August 2018

The State of Working Connecticut: Wages Stagnant for Working Families

Jamie Mills, J.D., Rachel Silbermann, Ph.D.

"The State of Working Connecticut" report provides a close look at recent trends in the state’s labor force, jobs, and wages. Our main finding is that despite recent progress, many families still struggle to make ends meet. Although unemployment in the state is at a post-recession low, sluggish wage growth paired with persistent racial and gender disparities are leaving many working families unable to achieve a decent standard of living for themselves and their children.

  • Between 2007 and 2017, median wages for workers at the lowest income decile have remained flat. The median salary during the same period decreased an average of 0.3 percent a year.

  • Workers in the top ten percent of the wage distribution saw an average increase of 0.4% a year. Although the trend has reversed slightly since 2014 as wages at the bottom decile grew faster (.5 percent) than those at the top (.35 percent growth a year), the income gap remains vast.

  • Wage disparities also persist between White workers and workers of color. On average, Blacks and Latinos make 65 cents to the dollar compared to Whites. Gender disparities also remain, with women earning 87 cents to the dollar compared to men.

  • Connecticut is the third most unequal state in the nation, behind only New York and Florida.

The report evaluates two common explanations for stagnant wages. First, it analyzes the commonly held view that sluggish wage growth is the result a “jobs swap”, a broader shift in the economy from high- and medium-wage sectors to low-wage, service-focused, low-wage employment. Our analysis highlights that although this trend existed in the immediate aftermath of the recession, since 2014, Connecticut’s economy has added more jobs in higher-wage sectors. The report also looks at the evidence of a possible skills shortage that is causing jobs to remain unfilled because businesses cannot find qualified workers. Analysis of the data finds that sectors often claiming to have skilled labor shortages have not seen rising wages.

The report concludes that weak economic growth, long-term wage stagnation, and growing income disparities are the result of policy decisions that can and should be reversed. Stagnant wage growth is exacerbating historic levels of inequality in Connecticut and across the country slowing economic growth and preventing workers and their children from having a decent standard of living. The report offers two policy proposals to respond to stagnating wages:

  • Raising the minimum wage to $15 per hour incrementally over three years. Currently, 31 percent of Connecticut workers make less than $15 per hour. The majority of these workers are over 30 years old (57 percent) and are working full time (61 percent).

  • Restoring Connecticut's Earned Income Tax Credit would increase earnings to close to 200,000 households in the state making on average less than $20,000 per year. 

Issue Area:
Family Economic Security