August 28, 2018

Report: Despite rising wages for working class, more help needed

After decades of wage stagnation for low and middle-income workers, things have started to change.

But Connecticut Voices for Children, a New Haven-based nonprofit that pushes progressive policies, says in a new report that it's not enough.

On Tuesday, CT Voices issued a policy report calling for the state to raise its minimum wage to $15 an hour and to restore the earned income tax credit to its original level.

Inflation-adjusted wages for the lowestearners in the state grew at an annual rate of 2.6 percent between 2014 and 2017, following an annual decline of 1 percent between 2007 and 2014, the report says, citing federal data.

CT Voices attributed that turnaround to a tighter labor market with less unemployment and to the state's minimum wage, which grew from $8.70 to $10.10 between 2014 and 2017.

Authors Jamie Mills and Rachel Silbermann said the recent growth is a "small increase in equity" that doesn't make up for decades of wage stagnation.

They discounted commonly cited explanations for why wages have not grown more robustly.

While a "jobs swap" effect (lower-wage jobs replacing higher-wage jobs) could be observed during the economic recovery prior to 2014, middle-wage jobs have grown at a faster pace since, the report says.

The authors also say that employers' reported difficulties finding workers with the right skill sets can't fully explain wage levels. In a true skills shortage, employers would be raising wages and investing more in training, they wrote.

Rather, CT Voices attributes sluggish wages to declining public sector (often unionized) employment, and increasing market power of larger employers to set wages.

Whatever the reason, the paper says the majority of families and single parents in some of the state's largest metro areas don't make a high enough wage to pay for a "modest by comfortable" standard of living, as defined by the Economic Policy Institute.

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