Officially, the "Great Recession" ended in 2009, but the recovery that followed has been slow and uneven. Workers across the Commonwealthand the U.S.still confront a relatively weak labor market, and low-wage workers have been particularly affected by growing inequality and the declining value of the minimum wage. Even as the Massachusetts economy grows more productive, workers continue to find that their wages don't reflect these productivity gains.
The charts that follow provide a snapshot of the economic situation for workers on this labor day, including information on wages, job growth, and inequality.
1) Rising Productivity and Stagnant Wages
Since 1979, productivity in Massachusettsmeasured as the output of goods and services per hour worked has more than doubled (even after adjusting for inflation), growing by 112 percent over this period. For the U.S. as a whole, productivity has grown by an inflation-adjusted 69 percent over this same period.
In the four decades following the end of WW II, wage growth in the U.S. generally kept pace with productivity growth, meaning that workers' incomes and standards of living rose along with productivity (details from EPI). That trend continued through much of the 1980s in Massachusetts, but by the end of that decade the two measures began to diverge. Since 1979, the median wage for Massachusetts workers has grown by just 18 percent, and the minimum wage has actually lost nearly 13 percent of its value.
2) Job Growth by Sector
Despite an overall, net job gain, job losses and gains in Massachusetts have not been spread evenly across all employment sectors during the long, slow recovery from the Great Recession. Sectors that historically have provided higher-wage job opportunities for workers with limited formal educationthe Manufacturing and the Construction sectorstogether have gained only 1,300 net jobs.. By contrast, sectors that offer low-wage jobs to these workersthe Leisure & Hospitality, the Retail Sales and the Other Services sectorshave added close to 60,000 jobs. The highest-wage Professional and Business sector also has seen robust growth.
While the economy has begun to grow again, low-wage workers continue to struggle. Between 1985 and 2012 (in each case three years after the official end of a recession), the gap in hourly pay between high and low wage earners grew by about $9.00, adjusted for inflation, from more than $15 an hour to more than $24 an hour (see chart below).
Moreover, while all wage earning groups saw declines in hourly wages over the last few years, the drop for lower-wage earners has been steeper and the gap remains wide.
4) Declining Value of the Minimum Wage
Over the past forty-five years the value of the minimum wage has lost a quarter of its value. A minimum wage earner working full time in Massachusetts will earn about $16,000 this year, higher than the poverty threshold for a an individual (a little over $11,700 in 2011), but lower than the threshold for a family of three (around $18,000). That same worker would have earned about $21,160 back in 1968 (measured in real, inflation-adjusted dollars).
5) Minimum Wage Lags Other Indicators
Increasing the minimum wage could help restore the value it has lost over time. In order to restore the value lost due to increases in the cost of living, the minimum wage would need to rise to about $10.72 in 2013. Assuming the cost of living continues to grow modestly, it would need to be about $11.00 per hour by 2015. Narrowing the gap between minimum wage and high wage workers back to where it was in 1979 would require an increase to $13.67 in 2013. And if the minimum wage had kept pace with gains in productivity since 1979, it would be $19.77or about $39,000 a year for a full-time workertoday.
Information on this website provides nonpartisan research and analysis on the minimum wage and is not intended to promote or oppose particular proposals on this issue.