Income, race and working population trends: a perfect storm for Connecticut?
Like Connecticut, Florida, Georgia and Texas have aging working populations.
But unlike Connecticut, those three southern states are attracting younger, highly educated professionals who will replace older workers when they retire.
As soon as 2015, the size of Connecticut’s working age population will peak, and those replacing the state’s retiring workers will be disproportionately younger and of lower income and education levels, said a report released Monday by Connecticut Voices for Children and written by Orlando Rodriguez, the nonprofit group’s senior policy fellow.
“That’s a problem for the state,” Rodriguez said. “The average earnings per worker are going to go down. And at the same time, the state has billions in unfunded liabilities and more importantly, those aging populations leaving the workforce are going to require more state services.”
Older populations will drive growth in Medicaid expenditures, he said. State revenue is going to decline with average earnings per worker, and health care costs will go up.
“State residents and policymakers have yet to consider the fiscal impact this will have on state revenues as earned income can be expected to start declining (after inflation) after 2015,” Rodriguez writes.
“We’ve seen some higher education level job growth in the finance sector in Southwestern Connecticut and potentially with Jackson Labs, but by in large we’re not creating those high income jobs here,” he warned. Jackson, a genetics laboratory, is slated to begin operations later this year. It plans to open a facility in 2014 on the campus of the University of Connecticut Health Center in Farmington.
A report in tandem
The cautionary information in the Voices for Children report was echoed in a report, also released Monday, by the Connecticut Association for Human Services, which notes that the median household income of black families in Connecticut is 58 percent of that of white families, and that of Hispanic households is 53 percent. While more than three-quarters of white families in the state own their own homes, the numbers are much lower for black families, 41 percent, and for Hispanics, 36 percent.
The CAHS report — “Opportunity in Connecticut: The Impact of Race, Poverty and Education On Family Economic Success” — warns that left unchecked, education and income disparities could keep current legislative reforms from having any solid impact on the state’s finances and future.
“Without attending to the disparities that exist in our highly favored state, school reform will not reach its mark, and inequality will persist for many children based on the color of their skin or where they live,” said the report, written by Judith Carroll, director of the CT Kids Count Project at CAHS.
But if those racial income gaps are closed, per capita income for working-age could increase by 12 percent in the same time period, according to the Voices report.
Combined, the reports suggest that raising the earnings of the state’s lowest paid — and largely minority — workers could prevent that projected decline in state revenue and per capita income.
The data, Carroll said, shows that once a family is on a certain, limiting trajectory, it takes a very significant event or change to get them off that path.
“If your family is only making ends meet, your parents can’t really help you. And they certainly can’t help you with a down payment on a house,” Carroll said. “Sometimes [higher income] people forget about the structures in their lives that make these things easier — it’s sort of this selective amnesia.”
Carroll and the organization acknowledge that the data isn’t necessarily news — but for advocacy purposes, hoped to aggregate existing information into one cohesive source.
One statistic, however, did surprise the author. As of 2006, the average net worth of the state’s White households was 65 times that of minority households — according to the Corporation for Enterprise Development. That’s $195,771 as compared to $3000.
“We weren’t expecting it to be that drastic — and that alone speaks volumes about the extent of the inequality,” Carroll said. “And when you put that in the context of Connecticut being a wealthy state — it makes it even more stark.”
CAHS’ report makes a few recommendations to policy makers — including raising the minimum wage and indexing it to inflation, providing automatic retirement accounts for all workers and prioritizing racial and economic integration in schools. The Voices report follows suit — suggesting reducing energy and health care costs to attract jobs to the state and investing in the education and training of lower-income workers.
“The fundamental and enduring solution to reverse the coming decline in workforce income is to raise the income level of the state’s lowest paid workers through education targeted at the skills and knowledge needed by employers currently in the state,” Rodriguez writes.
If racial and income disparities were somehow eliminated — both organizations say — the trends could be largely avoided.
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