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In Connecticut, Widening Income Divide Poses Questions for Nonprofit Sector

Martin Levine and Steve Dubb
December 20, 2018
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From CT Data Haven

December 18, 2018; Connecticut Mirror

“Inequality is one of the reasons the world’s falling apart,” notes University of Connecticut economist Fred Carstensen, who heads the Connecticut Center for Economic Analysis. As Keith Phaneuf and Clarice Silber in the Connecticut Mirror report,

The top one percent of earners in Connecticut captured all of the post-recession income growth between 2009 and 2013, according to a 2016 analysis by the Economic Policy Institute of Washington, DC…while the remaining 99 percent watched their earnings fall nearly two percent.

This is even worse than national figures, where the top one percent received “only” 85 percent of all gains during that period.

And there are consequences: As Phaneuf and Silber write, “When adequate investment in human capital—higher education, adequate health care and decent housing—are impossible because of debt or under-employment, inequality becomes a significant drag on economic growth.” Connecticut, they add, “is the only state not to have recovered all jobs lost in the last recession, having regained just over 90 percent; and child poverty levels have increased by 50 percent since 2000.”

Carstensen, the economist, adds: “If you don’t have wealth, if you don’t have assets against which you can draw so you can balance things out over a longer time period…you are living literally paycheck to paycheck.”

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In response, Carstensen suggests two primary strategies for remedying Connecticut’s rapidly expanding class divide.

One strategy is to direct public policy to “focus on drawing people out of poverty, and keeping the middle class from falling backward.” The Organization for Cooperation and Economic Development (OECD) – described by the Economist as “a club of mostly rich countries”—acknowledges, Phaneuf and Silber note, that “Some degree of tax hikes, by raising top marginal rates and closing deductions, ‘which tend to benefit high earners disproportionally’ may well be necessary” to achieve this objective.

The second strategy that Carstensen advises, write Phaneuf and Silber, involves using tax revenues collected to increase “access to public services, including high-quality education, job training, transportation and health care.”

For some, new and fairer tax systems are the answer. Salvatore Luciano, the new head of the Connecticut AFL-CIO, tells CT Mirror that his first step toward generating the needed funding “would be to raise taxes on wealthy households and major corporations.”

“I don’t think people realize how huge the wealth disparity is in Connecticut,” Luciano says, “I think that’s a big part of the problem.”

Needless to say, the view of folks like Carstensen and Luciano is not universally shared. Peter Gioia, economist for the Connecticut Business and Industry Association, for instance, opposes raising taxes, arguing that, “If you raise taxes at this point in time, you will have a flood of people leaving the state….There’s a whole cottage industry of financial advisors that are talking to people about this [tax trend], and showing them where else they can go.” Of course, Giola’s argument may be taken another way: illustrating why building a more democratic economy where business ownership is much more widely shared is so important to stave off this threat of capital moving away and realize the just social and economic outcomes that the nonprofit sector seeks to achieve.—Martin Levine and Steve Dubb
NPQ is an independent nonprofit organization that has been serving nonprofit leaders for more than 15 years. Please donate today.

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About the authors
Martin Levine

Martin Levine is a Principal at Levine Partners LLP, a consulting group focusing on organizational change and improvement, realigning service systems to allow them to be more responsive and effective. Before that, he served as the CEO of JCC Chicago, where he was responsible for the development of new facilities in response to the changing demography of the Metropolitan Jewish Community. In addition to his JCC responsibilities, Mr. Levine served as a consultant on organizational change and improvement to school districts and community organizations. Mr. Levine has published several articles on change and has presented at numerous conferences on this subject. A native of New York City, Mr. Levine is a graduate of City College of New York (BS in Biology) and Columbia University (MSW). He has trained with the Future Search and the Deming Institute.

Steve Dubb

Steve Dubb is senior editor of economic justice at NPQ, where he writes articles (including NPQ’s Economy Remix column), moderates Remaking the Economy webinars, and works to cultivate voices from the field and help them reach a broader audience. Prior to coming to NPQ in 2017, Steve worked with cooperatives and nonprofits for over two decades, including twelve years at The Democracy Collaborative and three years as executive director of NASCO (North American Students of Cooperation). In his work, Steve has authored, co-authored, and edited numerous reports; participated in and facilitated learning cohorts; designed community building strategies; and helped build the field of community wealth building. Steve is the lead author of Building Wealth: The Asset-Based Approach to Solving Social and Economic Problems (Aspen 2005) and coauthor (with Rita Hodges) of The Road Half Traveled: University Engagement at a Crossroads, published by MSU Press in 2012. In 2016, Steve curated and authored Conversations on Community Wealth Building, a collection of interviews of community builders that Steve had conducted over the previous decade.

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