport and the rest of Fairfield County, a Connecticut economist said Monday.
And one of Connecticut’s U.S. senators said that could reach throughout the state.
Donald Klepper-Smith, chief economist and director of research for DataCore Partners, said the 747 layoffs announced at People’s United that M&T announced last week will result in the loss of an additional 1,153 jobs elsewhere in the Connecticut economy.
“The Bridgeport labor market area is going to be put on its haunches for at least a year or two by this,” Klepper-Smith said, “These people will not be absorbed into other jobs easily.”
For every dollar earned by People’s United, another $1.18 is spent elsewhere in the local economy, he said
“The financial services sector has some of the highest multipliers of any in the economy,” Klepper-Smith said. “They are pretty sizable.”
Multiplier effects are used by economists to determine the kind of impact a business has on an economy.
Because the financial services sector is highly competitive, Klepper-Smith said “decisions are increasingly driven by economies of scale.” Banks that are merging seek to recover the costs associated with the deal by seeking to eliminate duplication of service, particularly back-office operations that don’t deal with customers.
During a press conference Monday in Hartford, U.S. Sen. Richard Blumenthal, D-Conn., expressed his concern about the layoffs, which he called “massive, unprecedented in recent history.” Blumenthal was told about of the layoffs just 24 hours before M&T notified the Connecticut Department of Labor on Thursday, but wasn’t given any details about the scope of the job cuts.
“These layoffs could well turn downtown Bridgeport or at least that part of it, into a ghost town, with ripple effects throughout Fairfield County and even the state of Connecticut,” Blumenthal told reporters. “They are exactly the kind of layoffs that have prompted me and others to say we have to stop the acquisitions and mergers that are out of control.”
Blumenthal said he is considering asking for a review of the merger by either the Federal Reserve or the federal Comptroller of the Currency.
Bridgeport Mayor Joe Ganim is demanding M&T Bank rethink its layoff plan. In a letter to Connecticut Attorney General William Tong, Ganim said, “if these shocking layoff proposals do not diminish significantly, City Finance will re-evaluate previously positive depository relationships with People’s and M & T Bank.”
“I am asking that you stand with me, and other elected officials, to demand that M&T Bank improve transparency and rethink its plan which will negatively impact the livelihood of thousands of families in the State of Connecticut,” Ganim told Tong in his letter.
M&T Bank officials said that when the layoffs occur, those who lose their jobs will be given priority as the Buffalo-based financial institution seeks to fill 1,500 currently vacant positions.
“People’s United employees … impacted in the merger will be given first priority for applications for these open positions that meet their experience and qualifications, and we will work to maximize the ability to obtain M&T employment from their existing work location,” an M&T spokesman said in a statement.
But company officials have not responded to questions by Hearst Connecticut Media as to whether employees who are laid off would see their pay cut if they were to apply for new positions with a lower rate of pay. Blumenthal said People’s United employees that are being laid off should receive “equivalent pay, equivalent jobs, equivalent responsibilities, fairness.”
“We’re going to be watching like a hawk, what they actually do,” he said. “More than their words, I care about their actions.”
Blumenthal said the layoffs contradict assurance he previously received from “People Bank officials at the highest level.”
The layoffs will take place between Oct. 1 and May 20, 2022, with majority occurring in 2022, M&T bank officials said Monday.
Bridgeport will become a regional headquarters for M&T when the merger is complete. Of the 747 jobs being eliminated, 661 of them are based in that city, according to the filing M&T made with state officials.
The job cuts in Bridgeport are likely to leave significant amounts vacant space in the People’s United headquarters. But John Boyd, whose Princeton, N.J.-based company evaluates locations for many of the nation’s corporate giants, said finding a tenant for whatever office space the bank vacates “should not be overly challenging.”
“We’re getting calls like never before looking at options in Fairfield County,” Boyd said. “We expect a number of companies in the tech, life sciences and co-working businesses to be looking at options like this in Connecticut. Timing is everything in economic development and in this case, timing is a friend because Connecticut is really booming.”
An M&T spokesman said Monday that “substantially all People’s United branch employees, including those who work in the Stop & Shop branches,” will be retained when the merger is completed.
People’s United officials announced in late January before its merger with M&T became public that it will not to renew its existing in-store branch contracts with Stop & Shop supermarkets in New York and Connecticut.
People’s United officials said at the time there would be no immediate effect on supermarket branch employees because the bank won’t begin pulling out of the Stop & Shop locations until 2022.
M&T officials promised on Monday that “community giving and reinvestment will remain a central part of the joint company’s mission through their respective foundations” and M&T.
“The combination of M&T and People’s United’s is a unique opportunity to create a new organization that will strengthen our ability to serve our combined communities and customers, and provide solutions that make a difference in people’s lives,” said René Jones, chairman and chief executive officer of M&T, who will lead the combined company in the same capacity.
The merger, which was unanimously approved by the boards of directors of each company, is subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals. Shareholders of M&T and People’s United, at special meetings of their shareholders on May 26, 2021, approved the transaction.
luther.turmelle@hearstmediact.com