Category Archives: Finance

Connecticut’s $10.10 Minimum Wage: Adjusted For Inflation, We’ve Been Here Five Times Before

by Categorized: Data, Employment, Finance, Government, Poverty Date:

Connecticut is making national news with legislation boosting the minimum wage to $10.10 an hour beginning in 2017. With Gov. Dannel P. Malloy’s planned signature on the bill Thursday evening, the Nutmeg State becomes the first in the nation to agree to eventually knock through the $10 mark for the lowest-paid workers.

But adjusted for inflation, we’ve topped $10.10 before – albeit not for several decades. As the chart below shows, the hourly minimum wage, in 2014 dollars, exceeded $10.10 in 1968, 1969, 1971, 1972 and 1978. The top rate was in 1968, when the inflation-adjusted minimum was $10.78.

The $10.10 wage is, however, significantly higher than the average inflation-adjusted minimum wage over the last 63 years. Since 1951, the lowest-paid workers have earned an average of $8.39 in today’s dollars.

So $10.10 isn’t the most Connecticut employers have been required to pay, and it certainly isn’t the least. And that alone will assure the topic remains controversial and politically divisive.

CT_Minimum Wage

Governor Asks Connecticut: “What’s On Your Mind?” Answer: “Guns.”

by Categorized: Finance, Government, Politics, Public Safety Date:

Last fall, Gov. Dannel P. Malloy invited the public to chime in on state regulations that are “outdated, unnecessarily burdensome, insufficient or ineffective.” More than 2,000 comments came in to a special website.

And what was on people’s minds?

Guns. Specifically, handguns in state parks and forests.

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Why the Hike in Postage Rates Isn’t as Bad as You Think

by Categorized: Data, Finance, Government Date:

The price of a first-class stamp jumps to 49 cents next week – a three-cent hike – and many mailers undoubtedly will grouse that the cost of sending a letter is bumping up against the half-dollar mark.

But take heart: You’re still in way better shape than your great-great-great-great-grandparents.

Adjusted for inflation, mail prices actually have moved in a fairly narrow band for the last 150 years, as the chart below shows. But in the first half of the 19th Century, sending a Mother’s Day card or paying a credit card bill – wait, neither of those existed in the 1800s – was a far pricier affair.

For all but one year from 1792 to 1850, the minimum cost to send a letter to the next town or beyond topped the current equivalent of a dollar. Then, at mid-century, 5c1847the government worked to modernize postal service, including the introduction of the first authorized national postage stamps in 1847. Putting a Benjamin Franklin on your envelope would set you back 5 cents that year – but that’s the equivalent of about $1.41 today. (And mail sent beyond 300 miles would have cost great-great-great-great-grandpa Jebidiah twice that.)

With that modernization effort – and a booming nation with the attendant economies of scale – the cost of postage plummeted, and by 1864 the cost of a stamp was less than 50 cents in current dollars. Since then, the inflation-adjusted price has fluctuated from about 35 to 70 cents, and has ranged from 40 to 50 cents for the last three decades.

Still grousing? Run out and buy forever stamps. Until Sunday, they’re still 46 cents – and valid for postage even after the rate increase.

PostageRates

 

Protesting a Six-Cent-a-Day Tax Hike

by Categorized: Data, Finance, Politics Date:

If your elected officials had some harebrained scheme that was going to jack up your cost of living to the tune of 6 cents a day, is that the sort of thing that would get your blood boiling and have you demanding a special legislative session?

It apparently would for thousands of Connecticut residents who have signed petitions targeting an upcoming boost in the state’s gasoline tax.  Nutmeggers pay humongous gas taxes and this may be more a reflection of frustration with tax creep than a real pocketbook issue (or maybe it’s just rank political posturing). But either way, let’s hit the calculator for a little reality check.

According to the U.S. Department of Transportation, the average American logs 12,888 miles a year. And according to the U.S. Department of Energy, the average passenger car on the road gets 23.0 miles per gallon. That mpg figure seems a little high to me but they’re the experts, so using their numbers, the average motorist in a car is buying about 560 gallons of gas a year.

With the gas tax in Connecticut slated to rise 4 cents a gallon next week, that means our average motorist can look forward to dropping an extra $22.41 a year at the pump. That’s a daily drag on our personal economies of a little over 6 cents, or roughly the cost of – actually, nothing costs 6 cents.

That, of course, is only the average and, as they say, your mileage may vary. Drivers of pickup trucks and large SUV’s could be shelling out closer to 8 cents a day, and a Ferrari owner who lives 50 miles from work might have to come up with as much as 20 cents a day.

That’s probably not enough to sink the state into a double-dip recession (and the extra cost could be wiped out by driving just 1 mph slower on the highway). But for some, it may be more the principal of trying to get government to live within its means rather than going to the well for a few million here and a few million there.

Still, it’s worth remembering that if the legislature does go into special session, that too will have taxpayers reaching for their wallets. According to a 2010 analysis by the Office of Legislative Research, it costs $11,000 a day to operate a special session. And if the session is called with less than 10 days’ notice, that’s on top of at least $9,600 the state will spend to dispatch marshals or troopers to notify legislators of the session – a task which, for the record, The Scoop is willing to do for free.

Nearly 10 Percent of Connecticut’s Bridges Are “Structurally Deficient”

by Categorized: Data, Finance, Politics, Public Safety Date:

The collapse of the I-5 bridge over the Skagit River in Washington state Thursday night brings frightening memories of the deadly bridge failure near Minneapolis in 2007 and the collapse of the Mianus River bridge in Greenwich 30 years ago next month. And while the MianusBridgeinvestigation in Washington is just beginning, the collapse also revives lingering questions about the quality and safety of the nation’s 600,000 bridges – including more than 4,200 in Connecticut.

Data from the Federal Highway Administration show that 9.6 percent of Connecticut’s bridges are considered “structurally deficient,” meaning one or more major components is deemed to be in poor condition, defined as “advanced section loss, deterioration, spalling or scour.” (Spalling refers to chipping or flaking of concrete and bridge scour is the phenomenon in which water currents wash away sediment, rocks or other material that surrounds the base of the bridge.) Highway officials caution that the designation of a bridge as structurally deficient does not mean the bridge is unsafe.

The deficient bridges are typically shorter spans along minor roadways, but there are also dozens of Interstate bridges and ramps that are in poor condition.

The percentage of Connecticut bridges in poor condition is lower than the national average of 11.0 percent. But the state’s number has been rising, slowly but steadily, since 2006. The recent climb reversed significant progress to reduce the number of structurally deficient bridges. More than 15 percent of state bridges were in poor condition in 1992, but that number dropped to 8.2 percent by 2003.

In addition to bridges deemed structurally deficient, nearly one in four Connecticut bridges is deemed “functionally obsolete,” meaning it no longer meets contemporary criteria for such factors as load capacity or shoulder width. That figure – significantly higher than the 16 percent of such bridges nationally – is partly a result of the state’s aging bridge infrastructure. In Connecticut, the average age of a bridge – or the time span since it was reconstructed – is about 44 years.

Sorrry, Powerball Still Isn’t a Good Investment

by Categorized: Data, Finance Date:

The Powerball jackpot has topped half a billion dollars. So at what point does it actually become a statistically smart play? Sorry, not this weekend. Not even close.

By the numbers, it may seem a reasonable investment: $2 to play. 1-in-175 million odds of winning. A $550 million prize. But the payout isn’t really $550 million  – and there’s no guarantee the winner won’t be splitting the bounty.

The $550 million figure represents an estimate of thpowerballse total 30-year payout for winners who choose an annuity option – an option that adds roughly $200 million in interest. (Powerball doesn’t actually know how much the figure will be until it seeks bids for the annuity after a win.) So the actual cash prize this weekend is currently estimated at $350.1 million.

That could still make it a break-even investment – if only Uncle Sam didn’t want his share. Even if you lived in a state with no income tax, the feds will grab about 39.6 percent of the dough. Now you’re down to a measly$211 million.

So best-case scenario: A $2 ticket that pays, on average, $1.21 back for the jackpot. And even then, only if there’s one winner.

So how high would the prize have to climb for Powerball to actually be a statistically supportable play? A jackpot topping $911 million – with all the other players not matching your luck.

Powerball – As Easy as Guessing a Coin Toss. Twenty-seven Times in a Row.

by Categorized: Data, Finance Date:

Just as moviegoers are flocking to the reboot of The Great Gatsby, the Powerball jackpot has climbed to stratospheric heights that would impress even F. Scott Fitzgerald’s anti-hero. So what are the odds you’ll be in a position to take over the Gatsby estate and revive the weekend bacchanals? Really, really, really small.

The chart below shows the probability of a single $2 ticket winning the various prizes – including the estimated $360 million grand prize – along with the number of consecutive coin tosses you’d have to correctly call to roughly match those odds.

More and More U.S. Clothes Are Made by Bangladeshi Workers Earning Pennies an Hour

by Categorized: Business, Consumer Affairs, Data, Employment, Finance, Politics, Poverty Date:

U.S. consumers horrified by the tragic building collapse in Bangladesh might want to check the manufacturer’s label on the clothing they’re wearing; data show the compact nation is now the fourth-largest source of apparel imported into the U.S., delivering $4.5 billion a year in goods.

That’s more than double the amount imported from Bangladesh a decade ago, and in that same time frame, Bangladesh’s share of the U.S. apparel market has nearly doubled as well. In 2003, Bangladesh ranked 10th among nations supplying the United States, with 3 percent of all apparel imports, Department of Commerce numbers show. But as manufacturers have sought ever-lower labor costs, that figure has jumped to 5.8 percent.

The shift in manufacturing to Bangladesh comes as wages are rising slowly in other apparel-producing countries, including China. Pay in Bangladesh increased three years ago as well, but the minimum wage for garment workers in the country is still about $38 a month.

Efforts to increase that amount have met resistance from factory owners and government officials, who fear even a small uptick in wages will lead Western brands to look elsewhere for suppliers.

Minimum Wage Fight – Historically, $9 an Hour is Higher than Average but Hardly Unprecedented

by Categorized: Business, Data, Finance, Politics, Poverty Date:

Gov. Dannel Malloy’s proposal to increase the minimum wage in Connecticut to $9 an hour over the next two years predictably has brought strong reactions from those who find it a boost for the working poor that will energize retail sales and those who see it as a jobs killer that will hurt small businesses.

But how does that $9 figure compare historically over the 62 years the legislature has been setting the minimum wage in Connecticut? Higher than average, but hardly unprecedented.

As the chart below shows, Connecticut’s minimum wage, in inflation-adjusted dollars, topped the equivalent of $9 an hour for most of the 1960s and ’70s, reaching a peak of $10.63 in 1971. But for the past 34 years, the minimum wage has been set below the equivalent of $9.

Both Malloy’s proposal, and the current minimum wage, are far more than the buying power set by the first legislatively established minimum wage in 1951, when the statutory 75-cent wage was the equivalent of $6.71 an hour in today’s dollars. Inflation ate away at that value until the legislature raised the minimum wage in 1957, and since then, the wage has fallen below the equivalent of $6.71 an hour only once – in 1995.

When the legislature has boosted the minimum wage – as they have done more than two dozen times since 1951- the new rate on average has been the equivalent of $8.78 an hour. Malloy’s proposal exceeds that by 22 cents, or about $450 a year for a full-time worker.

CT_MinimumWage

Don’t Get Too Excited About Falling Gas Prices

by Categorized: Data, Finance Date:

Gas prices in the Hartford area have dropped a nickel in the last week and more than a dime in the last month, giving motorists filling up with regular unleaded some comfortable distance from the sticker-shocking $4 levels of just a couple months ago.

Cause for rejoicing, right? Well, maybe not so fast.

Any drop in gas prices is welcome, but comparing today’s cost only against the super-inflated prices of the recent past can lead to a false sense of economy. Gas prices today are lower than they generally have been for the last year and a half, but as the graphs below show,  the current “low” price is historically very high.

In New England over the past 14 years, only two brief earlier periods have seen prices as high as they are today on an inflation-adjusted basis, according to data from the U.S. Energy Information Administration. And the national graph – with prices for a gallon of regular unleaded going back to the mid-1970s – shows current prices are nearly as high as they were, adjusted for inflation, during the gas shortages of the late 1970s and early 1980s.

Every penny counts, of course, but it may be premature to start planning that blow-out cross-country trip just yet.