The economic impact of low wage work

Low income workers often need help to make ends meet. As we have discussed in previous articles, many Connecticut families that have one or two adults working full time have wages that still leave them under or close the poverty line. Even with recent increases in the minimum wage, many jobs in the state just do not pay well enough for a family to become self-sufficient.

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State policy thankfully tries to address it by offering low income and poor households a slew of public benefits. These benefits are often what is keeping these families afloat and enabling them to make ends meet - without Husky, Medicaid, SNAP and other public programs these low wage workers would struggle even more.

These benefits, however, have a real fiscal impact on public finances. As many companies and corporations pay their employees wages that are barely enough to make them self sufficient. Daniel Kennedy, Stan McMillen and Louise Simmons, three PhD researchers, have produced a detailed analysis on the gradual increase of low income jobs in the state, and how job creation in the past decade has mainly happened in low-pay occupations, with more and more workers only having access to positions that do not pay enough to make ends meet. More than half of the new jobs created in the state since 2010 are at the bottom 25th percentile, wages wise, meaning that most of job creation are on low-paying, barely making ends meet positions. Hourly earnings have barely increased in the state since the recession ended; nationwide, they have increased 8%.

This is bad for the families in these jobs, and also for the state budget: according to their estimates, Connecticut spends $486 million a year paying for health insurance and income supports to families that are employed full time.

You can download the full report here.

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