The State of Working Massachusetts 2013

Work & Education

Workers with higher levels of education tend to have higher wages (see detail below) and lower levels of unemployment. Massachusetts leads the nation when it comes to the proportion of workers who have a Bachelor's or a higher degree.

In the 1980s and 1990s, real hourly wages for workers with a Bachelor's degree or higher grew at an annual rate nearly one percentage point higher than inflation, while wages for those with some college education or only a high school degrees saw a slight drop in hourly wages. That wage growth experienced by better educated workers slowed in the last decade, and wages for this group remain slightly below their pre-recession level. National data suggest that during this period only those with an advanced degree saw any wage growth.1

Despite a recent slowdown in wage growth for more highly educated workers, they retain a significant wage advantage. In 2012, the median hourly wage for a Massachusetts worker with a Bachelor's degree or higher was almost twice the wage for a worker with a high school degree.

In Massachusetts, the share of workers with a Bachelor's degree or higher has more than doubled over the past thirty years and, as noted above, we now lead the nation in the number of workers with a Bachelor's or higher degree.

The correlation between educational attainment and median wages may help explain our state's high ranking on wage and income measures. Recent academic work has pointed to a connection between education and income and has suggested that a state's high school and college attainment rates is an important factor in explaining its per capita income growth relative to other states between 1939 and 2004.2 This work is consistent with the experience of states in recent decades.

As the next two figures show, the link between the educational attainment of a state's workers and its median wage was weak in 1979, but had grown much stronger by 2012. The change during this period is likely part of larger structural changes in the labor market. Thirty years ago it was easier to find manufacturing jobs that, in part due to strong unionization in this sector, paid relatively well even for people with lower levels of education. Today, many of these jobs have disappeared. Higher-paying jobs now tend to require a college degree.

The chart below illustrates the relatively weak relationship between education attainment and median wages in 1979.

By contrast, the relationship between education and wages is much stronger in 2012.

1See discussion in the wage section of The State of Working America, Economic Policy Institute, 2012. Sample size issues make it difficult to break out earnings for workers with advanced degrees on a sub-national level.

2Bauer, Paul et al. "State Growth Empirics: The Long-Run Determinants of State Income Growth" (Working Paper 06-06, May, 2006, Federal Reserve Bank of Cleveland).