November 26, 2018
Other Voices

Higher min. wage, paid family leave thwart wealth inequity

Jamie L. Mills

Connecticut's economy is picking up steam after a slow recovery and years of sluggish economic growth following the Great Recession.

Unemployment is at historic lows, investment in key sectors is growing, and some of our urban areas are experiencing a building boom.

Despite these welcome economic indicators, our state does not offer equal opportunity to everyone. Low- and median-wage workers have not recovered their pre-recession income levels.

Between 2007 and 2017, median wages for workers at the lowest income decile (that is, the 10 percent of workers with the lowest wages) have remained flat.

Median salaries declined an average of 0.3 percent a year during the same period. In contrast, workers at the top decile saw their wages increase 0.4 percent a year.

While Connecticut ranked in the top 10 states in the nation for relative income equality in the 1990s, today we rank as the third most unequal state in the country, behind only New York and Florida. There is a risk of these alarming disparities becoming a permanent feature of our economy, depriving many Connecticut working families and children of the opportunity to reach their full potential, and depriving the state of the robust economic growth tied to increased income equity.

Wage inequity is a matter of color as well as class. Black and Latino households in our state earn less than two-thirds of what white households earn. These wage disparities for people of color exist across education and income levels.

Connecticut stands out nationally not only for its growing wage inequity but also for trends in poverty. While both overall poverty and child poverty have declined nationwide, neither measure declined in Connecticut between 2016 and 2017 despite falling unemployment.

Policy decisions have caused these racial and income disparities. People of color in Connecticut face systemic barriers to economic opportunity, including a history of neighborhood redlining and continued residential segregation, a property tax system in which low-income taxpayers pay substantially higher tax rates.

Increasingly we have tools to quantify the cost of short-sighted and discriminatory policies. According to the National Equity Atlas, in 2015 our state's economy would have been $34.3 billion larger if there had been no racial gaps in income.

Come January, the new governor and legislature should make eliminating these barriers to opportunity their highest priority.

First, policymakers should raise the minimum wage to $15 per hour, index it to prevent loss of value over time, restore the earned income tax credit to 30 percent of the federal tax credit to bolster income for those workers who need it the most, and implement a paid family leave program.

Next, policymakers should reform our tax system, which currently increases inequality, as low- and middle-class families pay a higher share of their income than wealthy households.

Lawmakers should change how we raise revenue both to make the system fairer and to pay for the essential investments we need so all children and families can succeed.

Naysayers might suggest that these policies are too costly or burdensome for employers, but the evidence does not bear out those claims. Research indicates that increasing the minimum wage does not cause net job loss, but it does increase incomes for low-wage workers. The earned income tax credit has a long history of bipartisan support and has proven effective both at increasing labor-force participation.

Paid family medical leave, as implemented in other states, had clear positive impacts on job retention and children's health, with most employers supporting the measure.

Fairness and economic prosperity go together. Only by investing in all our children and families can we ensure broad-based economic growth.

Jamie L. Mills is director of fiscal policy and economic inclusion of Connecticut Voices for Children, a progressive think tank.

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