Connecticut’s economy isn’t growing as fast as the rest of the country, according to a new report from Connecticut Voices for Children, a progressive advocacy group in New Haven.
In their latest State of Working Connecticut report, released today, the group breaks down the state’s economic rebound from both the Great Recession in 2007 and the COVID-19 recession of 2020. In this breakdown, they point out various wins and losses for the state, both nationally and in attempts to lower the wage gap between low, middle, and high-wage earners.
In terms of recession rebounding, there is both good and bad news for Connecticut, according to the report. On the one hand, Connecticut did show significant job growth since the worst part of the pandemic recession. According to the state’s Department of Labor, employment levels are almost fully recovered.
According to the Voices for Children, however, that growth has not kept up with growth nationwide. If Connecticut’s job recovery had occurred at the same pace as the national average, the report claims there would have been 53,000 additional jobs created.
This is consistent with arguments made by the Connecticut Business and Industry Association (CBIA).
“The pace of growth is not meeting the demands of Connecticut’s economy—our 12-month job growth is just 1.3%, in the bottom five states,” said CBIA president and CEO Chris DiPentima in a statement responding to last month’s jobs report.
This depressed job growth, says Voices for Children, is the result of a loss of jobs in state government. While there was a national loss of state and local government jobs of 1.1% in the last few years, Connecticut has lost 2.2%.
This pattern of lagging behind national averages, however, goes back further than just the last few years. According to the report, Connecticut has also lagged far behind recovery statistics from the previous recession brought about by the housing crisis in 2007. If Connecticut had kept up with those numbers, the state would have had about 246,000 additional jobs.
The report doesn’t address the state’s apparent decrease in workforce over the last few years, which CBIA has highlighted multiple times in the last few months. According to the organization, the sharp decrease in the number of people able to work in the state means businesses are having a hard time filling open positions.
The report also looked at wage increases over the last few years and the effect these have had on the state’s income gap. The state has one of the biggest wage gaps between top, middle, and lower-income earners in the country. According to the Center on Budget and Policy Priorities, “the richest 5% of households had average incomes 14.1 times as large as the bottom 20% of households and 4.9 times as large as the middle 20% of households.”
Recent efforts to increase wages for lower-income workers in Connecticut has shrunk the gap between low and middle-income earners, according to the report. Wage increases for low-income workers outpaced increases for middle-income earners, and together those increases outpaced those for the country as a whole, both in 2020.
Increases for low-wage workers continued to outpace those for middle-income earners in 2021-2022, and during that time also outpaced national averages again.
In 2020, wage increases also outpaced inflation but that was not the case in 2021-2022.
The increases did not, however, significantly decrease the gap between these two groups and the highest earners.
The report also includes a number of policy suggestions to address economic issues. These include increasing affordable housing, lowering barriers to employment for those with “involvement in the legal system,” strengthening early care and education programs, and several changes to state tax codes.
The entire report is available to read online.
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