The wage inequality gap between high and low wage earners in Connecticut has widened over the last five years, according to a recent report by the Connecticut Voices for Children.
The study, which compared wage gains and losses before and through the economic recession, found that wages for the highest-paid workers grew while pay for the lowest paid bracket generally remained stagnant.
Those in the 90th percentile of earners saw their income increase by more than 14 percent while those in the 10th percentile saw an increase of only 1.3 percent, the report found. Very high income earners saw their hourly income increase by about $6 per hour from 2006 to 2010. Very low earners saw their income increase by about 11 cents per hour during the same period with a 20 cent per hour decline from 2009 to 2010, the report said.
“Generally, those who were at the high end of the wage ladder in 2006 have experienced the greatest gains in recent years, while those who were at the low end have seen declines or little improvement,” the report said.
The report found that median weekly and hourly wages actually increased in Connecticut since 2006, but said that’s likely not good news. The increase may be a result of higher unemployment levels in the lower earning sector which ran parallel to the increase in median earnings, it said.
“The movement in average annual earnings better captures the true declines in income for most workers, declines which are not captured by apparently increases in median weekly wages that are driven by shrinking employment in low-wage jobs,” the report said.
in 2010, Connecticut’s ratio of income between very high and very low earners surpassed by the national ratio and the average ratio of its surrounding states. In Connecticut, very high earners made about 5.37 times as much as very low earners, compared to the 4.71 national average and the 5.17 peer state average, the report found.
The report, which also examined income gaps between different demographics, found that women in the state make 76 percent of what men do on a weekly basis, a gap that is slightly larger than it was before the recession.
The median weekly income for women grew by 9.4 percent, while the median for men grew by 11.3 percent, the report said.
“The positive direction of this trend in women’s weekly wages is promising. However, the fact that women’s wages grew less quickly than men’s suggests that women are moving backwards in terms of obtaining wage parity with men,” it said.
Connecticut’s gender gap is larger than the national and regional equivalents. The report found that on average nationally women make 81 percent as much as men and 82 percent as much in nearby states.
On a more positive note, the report found that the average income for black and Hispanic workers in Connecticut was higher than the national average. However, it noted that the increased income may be offset by the higher-than-average cost of living in Connecticut.
The report said the wage gap between white and black workers is significantly larger in Connecticut than nationwide. On average a black worker in Connecticut makes 67 cents on the dollar compared to white workers. Nationwide that ratio is about 78 cents on the dollar, the report said.
By contrast Hispanics in Connecticut fared slightly better than the nationwide average, earning 69.4 percent of the average white workers income compared to the national average of 68.7 percent.
“Since 2006, the Hispanic wage gap has narrowed by 7.6 percentage points, while the black wage gap has widened by 0.6 percentage point. Both groups saw increasing wage disparity as a result of the recession, and improving wage equality as the recession ended,” the report said.
The report found that education levels significantly impacted incomes in Connecticut. Workers with a four-year college degree earned on average twice the as much as those with a high school diploma. College educated workers saw their incomes increase by 8 percent since 2006 while high school educated workers watched theirs decline an average of 5 percent, the report said.
“The returns to a college degree were very significant – the median college graduate earned more than the highest paid high school graduates ($30.76 vs. $29.03),” it said.
The report concluded that education will have to be central to Connecticut’s economic strategy in the future. It notes that a higher percentage of the state’s white population has a formal education than its minority population, a fact that contributes to racial income inequalities.
“That inequality is unlikely to be reduced without addressing the underlying sources: closing our achievement gaps and improving access to higher education,” it said.
CT Voices for Children suggested the state look to reforming its public schools and increasing access to both higher education institutions and early childhood education in an effort to solve the problem.