Post-recession, there’s even more money at the top

The recession — and its aftermath — haven’t kept Connecticut’s top wage earners from earning more. Those doing well before the recession saw strong wage growth in the past five years, while those at the bottom lost jobs and made minimal wage gains.

In salary terms, according to a new report by the policy group Connecticut Voices for Children, Connecticut’s haves and have nots are growing further apart.

“Really, the most important thing we saw was a widening of existing inequalities in wages in a number of different categories,” said Sarah Esty, policy fellow at the group and co-author of the report.

“That includes a widening wage gap between whites and minorities, and the educated and uneducated,” she said.

The report stacks Connecticut up against four “peer” states — Massachusetts, New York, New Jersey and Rhode Island — chosen for geographic proximity and similarity in political climate and policy socioeconomics.

Connecticut proved most unequal amongst its peers. Esty said it’s not entirely clear why.

“But that particularly sharp increase in inequality from 2009 to 2010 is likely tied to strong rebound in wages for the finance and insurance sector,” she said. “You’re looking at the return of Wall Street money that had disappeared during recession.”

More generally, she suggested, Connecticut’s middle class has been undermined due to job loss, largely in the manufacturing sector.

“Connecticut has had a very strong middle class, which is why we’ve historically had lower levels of inequality,” she said. “But we are getting further into some of the long-term trends, including the loss of middle income jobs. And we’re seeing the effect of that.”

CT Voices wage inequality

Workers at the top (the 90th percentile, or “very high wage” workers) had the largest increase in wages over the four-year period: from $41.79 per hour to $47.81 per hour — a $6 increase.

By contrast, wages for 10th percentile (or “very low wage”) workers increased by an average of just 11 cents, from $8.79 to $8.90. And that includes a drop of about 20 cents from 2009 to 2010.

By 2010, those very high wage workers made 5.37 times the wage of the lowest income workers (that’s up from 4.75 in 2006). That’s higher than the national average: 4.71, and the peer states’ average: 5.17.

And that meager 11 cent increase for the ‘very low wage’ workers may not reflect the whole truth. According to the Esty, median weekly wages rose along with increased unemployment. So the increase is probably a result of jobs disappearing at the bottom, Esty said. When the lowest income jobs disappear, that artificially inflates the median wage.

And, the report notes, salaries from that top percentile of earners don’t take into account things like bonuses and stock options. That means top earners are likely earning even more than the figures used for this analysis.

Wage inequality also increased amongst other groups in the state.

The report finds that as of 2010, women made just 76 percent of the hourly median wage of men and whites. Blacks made 67 percent of that, and Hispanics 69 percent. Connecticut’s disparities are larger than the national average for blacks and women.

Predictably, the report found that workers with university degrees earned twice those without higher education. Those college graduates saw a wage increase of 8 percent between 2006 and 2010. Those with only a high school diploma saw a 5 percent dip over the same period.

The report analyzes geographical wage discrepancies, finding wide swings between regions. The average weekly wages in the Bridgeport-Stamford area ($1,532) are more than twice those of the Willimantic-Danielson market ($739), for example.

Making policy recommendations based on their findings, the authors suggest strengthening the education system and broadening access to education as one solution to wage inequality.

But Connecticut relies on a number of lower wage workers in tourism and other industries. So why not simply ask the state to do what it can to raise wages at the bottom?

“Of course there are a large number of people in Connecticut who are employed in retail, accommodation or food services, and it’s much better to have a job than not,” Esty said.

“But we’re thinking about the types of industry that Connecticut should focus on, and what sort of education we should be providing.”

“We’re not necessarily talking about shifting jobs in the state,” she said. “We’re talking about creating new jobs, and saying that not all jobs are created equal.”

“This should be about quality jobs,” she said.