The Register Citizen (Torrington, CT)
State’s income gap widening
Conn. has 3rd-largest spread between top 1 percent and the rest
The gap is getting wider, and Connecticut is a focal point of the chasm.
According to a report by the Economic Policy Institute issued this week, the incomes of the top 1 percent of earners grew faster than that of the bottom 99 percent in 43 states. Connecticut had the third-largest gap, trailing New York and Florida.
“When you look at these states, it speaks to the economic polarization we are seeing all throughout the U.S., especially in the East,” Donald Klepper-Smith, chief economist and director of research at DataCore Partners, said. “How you rectify this, I don’t know. That’s a challenge for policy makers to stimulate economic growth in the aggregate. How do all boats get lifted?”
States with wide gaps, he said, “create an environment of haves and havenots,” which stress the economy and put additional burdens on social services.
Benjamin Barnes, secretary of the Office of Policy and Management for Connecticut, said federal laws have allowed hedge funds to flourish, and many individuals among the top 1 percent in the state are managers of hedge funds.
“Add that into the mix and it makes our income gap that much more striking,” he said.
Barnes said Connecticut is a state of “high standards” and is known for taking care of its people. The top 1 percent, he said, contribute much to the state in the form of taxes and charitable giving.
“I’d rather have them live in Connecticut than not live
in Connecticut,” Barnes said. “They make significant contributions to the state each year.”
Connecticut had 17 residents on the latest Forbes magazine’s List of the World’s Billionaires, led by Greenwich’s Ray Dalio. The hedge fund manager has a net worth of $17.7 billion, according to Forbes.
Steven Cohen, another hedge fund manager from Greenwich, was the second state resident on the list, with a net worth of $14 billion. Fellow hedge fund managers Paul Tudor Jones II, of Greenwich; Andreas Halvorsen, of Darien; Clifford Asness, of Greenwich; and Stephen Mandel Jr., of Greenwich; were also in the top seven. Thirteen of the 17 billionaires in the state live in Greenwich.
According to the EPI report, Connecticut had the highest threshold in the country for making the top 1 percent with annual earnings of $700,800. The national average is $421,926. The report is based on 2015 figures.
Authors of the report, Estelle Sommeiller of France and Mark Price of Harrisburg, Pa., found that the top 1 percent in the country earned 26.3 times as much as the bottom 99 percent. In Connecticut, the top 1 percent earned 37.1 times as much as the lower 99 percent, which earned an average of nearly $68,000.
The Bridgeport-Stamford-Norwalk region was the fifth-most unequal metropolitan region, with the top 1 percent earning $6,290,951 and the lower 99 percent making an average of $101,213, a top-to-bottom ratio of 62.2.
Barnes said closing the gap should be a matter of elevating the lower 99 percent with better educational and employment opportunities.
Klepper-Smith agreed: “It comes down to economic policy that is conducive to spurring business activity. That’s not something we have here, and it makes it hard for policy makers to create aggregate economic growth.”
Without education and knowledge of technology, which not all residents have the means to acquire, “you are left behind.”
“Rising inequality affects virtually every part of the country, not just large urban areas or financial centers,” Sommeiller, an author of the report, said in a statement. “While the economy continues to recover, policymakers should make it a top
Thirteen of the 17 billionaires in the state live in Greenwich.
priority to grow the incomes of working people while reining in corporate profits.”
Price, the report’s other author, said policies should be enacted to boost bargaining rights for workers, rein in CEO salaries and financial sector managers, and implement a progressive tax system.