Since the 1970s, the fundamental structure of our economy has shifted in ways that have left most workers treading water rather than moving ahead. While Massachusetts workers have suffered from these national trends, on the bright side, our labor force has become increasingly more educated over the last three decades and highly-educated workers have seen their real wages grow at faster rates. In fact, their median hourly wages are nearly twice as high as those with only a high school degree (see charts, below). In addition, highly-educated workers also tend to have lower levels of unemployment.
As the workforce in Massachusetts has grown increasingly well-educated over the past three and a half decades, this trend has benefitted both our state economy and our workers. Since 1979, the share of Massachusetts workers with a college degree has more than doubled (see chart, below).
This is important (among other reasons) because states with better-educated workers tend to have high wage economies (see A Well-Educated Workforce is Key to State Prosperity). Given that Massachusetts is the national front-runner in educational attainment, it’s not surprising that we are also the state with the highest median wage (see charts, below).
The positive link between the educational attainment of a state's workforce and its median wage, however, has not always been so strong. As the charts below illustrate, the link was quite weak in 1979, but has grown much stronger by 2015. The increased connection between educational attainment and wages is likely related to larger structural changes occurring in national labor markets and in the global economy over this period. Thirty years ago, it was easier to find a manufacturing job that—in part due to strong unionization in this sector—paid relatively high wages, even to people with lower levels of education. Today, many of these jobs have disappeared from the U.S. economy. Now, higher-paying jobs tend to require a college degree.
Overwhelmingly, high-wage states are states that have a well-educated workforce (see chart, below). The correlation is very strong and there are large differences between median hourly wages in states with well-educated workforces and hourly wages in states with less-well-educated workforces (as measured by the share of workers who have at least a bachelor's degree).
The same pattern holds true when we look at cities across Massachusetts. In our state, cities with a larger share of college-educated workers also have higher median incomes. Many of the cities that have lower incomes and a less educated workforce tend to be in so-called “Gateway Cities” in Massachusetts. (To learn more about our Gateway Cities see Income Growth and Gateway Cities: What Happened, and Is There a Path Back to Broadly Shared Prosperity?) Thus, economic conditions in our Gateway Cities reflect not only the national trend of stagnant wages, but also the results of a state education system that—though far better than most states—has not done enough to provide all children in all of our communities with the opportunities that can allow them to reach their full potential.
Higher levels of education, however, do not guarantee a high income or strong, sustained wage growth. As discussed in the Wages and Income section of this report, real wages for most income groups have been weak to stagnant—or some cases, have declined—since the 1970s. While there have been wage and income gains for most workers in the last year or two, the disturbing, long-term pattern of wage and income stagnation for most workers has continued during the Great Recession and the subsequent recovery. Notably, workers with high levels of education have not been immune from this pattern—in fact, when workers are grouped by educational level, we see that all groups have suffered wage losses since the onset of the Great Recession (see chart, below).