More than two years into the pandemic, Connecticut's unemployment rate is almost back to pre-COVID levels. But the state lags behind in recovering lost jobs, and industries are still struggling to find enough workers.

On Monday, Gov. Ned Lamont toured FCP Euro, a Milford auto parts supplier, to highlight the state’s strong job numbers. According to the Connecticut Department of Labor, July unemployment dropped to 3.7%.

"We've brought our unemployment rate down dramatically, much faster than the national average,” said Lamont.

Connecticut also added 6,500 jobs in July, but the state has only recovered 88% of the jobs lost during COVID.

At FCP Euro, business is booming – ironically because the overall economy is struggling. Since new cars are in short supply, people are holding on to their old ones – and new parts to do it.

FCP Euro is growing so fast, soon it will expand to a much larger distribution facility in Arizona. Although that state is cheaper to operate in, FCP Euro says it’s committed to Connecticut.

"There is an incredible amount of talent in Connecticut,” said CEO Scott Drozd. “There is a great pool of talent; that pool of talent still exists."

But many workers still aren't working, as labor participation rates lag nationwide. Here in Connecticut, the Department of Labor blames a shortage of child care, job training, and transportation. Plus, many people are starting their own businesses.

“A lot of folks may have quit their old job working for, whether it's FCP or somewhere else, and they're starting a new venture,” said Connecticut Economic Development commissioner David Lehman.

This year’s state budget included extra job training programs and more than a half a billion dollars in tax cuts and rebates. Bus rides are also free for most of the year.

"We have the most expansive expansion of our workforce development we've ever had in the state, making sure you have transportation, making sure you have day care,” said Lamont.

But Lamont’s Republican challenger, Bob Stefanowski, says too many of the tax cuts are temporary. He has called for a 1%, across-the-board drop in the income tax rate – paid for partly by the state’s multibillion-dollar surplus. Lamont calls the proposal fiscally irresponsible, instead using surplus funds to pay down long-term debt.