As Connecticut continues to deal with a stagnating labor force, and trails the nation in job growth, making wages fairer could help the state’s workers and reduce inequality, according to a new report released Tuesday.

In the latest edition of its annual “State of Working Connecticut” report, Connecticut Voices for Children, a research-oriented advocacy group, examined the relationship between job growth and wages in the state. The report’s authors argued that addressing wage gaps and inequality would make the state more affordable for lower-income and middle-wage workers.

“It’s necessary for Connecticut to become a more affordable and accommodating place for families that live and work,” CT Voices research and policy director Patrick O’Brien told reporters on Tuesday.

“That certainly requires addressing major expenses such as housing and child care. It also requires increasing wages and improving work flexibility, to strengthen the financial return to work and make it easier to balance paid employment with caregiving,” O’Brien said. 

The report compared Connecticut to the United States more broadly, examining differences in labor force, job growth, wages, and inequality. It found that Connecticut lags the national average on several fronts, particularly when it comes to the size of the state’s working population and the number of women in the labor force.

Those factors are contributing to slower growth in Connecticut, making it harder for the state to pay down debts and make substantial financial investments in the state’s families and children, the report found.

Slow growth

Connecticut’s struggles with job growth and labor force participation date back decades to the 2007 Great Recession. But the issues were amplified further by the onset of the COVID-19 pandemic in February 2020, which saw a steep increase in unemployment across the nation, according to the CT Voices report.

The nation and the state have both recovered since then, but Connecticut’s recovery has been slower, the analysis found. From February 2020 to January 2025, the state’s labor force grew just 1.2%, far less than the 3.8% growth the United States experienced. If Connecticut’s growth matched the country’s, the state would have had an additional 49,800 potential workers by January 2025.

Comparing Connecticut’s job growth to the national average tells a similar story. Since 2020, Connecticut has experienced a 1.1% increase in job growth, compared to the nation’s larger 4.4% growth. If the state had kept pace with the nation’s, Connecticut would have added nearly 57,000 jobs. 

The report added that many of these problems are compounded by the state’s stagnant labor force. The number of prime-age individuals (aged 25-54) and women in Connecticut’s workforce have both declined, suggesting that these groups — which are the groups most likely to be raising or starting families — may face unique issues in the state. 

“These trends strongly indicate that factors such as caregiving responsibilities, unaffordable or inaccessible housing and child care, and lack of work flexibility are significantly slowing the state’s labor force growth,” the report noted. 

Wages are also a concern

The report also found that wages in the state have not fully recovered from the pandemic. While Connecticut workers have seen wage increases, those increases have not matched the growth experienced nationally. And because the state’s highest wage earners have seen more substantial income growth, any wage gains in the state have largely been wiped out by what the report calls “greater wage inequality” between high-income earners and everyone else. 

When looking at the numbers, higher wage workers made an average of $66 more an hour than lower-wage workers. Nationally, high-wage earners made $59 more an hour, suggesting that Connecticut’s inequality is greater than the already wide disparities seen across the country. 

This inequality also “inflates local prices for essential services such as housing and childcare, making it harder for low and middle wage workers to afford living and raising a family in the state,” O’Brien said. 

Those disparities are compounded for workers from vulnerable communities in the state. “Many workers in Connecticut experience substantial gender, racial, and ethnic wage gaps, reflecting disparities in key wage factors”, the report noted, specifically highlighting that women, Black, and Hispanic workers in the state are more likely to deal with these wage gaps. 

Policies proposed

CT Voices for Children argued that a number of policy prescriptions could help address the state’s problems, using the report to advocate for indexing the state’s personal income tax to inflation, increasing the salary threshold for overtime pay protections, limiting noncompete agreements that can prevent workers from changing jobs or starting businesses, and hiring more state tax auditors. 

Many of those proposals have been supported by the organization in previous editions of the report. But this year, as a new federal administration changes labor policy, state changes could be even more important, the authors said. 

Under expected federal cuts to programs like Medicaid and SNAP “ a number of residents will be impacted, especially low and middle income families,” said CT Voices executive director Emily Byrne. “The state will not only need to determine how to minimize harm and increase affordability for residents, it will need to do even more to promote economic growth in Connecticut.”