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October 17, 2016 Editorial

CT’s wealth gap a threat to economy

The United Way's second annual ALICE report painted another striking picture of two distinct Connecticuts.

There's the affluent state in which Connecticut remains one of the wealthiest places in the nation, with an average per-capita income 141 percent above the national level. But there's also a growing population — 38 percent of the state's 1.36 million households to be exact — struggling financially, unable to afford basic needs such as housing, child care, food, health care and transportation.

This resource-strapped population includes households living below the federal poverty level and those living above that level but who still struggle to meet what the United Way calls the average “household survival budget” for a Connecticut family of four, which ranges from $66,168 to $73,716 — more than triple the U.S. family poverty rate of $23,850. United Way has aptly labeled this group ALICE — for Asset Limited, Income Constrained, Employed.

Make no mistake, this widening wealth gap, which mirrors a trend nationally as well, is a threat to the future well-being of Connecticut. Unfortunately, Connecticut's policies, along with an aging population and technology replacing the human workforce, only threaten to exacerbate the problem.

Connecticut's ongoing budget crisis will likely lead to a continuing decline in government services to the state's most vulnerable residents, putting even more pressure on poverty-stricken families to fend for themselves. Certainly the Great Recession had a major negative impact on the job-status and wages of many state residents, but it's now been more than a half decade since that downturn struck. Since then, Connecticut's economic recovery has lagged the nation's, and our fiscal position remains weak, despite lawmakers passing two of the largest tax increases in state history since 2011.

Continuing to raise taxes to ensure the same level of government services remains intact, however, is not the answer. That will only exacerbate the problem by encouraging more employers and mobile residents to flee the state. Connecticut's tax-and-spend policies have contributed to the gradual replacement of our well-paid, skills-based occupations with low-wage jobs. In 2014, for example, 49 percent of jobs in the state paid less than $20 per hour, with two-thirds of those paying less than $15 per hour, the United Way report said. Projections show low-wage jobs will continue to increase in the year's ahead.

To be clear, Connecticut still has a highly-skilled and educated workforce, but that competitive advantage is slipping, especially with the out-migration the state has experienced in recent years. From July 2014 to July 2015, Connecticut lost a net 3,876 residents, or 0.11 percent of its population, one of only a handful of states to see its citizenry shrink. Typically those who move out of state are younger residents or people with the financial wherewithal to do so — two groups Connecticut desperately needs to retain and grow.

There are no easy answers to reverse course and a market correction won't happen overnight. But the only way Connecticut will be able to regain its economic vigor of days past is by improving the education prospects of its citizenry, particularly urban and minority students, and attracting more high-quality jobs. That, of course, will require state lawmakers to improve the business climate and not resort to tax increases (and new regulations), at a time when pressures to do so remain at an all-time high.

Now more than ever, we need a policy environment that invites private-sector infrastructure and human capital investment.

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