December 3, 2016
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Connecticut’s Recession Marked by Severe Unemployment and Racial and Ethnic Gaps

 

 
Wage gaps point to long-term economic problems
 
Connecticut’s current recession has been particularly severe, marked by historically high
unemployment levels and racial and ethnic disparities in unemployment, according to a new
Labor Day report on jobs and wages in the state. “The State of Working Connecticut 2009,”
released by Connecticut Voices for Children, a research-based policy think tank, also finds that
stagnating wages and racial and ethnic wage gaps reveal longer-term economic problems that
threaten the ability of many families to weather the recession. Wages have stagnated or declined
for the bottom 50% of workers since the beginning of the decade, gaps between high- and lowwage
workers are greater than at any time in the last three decades, and racial and ethnic wage
gaps diminish economic opportunities for many.
 
To help restore broader economic opportunities and to help families through the recession, the
report recommends that the state re-think its economic development strategies, ramp up supports
for unemployed families, avoid further state budget cuts that would result in further job losses,
and increase investments in education and worker training.
 
“Connecticut’s job creation engine has stopped working for our families, and our public leaders
need to step up supports for these families during this difficult period and develop new strategies
for economic development,” said Jamey Bell, Executive Director of Connecticut Voices for
Children. “We need a strategic, long-term plan to build a stronger economy that works for all
families and values their work.”
 
Among the reports findings:
Connecticut’s current recession has been particularly severe. Unemployment in
Connecticut is higher than at any time since 1977, and the number of jobs has fallen to the lowest
point since 1998. The rate of job loss in the current recession has been 2.5 times faster than
during the 2000-2003 recession.
 
Unemployment is highest in Connecticut’s largest cities (e.g., 13.9% in Hartford, 12.7% in
Waterbury, 11.7% in New Britain, and 11.6% in Bridgeport). However, the greatest
percentage increases in unemployment since 2008 have more often been in smaller cities
and towns (e.g., a 3.6% increase in Plymouth, 3.5% in Thomaston, 3.2% in Union, and 3.1% in
Thompson).
 
Unemployment has most heavily affected African Americans, Hispanics, and people
without high school degrees. African Americans and Hispanics were more than 2.5 times as
likely to be unemployed as Whites in 2008. Connecticut’s racial and ethnic unemployment gap
is higher than the gap for New England or the nation. Those without a high school degree in
Connecticut are even worse off than their counterparts in other states. In 2008, 15.2% of
residents with less than a high school degree were unemployed, a rate even higher than the rate
for those with a similar education in New England (13%) and the U.S. (12.8%). In 2009,
unemployment rates for the educational category are likely to be higher.
 
Low-wage workers have continued to lose ground over this decade, earning 7.5% less in
2008 than they did in 2001. Since 2001, wages have stagnated or declined for the bottom
50% of workers. However, wages for very high-wage workers (at the 90th percentile) reached
their highest point in the decade in 2008. The gap between very high wage and very low-wage
workers is growing faster in Connecticut than in the nation, and Connecticut’s gap is wider than
at any time in the last three decades. Wage gains over successive economic cycles are being
shared by fewer people over time. Since 1989, the bottom 30% did not see their wages rise;
since 2001, the bottom 50% did not see their wages rise.
 
Racial, ethnic, and educational wage gaps reveal limited economic opportunities for many
Connecticut workers. Median wages for African Americans and Hispanics were only about
60% of the median wages for Whites in Connecticut. Wages for workers without a high school
degree are only about one-third of wages for workers with a bachelor’s degree.
 
Since the beginning of Connecticut’s recession in March 2008, the state’s greatest job losses
have been in the professional and business services, construction, manufacturing, and retail
trade sectors. Yet the recent record has not been bleak for all job sectors. The state’s largest
sector – education and health – has experienced the greatest gains in employment, though jobs in
this sector have stalled since March 2009. The gains in this area are threatened by the potential
of further state budget cuts in future years, according to the report.
 
“Gaps in employment and wages between racial and ethnic groups and between high- and lowwage
workers are a threat to our common economic future,” said Joachim Hero, Research
Associate at Connecticut Voices for Children and author of the report. “We can’t afford an
economy that leaves so many of our workers behind.”
 
To help restore broader economic opportunities and to help families through the recession, the
report recommends that Connecticut:
 
Re-think the state’s economic development strategy. In the last decade, the state’s economic
development efforts have been fragmented and without a cohesive strategy, according to the
report. It recommends evaluating the economic returns of current state economic development
investment, and judging the success of these initiatives on the basis of higher wage jobs created
and the preparedness of our workforce.
 
Ramp up supports for the families of lower wage workers and workers who have lost their
jobs. The report recommends expanding the coverage and benefits of the unemployment
insurance program, providing wage insurance for workers who lose their jobs, subsidizing
COBRA coverage for unemployed and part-time workers, and taking advantage of federal
opportunities to expand the HUSKY health insurance program. To help lower-wage families
make ends meet, Connecticut should restore funds cut for programs that reduce family expenses,
assure affordable health insurance, make the state tax code more equitable, expand the supply of
affordable housing, and curb predatory lending practices.
 
Expand public investment in education and training. Since post-secondary education clearly
is a key to higher earnings and steady employment, barriers to college must be reduced by
investing more in pre-school and K-12 education to reduce the state’s enlarging achievement
gap, targeting interventions to curb the number of youth who drop out of high school, increasing
funding for college scholarships, and expanding financial support to our public colleges and
universities to limit tuition increases.
 
Avoid future state budget cuts that would undermine the economy and reduce supports for
working families and the unemployed. An excessive reliance on one-time revenues and
borrowing in the current state budget will contribute to projected budget deficits for Fiscal Year
2012 and later years. The detrimental impact of closing these budget gaps could prove
devastating if Connecticut chooses to address them with further cuts, rather than increased ongoing
revenues. For example, Connecticut’s education and health job sector, heavily dependent
on public investment, is the largest job sector in the state, with the greatest amount of growth,
even during the recession. Severe cuts to state spending in this area could undermine an area of
progress in the state economy, and weaken one of Connecticut’s economic advantages – its welleducated
workforce.
 
The State of Working Connecticut is released each year in partnership with the Economic Policy
Institute, an economic think tank based in Washington, DC (www.epi.org). Connecticut Voices
for Children is a statewide, research and policy organization that works to advance strategic
public investment and wise public policies to benefit our state’s children, youth and families.
For more information on Connecticut Voices, or to read the Voices’ report, CLICK HERE


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