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Voices Speaking

July 28, 2016

Connecticut’s Income Inequality in Stark Contrast to Its Prosperity

Derek Thomas, M.P.A.

This blog was first published at the CT Mirror’s CT Viewpoints Website.

In the economic expansion following the great recession, the top 1 percent in Connecticut enjoyed exclusive benefit from all income growth, compared with 85.1 percent of income growth enjoyed by the top 1 percent in the United States as a whole. That is one of the findings in Income inequality in the US by state, metropolitan area, and county, a new paper published by Mark Price, an economist at the Keystone Research Center in Harrisburg, PA and Estelle Sommeiller, a socio-economist at the Institute for Research in Economic and Social Sciences for the Economic Policy Institute’s (EPI) Economic Analysis and Research Network (EARN).

In 1928, just before the Great Depression, the income of the top 1 percent in Connecticut was 31 times greater than the income of the bottom 99 percent (Figure 1). This gap decreased in the years from 1940 to the late 1970s as the middle class grew and living standards rose. This period of economic democratization ended in the 1980s, a period marked by, among other policy decisions, the erosion of the minimum wage, tax cuts for those with the highest incomes and a decline in unionization. Over the past thirty years, incomes for the bottom 99 percent grew by just 14.5 percent while the incomes of the top 1 percent swelled by 290.8 percent. As a result of this lopsided growth – a period in which the top 1 percent captured 71.6 percent of all income – incomes of the top 1 percent are now 42.6 times greater than the bottom 99 percent.

For historical perspective, Price and Sommelier compare the distribution of income growth during previous economic expansions. Prior to 1980, the top 1 percent in Connecticut captured, on average, 16.5 percent of overall income growth during the six economic expansions, and the bottom 99 percent captured a proportionate 83.5 percent. In the four expansions since 1980, however, economic recoveries have looked dramatically different: the top 1 percent captured, on average, 79.8 percent of overall income growth, while the bottom 99 percent captured just 20.2 percent.

The new data allows for intra-state analysis as well (illustrated interactively here). The authors find that the most unequal metro area in Connecticut – and the 2nd most unequal metro area in the nation – is the Bridgeport-Stamford-Norwalk metro area, where the top 1 percent makes 73.7 times more than the bottom 99 percent (Table 1).

Connecticut Voices for Children has illustrated the yawning socio-economic gaps in this region of the state. Within this metro area, poverty rates for children are nearly 23 percentage points higher for children in Bridgeport than they are for their peers in Stamford. Within Stamford itself, poverty rates for black residents are more than 16 percentage points higher than they are for whites.

Connecticut’s standing as one of the most prosperous states is at odds with its dubious distinction as one of the most unequal. Just as policy choices contributed to today’s dramatic levels of inequality, so too can policy choices (national, state and local) begin to tackle generational poverty and restore the American promise of economic mobility. Consider, for example, the revenue forgone by our state under the current tax system in which the bottom 95 percent of Connecticut households pay an effective tax rate of 11.3 percent while the top 5 percent pay a rate of 8.5 percent, resulting in a loss of more than two billion dollars in state revenue annually (see Figure 2).

By adding fairness to the state tax system, lawmakers could begin reinvesting in education, infrastructure and other smart investments to grow the state’s economy. Strategic investments would in turn increase opportunity across the state, enabling a return to a more democratic economy with a growing middle class and shared prosperity.

 

Issue Area:
Budget and Tax
May 10, 2016

School Discipline in Connecticut: Questioning Suspended Education

Though we know removing students from the classroom is harmful, exclusionary discipline continues to be used in schools across Connecticut. Research has shown that students who are suspended, expelled, or arrested are more likely to experience academic failure, drop out of school, and become involved in the juvenile justice system, feeding the school-to-prison pipeline. To help state leaders disrupt this pipeline, we analyze exclusionary discipline data to identify the factors affecting a student’s likelihood of entry to the system, and recommend interventions to disrupt their entry.

In past publications, we have raised concerns about the overuse and misuse of exclusionary discipline in public schools across the state:

  • Arresting Development: Student Arrests in Connecticut” (2013). We analyzed school-based arrest data from 2007 to 2011 and showed that although the overall number of arrests had declined across the state, a significant portion of those arrests were avoidable—that is, students were arrested for non-criminal behaviors that could likely have been addressed in the classroom. While arrest rates were higher for students of color, students in poorer school districts, and students with disabilities, we observed significant variation in arrest rates across schools and districts with similar student populations, which suggested school policies and practices may impact rates of arrests.
  • Keeping Kids in Class: School Discipline in Connecticut, 2008-2013” (2015). In our analysis of suspension, expulsion, and school-based arrest data from 2008 to 2013 we showed that as rates of exclusionary discipline use declined, schools continued to suspend, expel, and arrest students of color, students from poorer districts, and students with disabilities at rates disproportionate to their representation in the population of students enrolled in CT public schools. Additionally, in 2013, nearly 1 in 10 school-based arrests were for non-criminal violations of school policy (like profanity, insubordination, or dress code transgressions).

In our new series, School Discipline in Connecticut: Questioning Suspended Education, we take a deeper dive into school discipline data, closely examining which students bear the brunt of this overuse of discipline and identifying opportunities for intervention. Our past research shows that low-income students, students of color, and students with special education needs are disproportionately impacted by the overuse and misuse of exclusionary discipline. In this series, we study additional factors that may influence school discipline rates, including school type, degree of racial segregation, and intersecting student identities.

The first brief in this series, “Struggling with School Transitions,” highlights the potential relationship between school transitions and school discipline. Comparing rates of exclusionary discipline by grade level to enrollment data suggests that school transitions (e.g., from elementary to middle school or middle to high school) may be a point of stress for Connecticut’s students. School discipline rates spike in the sixth and ninth grades, grades in which the majority of the state’s students are starting at new schools. If student suspensions rise sharply in the sixth and ninth grades, and suspensions are associated with further exclusionary discipline, then the behavioral challenges of changing schools may inadvertently function to establish harmful patterns of removing students from the classroom, contributing to further problems down the line.

In upcoming briefs we will highlight factors including gender, race, disability status, English language proficiency, and racial segregation in schools and how these factors affect the type, severity and duration of discipline used. This series seeks to better identify the factors that influence the overuse and misuse of exclusionary discipline in schools. By developing targeted interventions to address these factors, the state can more effectively disrupt existing entry points in the school-to-prison pipeline, and improve school climate for all of its students.

Issue Areas:
Education, Juvenile Justice
April 25, 2016

Governor’s Proposal Puts Low-Income Families at Risk for Losing Health Coverage

Sharon Langer, M.Ed., J.D., Mary Alice Lee, Ph.D., and Dumingu Aparna Gomes

This post was first published at the CT Mirror's CT Viewpoints website.

Connecticut has every reason to be proud of its long-term commitment to ensuring access to care for low-income children and families through the HUSKY program (Medicaid and Children’s Health Insurance Program).  We have one of the lowest rates of uninsured residents in the nation, thanks in large part to the State’s Medicaid program.  Long before enactment of the Affordable Care Act in 2010, Connecticut invested in the health of its children and their parents by aligning income eligibility for everyone in a family.  This policy was based on knowing that when whole families are insured, children’s access to care improves and parents stay healthy for work and family responsibilities.  Just last month, Connecticut’s  Governor Malloy, along with Connecticut’s budget director and state Medicaid administrators, extolled the quality improvements and cost savings realized through innovative changes to the HUSKY program.

Some of this progress will be undone if the Connecticut General Assembly goes along with the Governor’s April budget proposal to reduce income eligibility for almost 10,000 low-income parents. For example, in 2016 the income limit for a family of four would be lowered from $37,665 (155 percent of the federal poverty level (FPL) to $33,534 (138% FPL).   Because of federal Medicaid rules, the estimated savings associated with reducing coverage is just $900,000 in state fiscal year 2017.  This cutback in parent coverage follows a very significant change in eligibility just last year (from 201% FPL to 155% FPL), the full effects of which will not occur until this summer when up to 20,000 parents may lose HUSKY coverage.  Taken altogether, this proposal means almost 30,000 low-income parents could lose affordable health coverage over the course of this year and next. 

State officials have emphasized that affordable health care coverage is available for these parents through the health insurance marketplace, Access Health CT. However, even with federal subsidies for premiums and limits on out-of-pocket costs, coverage in a qualified health plan can be very costly for low-income families. For example, a family with two parents and two children earning $48,843 could be billed as much as $13,676 (28 percent of household income) for their health coverage.   In addition, dental health insurance for adults is a separate purchase, without premium subsidies and with significant out-of-pocket costs for limited coverage.

We now know what can happen when coverage is cut for low-income parents:  Last year, most parents were eligible for a one-year extension, putting off until July 31, 2016, the risk that they will lose coverage altogether.  Among those who actually lost coverage last summer (645 parents),  just one in four enrolled in a qualified health plan through Access Health CT, including some who experienced gaps in coverage.  Three of every four parents who were cut from HUSKY A last year are not currently enrolled through Access Health CT and may be uninsured

Missing from the data collected last year is whether eligible children were cut off inadvertently from the HUSKY program when their parents lost coverage, as happened in Maine and Wisconsin.  

Experience in other states suggests that the effect of the rollback of Medicaid eligibility can be reduced in part with policies that address the financial burden for families forced to pay for their own coverage.  For example, Connecticut could use state subsidies to help reduce the overall costs of marketplace coverage.  To date, we have not heard discussion of these or other proposals to mitigate the effect of this cutback on Connecticut’s families. 

Cutting income eligibility for parents—once again and before the full effects of last year’s cut are evident—is a huge step backward in Connecticut’s long-standing commitment to covering children and parents in low-income families. 
 

April 22, 2016

Ready. Set. Give! Help CT Voices through The Great Give 2016

Great Give 2016READY!

Connecticut Voices for Children works to promote the wellbeing of all of Connecticut's children and their families by advocating for strategic public investments and wise public policies.
 

April 14, 2016

Ambitious Investments Will Boost Economy and Reduce Inequality

Rachel Leventhal-Weiner, Ph.D.

Last week, the Economic Policy Institute (EPI) released a report describing the high costs of child care in all 50 states, and the benefits of public investment in early childhood care and education. The authors of ‘It’s Time For An Ambitious National Investment in America’s Children’ propose an expansion of subsidies (known in Connecticut as Care 4 Kids) to allow parents access to affordable high quality child care, investments in high quality early education, and funding for before-and-after childbirth home visits – all of which will benefit children, families and the economy.

In their report, EPI finds that high quality child care is simply out of reach of many low- and middle income families. For example, in Connecticut, the annual cost for infant care is 6th highest in the nation at $13,880. This breaks down to $1,157 per month and is 37 percent more than in-state tuition at a four-year public college. Families with more than one child (an infant and a 4-year-old) would have to spend 29% of their income on childcare ($25,382 annually).

Annual Cost in Connecticut

Annual Cost Chart

Source: Economic Policy Institute: The Cost of Child Care in the United States

For too many families, the rising cost of childcare is prohibitive – particularly at a time of stagnating incomes. A full time minimum wage worker earning $19,968 annually would have to spend close to 70 percent of her annual income to afford high quality infant care for one child. Child care workers – low-wage workers themselves, earning on average just $21,840 yearly—would have to spent 63.6 percent of their annual earnings to put their own baby in infant care. Even for Connecticut families earning the median family income of $86,981, the cost of infant care amounts to 16 percent of household earnings, exceeding the recommendations of the US Department of Health and Human Services that child care costs should account for 10 percent or less of a family’s budget.

Expanding access to affordable care through subsidies and tax credits – such as the child and dependent care tax credit (CDCTC) – has enormous potential to improve the economic security of Connecticut families and the state’s economy. Among the findings:

  • Capping child care expenses at 10 percent of income would save the average Connecticut family with an infant $5,182 annually (it would save those with an infant and 4-year old $16,684 annually).
  • Decreasing child care costs by 1 percent would increase labor force participation by 0.2 percent, meaning more parents would be able to go back to work. The authors calculate that Connecticut’s gross state product (GSP) would increase by 1.2 percent or more than $3 billion annually.
  • Professionalization of the child care workforce would improve the economic well-being of providers and their families. Child care workers are disproportionately women and workers of color, meaning that higher wages among child care workers would help to close Connecticut’s gender-based wage-gap and vast racial pay gaps. By attracting and retaining a trained workforce, professionalization would in turn improve the quality of care.

Unfortunately, Connecticut, in response to structural budget challenges, is cutting investments in child care subsidy programs at a time when families can ill afford it; child poverty is at a record-high, low-wage work is replacing middle- to high-income work, and fewer families are being served by Care 4 Kids. The benefits to families and the state economy cannot be clearer. EPI is calling for an ambitious national investment in early childhood care and education, and we need the same here in Connecticut.

 

Issue Areas:
Early Care, Family Economic Security
March 18, 2016

Building Connecticut's Future

Derek Thomas, M.P.A. and Jesse Marks, Yale Law School Legislative Advocacy Clinic

As Connecticut’s slow recovery from the Great Recession enters its seventh year, it’s time to invest in rebuilding our long-neglected public infrastructure – a strategy that capitalizes on current low interest rates and will push long-term economic growth and lift wages.

A new report by the Center on Budget Policy and Priorities makes clear that America’s public infrastructure is being neglected. The American Society of Civil Engineers’ (ASCE) latest report card graded America’s public infrastructure at a “D+.” Bringing roads, bridges, water treatment facilities, and other infrastructure up to a state of “good repair” by 2020 will require $3.6 trillion of investment.
 

Public Infrastructure Has Been Neglected

Part of the problem is that we invest far less in public infrastructure than in the past, which could be related to the state’s lackluster growth. Federal spending as a percent of GDP on infrastructure has fallen by half over the past 35 years. State and local governments in all but five states cut infrastructure spending as a share of their economies from 2002 to 2013, the most recent year for which statistics are available.

Connecticut’s spending has followed this national trend over the past decade. Since 2010, however, only seven states, including Connecticut, have increased infrastructure spending as a share of the economy (a 0.12 percentage point increase).  Yet, Connecticut’s 2013 spending on infrastructure (1.49 percent of gross state product) remains less than it was in 2002 (1.70 percent in 2002). Connecticut’s spending also trails both the national average and several nearby states.

One reason this is a good time to recommit to public infrastructure investment is that states and localities can take advantage of unusually inexpensive borrowing. Nationally, interest payments on debt averaged just four percent of current spending in 2013, the lowest level since the Census began tracking this in 1977. This is driven in part by historically low interest rates, which are expected to continue.

State/Local Infrastructure Spending

Infrastructure investments can improve state economies – now and in the future. In the short term, infrastructure investments support employment – such as construction jobs - which are still below prerecession levels. For example, studies of the economic impact of infrastructure spending as part of the 2009 Recovery Act have found that a dollar of federal infrastructure spending has led to anywhere from $1 to $2.50 in additional GDP. Those effects would likely be somewhat less pronounced today, since we are no longer in the depths of a recession, but they would nonetheless be significant, since the state remains well below pre-recession employment.

Targeted infrastructure investments are also crucial in addressing inequality. Poorer areas often have worse infrastructure. Nationally, in areas where three-quarters or more of students are eligible for free and reduced lunch, a full 60 percent of schools are in need of repair. Low-income neighborhoods also often have a higher share of potentially-poisonous lead pipes. In most cases, such disparities are best addressed at the state level, since the municipalities themselves are usually poorer.  The CBPP report cites property tax systems in particular as contributing to municipal infrastructure gaps, an issue that could be alleviated through property tax reform in Connecticut.

The good news is that Connecticut is already re-prioritizing and starting to address its critical infrastructure, such as the “Let’s Go CT!” plan to provide a new rail connection between New Haven and Hartford, expansion of bus systems, highway improvements, and municipal transport infrastructure. Municipalities have also taken the lead. New Haven, for instance, is nearing the end of the largest per capita investment in its education infrastructure in the state.

Looking ahead, Connecticut can make further investments in areas of need. To best determine where infrastructure spending should be focused and how much should be spent, policymakers should consider several key questions: Where are the infrastructure assets most in need of repair in terms of geographies and disadvantaged socio-economic and racial groups? How can the state best finance its future capital investments?

By focusing the conversation on these questions, Connecticut leaders may find themselves one step closer to a path out of the state’s disappointing economic growth and towards a period of newfound dynamism.

Issue Area:
Budget and Tax