MassBudget is pleased to present this State of Working Massachusetts 2017 report. Each year, in our State of Working Massachusetts reports, we look at how Massachusetts is faring with respect to jobs and the labor force, wages and income, and education. Throughout the report, we present data available from the U.S. Census Bureau, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, and various Massachusetts government agencies.1 We invite you to read more about all of these topics and to explore the many other issues we cover and reports we provide on the MassBudget website.
Jobs and the Labor Force
Eight years into the recovery from the Great Recession, Massachusetts is seeing more and more people joining the labor force, which has grown 3.2 percent so far in 2017 — faster than any other state in the nation. Massachusetts has added close to 300,000 jobs since the start of the Great Recession in 2007, representing 9.0 percent job growth — among the highest rates of job growth in the country over that time.
Wages and Income
Increases in jobs and in the overall labor force are signs of a strong and growing economy. Unfortunately, job gains are still not translating into strong, broad-based wage growth. This continues a long-term trend in Massachusetts and in the United States: economic growth is not translating into wage and income growth for most workers and their families. Since 1979, median household income in Massachusetts has barely budged, growing only half a percentage point each year after adjusting for inflation. By contrast, among the highest-income one percent of households, income has risen by 4.3 percent annually.
This is a national pattern, but it is particularly pronounced in Massachusetts, where the highest-income one percent of households have seen more rapid income growth than in any other state: 341 percent between 1979 and 2014 (the most recent year for which data is available). Ten percent of all Massachusetts income went to the highest-income one percent of households in 1979. In 2014 it was 25 percent.
This growing inequality is part of what is known as the “Great Decoupling”—the period, beginning in the 1970s, when growth in wages and income for most workers began to flatten even while productivity continued to increase.
The highest-income households, who derive relatively little of their income from wages, have made enormous gains, but what if all Massachusetts households had shared equally in income growth since 1979? The median household income would be $88,300—37 percent higher than it is today.
While the above scenario of equal growth is hypothetical, we can observe one thing with certainty: since the recession of the early-1990s, the only times Massachusetts’s lowest-paid workers have seen wage increases have been after an increase in the state minimum wage. After declining by almost 10 percent between 2008 and 2014, wages among the lowest-earning 10 percent of workers have increased by 8 percent since the state’s minimum wage was increased by a dollar each year in 2015 and 2016.
In 2016 Massachusetts became the first state ever with 50 percent of its workforce holding a four-year college degree. Across the nation, states with the best-educated workforces consistently have stronger economies than those with less well-educated workforces. Massachusetts and New Jersey have the two best-educated workforces and the two highest median wages in the United States.
Massachusetts is a prime example of the importance of access to higher education, as shown by nearly four decades of growth in the “college wage premium” — the additional amount earned by workers with a college degree compared to those who have not attended college. Since 1979, while actual wage growth has been flat or weak for most Massachusetts workers, including those with a college education, the relative earnings benefit of a bachelor’s degree has grown steadily. By 2016, the median wage for Massachusetts workers with a college degree was about twice that of workers with no more than a high school diploma.
Expanding access to higher education clearly benefits both individual students and the overall state economy. But the state reduced funding for public higher education by $3,000 per student from 2001 to 2016. Meanwhile, costs have been shifted onto students, with tuition and fees rising $4,000 per student over the same period. (Both amounts have been inflation-adjusted to 2016 dollars.) The University of Massachusetts recently announced a 3 percent tuition increase for the fiscal year 2018, marking the third consecutive year of increases.
Strong job growth and the best-educated workforce in the country are key to making and keeping the Massachusetts economy one of the strongest in the nation. But stagnating wages and income threaten to leave many workers and their families behind. We hope this State of Working Massachusetts 2017 report empowers the people of Massachusetts to focus on the challenge of building a Commonwealth in which everyone can contribute their full potential and all can benefit from a strong and vibrant economy.
To read these sections in their entirely, click on the name of the section on the ribbon below.______________________________
1Much of the underlying data in the State of Working Massachusetts 2017 comes from Economic Policy Institute (EPI) analysis of Current Population Survey data. To read more about their methodology in calculating income, wages, and other measures used throughout this report, please refer to the appendices of EPI’s The State of Working America 12th edition.