Print

Mind the (Wealth) Gap

In Connecticut, the rich get richer and the poor get poorer

Jim Motavalli

June 05, 2008

His name is Bob, and more than 35 years ago he attended the prestigious Foote School in New Haven. Tonight, in a bitter twist, Foote School eighth-grade volunteers are dishing out food to him at the city's Downtown Evening Soup Kitchen.

Bob is 53. He's worked all his life. But three years ago he swallowed his pride and, for the first time, walked through the doors of the soup kitchen. Despite a consistent stream of steady low-wage temp jobs, after rent and other expenses, there just isn't enough for food.

"I don't want to come here everyday," he says. "But, these companies now, they don't want to pay a decent wage. They use you as a temporary [worker] so they don't have to cover your insurance. I don't think it's right, but that's what's going on now."

Connecticut has always been a state of haves and have-nots, but our economic challenges have widened the gap between them into a chasm. A new report from Connecticut Voices for Children (CVC), a research and advocacy group for low-income families with offices in New Haven and Hartford, offers a stark analysis: Connecticut is the only state in the nation to see a significant decline in the real wages of the poorest 20 percent of state residents.

From the late 1980s until 2006, the poorest 20 percent of families on average lost $4,437 of their income. The figure contrasts sharply with a gain of $1,814 for such families across the country. It's time to toss out any notion that our progressive state has a social safety net, or that we offer a welfare state vaguely reminiscent of Sweden. It's not a long drive from the mansions of Greenwich to public housing in Bridgeport, New Haven and Hartford, but it's a whole other world.

Connecticut is a good place to be rich. Our state — which provides bedroom communities for many New York-based hedge fund millionaires — saw a dramatic income rise among its wealthiest residents. The lucky top fifth saw their incomes jump 45 percent, or a whopping $52,439 (the second highest dollar increase in the nation). Connecticut's richest residents earn on average eight times as much as its poor. Twenty years ago, it was only 4.6 times as much.

One of the revelations of the report is that even the middle class is suffering. Their real income increased only 5.1 percent in the period studied, putting Connecticut near the bottom of all states.

The numbers look bad, but they're worse than they seem, since the study data ends in 2006, before the current recession started. The poor were dealt a further blow last week. In what state Rep. Zeke Zalaski (D-Southington) called a "sad day for Connecticut's lowest wage earners," Republican Gov. Jodi Rell vetoed a bill that would have raised the state's minimum wage to $8.25 by 2010.

Connecticut soup kitchens and food pantries report dramatic increases in patronage in the last year. "We're certainly seeing an increase in the people coming in for food," says Sister Theresa Fonti, co-director of the House of Bread Soup Kitchen in Hartford. "Their money isn't lasting long enough to buy food after paying for gas and expensive utilities."

Jill Bruno, director of veterans affairs for Bridgeport, operates a food pantry for local veterans. "When the food pantry started two and a half years ago, we served 12 families a month," she says. "Now it's around 65 to 75. The average working family is having a hard time paying rent and buying gas and food." Moved by the need, Bruno also volunteers at United Congregational Church's weekly food program in Bridgeport.

Why is the income gap increasing? The answers are readily available. "We're a state of great wealth," says Doug Hall, associate research director of CVC. "On most average indicators we do pretty well — we have the highest per capita income in the country, for instance. But the high end of hedge fund managers masks the fact that we also have people on the low end who are really struggling. "

One important factor, Hall says, is the loss of unionized manufacturing jobs that could support a family. "We have significant concentrations of poverty in the larger cities that once offered factory employment," he says. "That job base isn't there anymore, and as a result wages have declined across the board in Connecticut, particularly at the lower end. We're all familiar with the high school graduate whose only option is minimum wage at McDonald's — and even there the competition is stiff."

The CVC report points out that income inequality leaves more children living in poverty, a background likely to lead to learning disabilities, poor school performance and a high likelihood of adult unemployment.

The group's wish list is largely wishful thinking in 2008. It includes reducing educational disparities in a state with high percentages of school segregation; restoring funding to state programs for lower-income families (the strapped legislature is actually moving in the opposite direction); a livable wage; and progressive tax reform to give families a state earned income tax credit.

Jared Bernstein wrote the new book Crunch: Why Do I Feel so Squeezed? He's also senior economist at the Washington-based Economic Policy Institute, which co-authored a study that accompanied CVC's work. "Connecticut is a microcosm — a lot of the underlying trends that drive inequality are right there in the Nutmeg State," Bernstein says. "Hedge fund managers can sit down at the table with all the chips leveraged by globalization to demand incomes inconceivable a decade ago. "

Bernstein also sees "a hollowing out of middle-class opportunities," symbolized by the loss of jobs, often unionized, paying $50 to $80 an hour to employees who did not necessarily have a college degree. "Those jobs in manufacturing just aren't there anymore, or they're not paying what they used to," he says.

The Center on Budget and Policy Priorities was also a co-sponsor of the national study, and senior fellow Elizabeth McNichol agrees with Bernstein that the poor are stuck. "Even if people can find jobs, they lack a support structure — quality child care and transportation," she says. "The state cut assistance in these areas and has never restored that funding. Unfortunately, the poor are likely to be hit again with further cuts, and at the worst possible time."