Study: Fairfield County has nation’s highest wage inequality

A study by the Federal Reserve Bank of New York found Fairfield County has the highest wage inequality in the nation. A study by the Federal Reserve Bank of New York found Fairfield County has the highest wage inequality in the nation. Photo: Bob Luckey / Bob Luckey Photo: Bob Luckey / Bob Luckey Image 1 of / 26 Caption Close Study: Fairfield County has nation’s highest wage inequality 1 / 26 Back to Gallery

A recent study by the Federal Reserve Bank of New York found that Fairfield County is the most unequal place in America when it comes to income.

The report shows that in general most unequal places tend to be large urban areas and the New York-Northern New Jersey region is home to some of the most and least unequal places in the country. But the study ranked Fairfield County as the most unequal metropolitan area in the nation in both 1980 and 2015.

The top wage earners in Fairfield County were receiving almost six times more than the bottom earners in 1980. By 2015, it was almost nine times as much.

“Three key factors drive differences in wage inequality across metropolitan areas: differences in the local demand for skilled and unskilled workers; urban agglomeration economies, which tend to favor higher-skilled workers; and the migration of skilled workers between locations,” Jaison Abel and Richard Deitz wrote.

Before the pair released their report in October, new U.S. Census data also showed that the gap between rich and poor in the United States is the largest it’s been since the Census Bureau started monitoring income inequality more than 50 years ago.

Technological growth and globalization have stimulated the economy in places like San Francisco and New York, and that has increased the demand and wages for skilled workers, according to the report.

These same influences have dampened the economy in places like Detroit, where international competition and automation have displaced low-skill workers and decreased wages in general. The wage gap in these areas is lower, according to the report.

Pete Gioia, economic advisor to the Connecticut Business and Industry Association, acknowledged that Fairfield County is one of the wealthiest in the United States, partly because of the number of financial service specialists. He said that he did not observe anything about the workers in the county at the lower end of the wage gap that differentiated them from other lower-end workers in the Northeast — the highly skilled were getting paid more because of the industrial mix, he added. He said that the wage gap was unlikely to be remedied in Fairfield County.

“Automation may help boost low-end wages but at the cost of fewer workers,” he said.

He said there was still a big gap in other parts of Connecticut as well, but less than Fairfield because there are more jobs in manufacturing professions and fewer in high-end financial services.

Sal Luciano, president of the AFL-CIO, has said that “Connecticut has the third-highest income inequality in the nation, exacerbated by a tax system that protects wealth at the top and blocks access to prosperity for the working poor and what’s left of the middle class. The top 1 percent of Connecticut residents make 37.2 times more than the bottom 99 percent.”

But resolving income inequality won’t be easy.

Recently, Ray Dalio, founder of Bridgewater Associates, and Paul Tudor Jones, founder of Tudor Investment Corp., called for the reform of capitalism to combat income inequality.

The Courant reported on the comments, which were made at the Greenwich Economic Forum.

“We have not made capitalism work for the average person,” Dalio said on Nov. 5. “Capital stays where they like capitalism. And capitalism needs to be fixed. And if you don’t fix it, you’re going to have a revolution. And then you’re also going to chase the capitalists away.”

The Connecticut General Assembly over the years has tried with little success to change the tax structure in a way that gets the wealthiest to pay more.

The Center on Budget and Policy Priorities advocated for Connecticut to institute a 2 percent capital gains surcharge on residents with incomes above $500,000, but Gov. Ned Lamont, a wealthy businessman from Greenwich, opposed the proposal.

Elizabeth McNichol, a senior fellow with the center, said it would reduce inequality and improve the state’s upside-down tax system.

“Taxes on the highest incomes can generate substantial revenue for public investments that boost a state’s productivity in the long run, evidence suggests, without harming economic growth in the short term,” McNichols wrote in May.

The state income tax rates have not been increased over the past four years. The top rate for Connecticut residents making more than $500,000 a year was last raised to 6.99 percent in 2015. That’s the same rate the wealthiest currently pay on their capital gains.