Home Fairfield Report: State’s wealth gap expanded drastically

Report: State’s wealth gap expanded drastically


Even before the recession hit, the distribution of wealth in Connecticut underwent a drastic shift that saw the state go from being one of the most egalitarian states to being one of the most unequal, according to a new report.

Between 1977 and 2007, the gap between Connecticut’s wealthiest residents and everyone else grew faster than in any other state, according to a report published Nov. 15 by the Connecticut Association for Human Services (CAHS) and Connecticut Voices for Children.

In 1977, the wealth gap between the top 20 percent of all Connecticut earners and the middle 20 percent of all earners was the ninth smallest among the 50 states. By 2007, the gap between the top fifth and the middle fifth had grown to the seventh largest in the country.

Similarly, the gap between the top 20 percent of all Connecticut earners and the bottom 20 percent of all earners went from being the fifth smallest in the country in 1977 to being the third largest in 2007.

The report’s authors utilized Census wage data for the period being examined, in addition to data provided by the Internal Revenue Service and the Connecticut Department of Revenue Services.

“Altogether, the Census figures present a clear picture: To a degree greater than any other state, the benefits from three decades of growth in Connecticut have gone to the wealthy,” the report states.

The share of Connecticut’s total adjusted gross income (AGI) going to the top 1 percent of all earners increased to 28 percent in 2007 from 17 percent in 1977.

Connecticut wage earners falling into the 99th percentile averaged $766,000 in annual income in 2007, while those falling into the bottom 20 percent of all earners averaged $17,000, the report stated.

Based on the data analyzed by the report, Connecticut earners falling into the 95th percentile of all earners averaged $225,000 in annual income in 2007 — putting their average annual earnings closer to that of the bottom fifth of the population than the top 1 percent.

“This increasing divide shows that we need to redouble our efforts to ensure economic success is within reach for working families,” said CAHS Executive Director James Horan in a statement. “The latest research on the impact of inequality is very troubling. Our economy won’t truly rebound without shared prosperity, and we just don’t have the policy framework in place.”

Liz Dupont-Diehl, policy director for CAHS, said the upcoming legislative session, in which Gov. Dannel P. Malloy will present his biannual budget proposal, represents an opportunity for significant reforms to aid the lower and middle classes.

“The Malloy administration and the legislature have been pretty good over the past couple of years in not shredding the safety net,” Dupont-Diehl said. “But now we need to invest in people.”

She said the organizations are advocating for measures such as increasing and indexing the minimum wage against inflation and increasing access to education and higher education.

Other items being advocated for by CAHS include the shoring up of the unemployment insurance compensation trust fund, the strengthening of programs like the state’s earned income tax credit, and adjustments to state and local tax codes that reduce reliance on property and sales taxes, which can disproportionately impact low-income households.

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