Economic Security Of State's Working Poor Continues To Weaken As Income Gap Widens
By RITU KALRA, Courant Staff Writer
January 27, 2006
For Santos Amalia Villar, 62, who works in the meat department at El Gitano Supermarket in Hartford, only God - and Social Security - will help her during retirement.
Certainly her $300 weekly paycheck does not allow for any savings.
Villar's situation - managing day to day, but with an uncertain future - is not unique in Connecticut. For many of the state's working poor, economic security continues to deteriorate as the gap between the wealthiest and poorest residents accelerates.
The chasm between rich and poor grew at a faster pace during the early part of the decade than in any other state except Tennessee, according to two reports released Thursday on income inequality in the United States.
Between 2001 and 2003, the richest 20 percent of Connecticut families had average incomes 6.9 times as large as the poorest 20 percent, up from a ratio of 5.2 during the early 1990s.
Connecticut also shared another distinction - this one with Washington - as one of only two states where the annual incomes of the poorest 20 percent, adjusted for inflation, actually declined by $22 from 1991 to 2002.
Those two statistics were tempered, however, by the fact that 20 states, led by New York, had a bigger gap between their richest and poorest. And Connecticut's bottom 20 percent - those who make below $21,003 a year - still fared better than the bottom 20 percent nationally, whose annual paychecks average $16,778.
The reports, compiled by Connecticut Voices for Children and the Economic Policy Institute and based on the most recently available data from the U.S. Census Bureau, paint a mixed picture of the prosperity of Connecticut's working poor. Their income is still higher than the national average, but eroding at a faster pace.
"The fact that you've gained no purchasing power in 11 years is discouraging and problematic for people in the bottom 20 percent," said Edward Deak, an economics professor at Fairfield University. "On the other hand, if you look at other states that have some of the similar structural characteristics of Connecticut, you see that their bottom 20 percent are worse off. Things are bad, but they could be worse."
The story is better for those in the middle 20 percent, whose annual incomes grew by $7,515, or 15 percent, adjusted for inflation. But that growth pales in comparison to the wealthiest in the state, whose annual incomes grew by $35,093, or 32 percent, during the 11-year period. The top 5 percent, meanwhile, saw their annual incomes jump by $66,357, or 40 percent, between 1991 and 2002.
As the wealthy pull away from the pack, they exacerbate the difficulties faced by middle- and lower-income workers by bidding up the prices of essentials, such as housing, economists said - and as housing and college tuition prices soar past inflation, keeping up with inflation is no longer sufficient.
The report's authors say one way to help close the gap would be through a state earned income tax credit for the working poor that mirrors the federal program.
"Imagine what it would be like to try to get by on $18,000 a year in Connecticut," said Doug Hall, associate research director at Connecticut Voices. "If you had $4,000 additional coming in from the federal government, and an extra $800 from the state government, that goes a long way toward helping you to make ends meet."
For Villar, it was a different program that helped ease the financial pressure. Four years ago, she purchased a three-family home with help from Home Ownership Made Easy, a program run by Hartford Areas Rally Together that provides financial assistance to first-time home buyers. Before buying the house, she shared a room with two family members. Now she collects enough rent from extended family who live in her house to cover the mortgage, and she even went to California on a recent vacation to visit relatives.
Still, after paying the utility bills and sending some money home to Peru each month to help care for her mother, there's nothing left for savings.
"My struggle is to save for a decent retirement," Villar said through a translator. "I'm planning to retire at 66, if it's God's will and if the Virgin keeps me alive."
Reprinted with permission of the Hartford Courant.
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