A new study by a public education and advocacy group reported that the wealth gap between the rich and poor in Connecticut has increased more since 1991 than in any other state except Tennessee.
The report, issued last week by Connecticut Voices for Children in conjunction with the Center on Budget and Policy Priorities, detailed not only a growing wealth gap among Connecticut residents, but also found that Connecticut was one of only two states in which the poorest 20 percent of families actually lost income between 1991 and 2002. While the state’s poorest families lost, on average, $22 of income in that 11-year period, their counterparts gained an average of approximately $2,300 nationally.
Though the report did not specifically detail wealth inequality in the greater New Haven area, some local anti-poverty advocates said the city is experiencing a similar trend.
“New Haven has more than its share of people living in poverty, but also significant pockets of real wealth,” said Dr. Douglas Hall, associate research director of the Connecticut Voices for Children and one of the report’s authors.
Heather Calabrese, senior vice president of the United Way of Greater New Haven, said the New Haven-Meriden region has the seventh greatest city-suburban disparity in the nation.
“The economic implications are that we have a workforce that’s not well-trained for well-paying jobs,” she said.
According to the 2000 Census, 37 percent of New Haven residents fall below the poverty line, as defined by the federal government — for example, a four-person family earning $19,550 annually — and 20 percent earn less than $10,000. Meanwhile, approximately 7.2 percent of Stamford, Conn. residents and approximately 4.3 percent of Branford, Conn. residents earn less than $10,000.
Although the report includes data from 1991 to 2002, with added reference numbers from the 1980s, some city officials and anti-poverty advocates said they attribute the state’s increasing wealth gap to more recent issues, including federal budget cuts, tax structure and recent factory closings in the region.
Hall said the increase in inequality in recent years can be attributed both to the protracted statewide effects of the 2001 recession and to stock market gains among the state’s wealthiest residents. Connecticut’s economy entered the recession in July 2000, 16 months earlier than much of the nation, and did not begin recovering until 2003, resulting in a period of high unemployment that suppressed wages, most significantly among lower-income workers, he said.
“Lower-income folks were hit first and hardest, and then lifted last as we came out of the recession,” Hall said.
Still, Hall said the healthy stock market of the past decade has boosted higher-income families’ capital gains. According to the report, the incomes of the state’s wealthiest 20 percent rose by approximately $35,000 — roughly 31.9 percent — between 1991 and 2002. The 2000 Census estimates show that approximately 1.3 percent of New Haven residents earn at least $200,000 per year.
But some city officials said they see the recent spate of factory closings in the area as a sign of pressure on lower-income jobs and wages.
Derek Slap, Mayor John DeStefano Jr.’s press secretary, said he estimates that the region has lost almost 1,500 jobs in the past three weeks due to the closing of area manufacturing companies and layoffs of lower-wage workers. In addition, Slap said most of the area’s new jobs are lower-wage service-sector jobs, which tend to be less stable over time than manufacturing jobs.
“We’re a small state, and … any time we have any outlet close that has anything to do with employment, it is a problem,” said Michelle Turner, director of the Community Action Agency of Greater New Haven.
But Slap and Kate McAdams ’01, an assistant to DeStefano — a Democrat — also blame federal policy since President Bush’s 2001 inauguration for exacerbating the wealth gap. Slap said he finds fault with the Bush administration’s recent proposal to cut community block grants by 30 percent.
“We definitely feel squeezed by the federal government and their lack of support for urban communities, and this one in particular,” Slap said.
A major cut in federal funding for the city’s police department has hampered the city’s ability to pay overtime for police officers to be on the street, Slap said. McAdams said the Bush tax cuts have helped the rich while doing little or nothing for the poor.
The tax cuts, which took effect less than a year before this study was concluded, cut tax rates in the highest income bracket, yet also expanded child support credits and the federal-level Earned Income Tax Credit, which gives low-income workers an additional tax break.
The Connecticut Senate Republican caucus and Republican Gov. M. Jodi Rell’s press office did not return calls this weekend.
Among the report’s recommendations for ameliorating the state’s wealth inequality was a call for Connecticut to implement a state-level Earned Income Tax Credit, which could give up to 25 percent of the city’s residents a break on this year’s taxes.
Mayor John DeStefano Jr. gave his official support to the state EITC last week, and McAdams said the measure has been gaining momentum throughout the state. Turner said the EITC could bring up to $20 million back to the city, and Hall said that a family making between $15,000 and $18,000 per year could see up to $900 of savings on this year’s taxes.