Impact of Low Wage Jobs on State Tax Revenues: A Detailed Analysis
Explore the impact of low-wage jobs on state tax revenues in Connecticut, as analyzed by Budget Analyst Manisha Srivastava. The analysis includes total employment and wage growth, low-wage versus high-wage job growth, personal income tax withholding rates, and sales and use tax economic growth rates. Gain insights into the shifts in job sectors and their effects on tax revenues over the years.
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Presentation Transcript
Impact of Low Wage Jobs on Impact of Low Wage Jobs on State State Tax Tax Revenues Revenues Manisha Srivastava Budget Analyst CT Office of Policy and Management May 10, 2016
Total Employment and Wage Growth Total Employment and Wage Growth 18% 16.9% 16% 14% 12% 10% 8% 6.4% 6% 3.8% 4% 3.1% 2% 0% FY 2004 - 2008 FY 2011 - 2015 Growth in Employment Growth in Average Annual Wage 2
Total Employment & Real Wage Growth Total Employment & Real Wage Growth 6% 4.9% 5% 3.8% 4% 3.1% 3% 2% 0.9% 1% 0% FY 2004 - 2008 FY 2011 - 2015 Growth in Employment Growth in Real Average Annual Wage 3
Low Wage vs. High Wage Job Growth Low Wage vs. High Wage Job Growth Connecticut Net Employment Change (in Thousands) Higher-Wage Industries (Annual Wage > $80,000) -54.4 8.3 Mid-Wage Industries (Between $50,000 to $80,000) -24.8 33.0 Lower-Wage Industries (Annual Wage < $50,000) -39.9 50.1 -60 -40 -20 0 20 40 60 Jobs Lost (Mar. 2008 - Feb. 2010) Jobs Gained (Feb. 2010 - Mar. 2016) 4
Low Wage vs. High Wage Job Growth Low Wage vs. High Wage Job Growth CT vs New England vs the United States Jobs Lost 2007-Q4 to 2010-Q1 Jobs Gained 2010-Q1 to 2015-Q4 Higher-Wage Mid-Wage Lower-Wage -60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0% Connecticut New England United States 5
Personal Income Tax Personal Income Tax Withholding Economic Growth Rates Withholding 15.1% 15% 9.5% 10% 8.7% 7.8% 7.8% 7.1% 6.0% 5.2% 4.5% 5% 3.9% % Growth 3.6%3.1% 3.1%3.3% 3.3%3.6% 0.8% 0% -1.5%-1.8% -3.7% -5% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 16 Fcst. 17 Fcst. 18 Fcst. Fiscal Year 6
Sales and Use Tax Sales and Use Tax Economic Growth Rates 10% 7.1% 5.6% 4.9% 4.9% 5% 3.9% 3.9%3.4% 3.4% 3.3% 2.8%3.0% 2.4% 2.3% 1.3%1.9% 1.2% % Growth 0% -1.9% -3.5% -5% -7.9% -10% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 16 Fcst. 17 Fcst. 18 Fcst. Fiscal Year 7
Revenue Performance PIT - Withholding Impact of Recessions on Baseline Revenue 140.0 133.4 127.6 130.0 118.4 120.0 Index 110.5 116.8 110.0 102.5 113.3 109.1 105.8 98.5 96.7 100.0 102.1 97.1 96.3 90.0 2001 2008 2002 2009 2003 2010 2001 Recession 2004 2011 2005 2012 2008 Recession 2006 2013 2007 2014 2008 2015 8
Revenue Performance Sales Tax Impact of Recessions on Baseline Revenue 120.0 118.0 115.0 115.3 110.0 112.0 108.9 105.0 104.8 Index 100.0 101.2 100.9 99.3 98.5 95.0 96.7 95.5 93.2 90.0 92.1 88.9 85.0 80.0 2001 2008 2002 2009 2003 2010 2004 2011 2005 2012 2006 2013 2007 2014 2008 2015 2001 Recession 2008 Recession 9
Revenue Sources FY 2015 All Other, 15.8% Withholding, 33.0% Corporation Tax, 4.8% Sales and Use Tax, 25.0% Estimates & Finals, 21.3% 10
