A new report from the nonprofit Connecticut Voices for Children found greater real wage growth for low- and middle-wage workers over the past two years, but it hasn’t been enough to offset 40 years of income inequality.
The report found that the increase in wages for low-and-middle wage workers “is due in large part to the increase in the minimum wage and the tightening of the labor market.”
Patrick O’Brien, research and policy director for CT Voices, said he wasn’t surprised by the finding.
He said annual adjustments to the minimum wage, which will rise again to $15 an hour next June, have improved equity.
While wage inequality still persists, it did narrow for workers at the bottom and was the lowest between white workers and workers of color in that income bracket because of the minimum wage increases.
But, he warned, this is only a break “in the trend from like the past 40 years.”
Connecticut Voices recommended continuing to raise the minimum wage in order to offset inflation, which is at a 40-year high.
Emily Byrne, executive director of CT Voices, said they are calling on the legislature to strengthen the minimum wage.
“Enacting a living wage should be our goal,” Byrne said.
The increase in wages for low-income workers is the good news. The bad news is that Connecticut still lags behind the nation in job recovery and the gap between the two is expected to expand.
Specifically, as of July 2022 — the most recent month data are available — Connecticut is on track to close its job shortfall in June 2023, nearly a year after the U.S., which already closed its job shortfall.
As of July, Connecticut had recovered 86% of the historic 289,400 jobs lost to pandemic disruptions, while the U.S. recovery rate hit 100% in June.
A slower recovery means limiting the growth in the state’s tax base.
O’Brien said the slow down in the labor market is due in part to the decline in state and local government jobs, the sector over which policymakers have the most direct control. It’s also due to its diminished, inequitable labor force participation rate. Women, who are default caregivers, left the workforce in greater numbers than men over the past two years.
Byrne said they also want to see the legislature strengthen the labor market and the economy by enacting tax reform and making child care more accessible and affordable.
She said they also would like to see the legislature pass legislation that gives workers predictability over their schedules and tightening non-compete agreements. And they want to see a bigger push to hire more government workers.
Connecticut’s biggest business lobby, the Connecticut Business and Industry Association, believes the workforce shortage is a crisis, but it doesn’t agree on the solutions proposed by Connecticut Voices.
Chris DiPentima, president of the Connecticut Business & Industry Association, has been trying to call attention to the workforce issues, but increasing the minimum wage and taxes is not something his organization will get behind.
Earlier this summer, DiPentima pointed to the CNBC survey that found Connecticut’s cost of living is eighth highest in the country, the cost of running a business here is sixth highest, and the study ranked our economy 47th.
“Tax reform will make Connecticut more affordable, while regulatory reforms such as overhauling professional licensing requirements and easing workplace mandates will bring down business costs,” DiPentima has said.