A new report from Connecticut Voices for Children attempts to drill down on how Connecticut’s labor market has weathered the Great Recession.
The report found that low-wage jobs increased, high-wage jobs decreased, and unemployment among minorities remained high even though the Great Recession ended seven years ago.
The report concludes that those changes in the state economy pose challenges for low-wage workers and the state’s economy.
“Higher unemployment and lower wages for workers of color exacerbate existing disparities in opportunity, with significant implications for both the competitiveness and fairness of our state’s economy,” Ellen Shemitz, executive director of Connecticut Voices for Children, said.
The report found that since 2001, the share of private-sector jobs in low-wage industries has increased by 20 percent, while the share of private-sector jobs in high-wage industries has decreased by 13 percent. In addition, 44 percent of private sector growth since 2010 has been in low-wage industries.
The public sector, which is composed almost entirely of mid- and high-wage industries and disproportionately employs people of color, has shed more than 14,000 jobs since 2008, according to the report.
At the same time, unemployment has returned to pre-recession levels for white and college educated workers, but unemployment for workers of color and those without a college education have yet to recover.
Because workers of color are overrepresented in the low-wage industries that have driven the state’s job recovery, racial and ethnic wage gaps have widened, the report found. According to the latest data, minorities’ median hourly wages stand between $7.25 and $8 lower than whites.
“The growth in low-wage industries is a double-whammy for working families — not only do they pay less, but they also lack the benefits, predictability and flexibility of jobs past,” Ray Noonan, associate fiscal policy fellow at Connecticut Voices for Children and report co-author, said.
The report also found that during the Great Recession, Connecticut’s mid- and high-wage industries bore nearly all of the job losses, and that during the current recovery, low- and mid-wage industries are growing the fastest. However, it also noted that Connecticut’s high-wage industries began shedding jobs well before 2008, so the intensity at which the state shed high-wage jobs increased during the Great Recession. The trend of low-wage jobs replacing high-wage jobs is being called the “jobs swap,” by the organization.
“Connecticut’s jobs swap has implications for individual family economic well-being and for the state’s overall revenue sufficiency,” Derek Thomas, a fiscal policy fellow at Connecticut Voices for Children and report co-author, said. “The first decade in the 21st-century — which includes the loss of manufacturing jobs in the early 2000s as well as the vast job losses during the Great Recession — has left the state with a sizeable high-wage jobs deficit.”
Over the last 15 years, which includes the years leading up to the recession, the share of jobs in low-wage industries in Connecticut increased by 20 percent while the share of work in high-wage industries declined by 13 percent
According to the report, although 97.7 percent of Connecticut’s net job losses during the recession were in mid- or high-wage industries, only 56 percent of net job growth since then has been in similarly well-paying sectors — 49 percent in mid-wage industries and just 7 percent in high-paying industries.
The report also found that the median and bottom 10 percent of wage-earners have seen their wages decline by more than 2 percent since 2002, while the top 10 percent have experienced growth of more than 11 percent.
Connecticut Voices for Children is recommending that lawmakers look at a number of steps to bridge the gap and provide relief to working families. It recommends restoring Connecticut’s Earned Income Tax Credit to 30 percent of eligible recipients receive from the federal program. The Connecticut EITC is currently providing 27.5 percent of the federal credit.
The group also calls for increasing the state’s minimum wage to $15 an hour. The minimum wage will be $10.10 starting in January.
The report found that 16 of the 92 private industries it analyzed pay an average wage of less than $15 per hour. Raising the minimum wage to $15 per hour would offer relief to 336,000 workers, the report found.
It also recommended restoring funding for child care subsidies. Earlier this year, because of changes in the program, 12,900 families were no longer eligible for subsidies.
Lower down on the list of recommendations are changes to how local schools are funded and investment in infrastructure, such as airports, bridges, railways, roads, and broadband.
A court decision expected to be released Wednesday will likely determine how the state funds local schools.
