Report says wage gap in Mass. is widening

Posted Jan. 01, 2012, at 7:23 p.m.

BOSTON — Thanks to one of the best-educated work forces in the nation, Massachusetts has weathered the economic storm in stronger shape than the U.S. in general. But a new report contends many residents have not enjoyed as safe a harbor.

The analysis by the Massachusetts Budget and Policy Center points to a widening income gap in the state, with significant gains among top earners but only modest or little improvement for those in the middle and lower rungs.

If anything, the wage gap in Massachusetts has become even more pronounced than the nation as a whole, said Noah Berger, the center’s executive director.

“On the bad side, we have seen even greater inequality here than in the rest of the nation,” said Berger.

“On the positive side, that inequality has not been because of wages falling at the bottom, but rather wages at the top growing more than much of the rest of the country,” he added.

The report, “The State of Working Massachusetts 2011,” calls for a sharper focus on education to give more residents an opportunity to attend college. It also suggests an increase in the state’s minimum wage, currently $8 an hour, to boost incomes of workers at the lowest end of the economic spectrum.

The gap between average hourly wages for the highest 20 percent of earners and the lowest 20 percent has grown nearly $10 an hour over the last three decades, after adjusting for inflation, according to the analysis. Workers in the lower 20 percent actually saw the real value of their wages decline, while the wages middle-income workers rose at less than half the rate of the upper 20 per cent.

“If the trend of unequal wage growth resumes as the economy begins to grow again, this gap will widen further,” the report warned.

The analysis, which used data from the federal Bureau of Labor Statistics and the latest U.S. Census, showed the Massachusetts unemployment rate has remained below the national average since January 2007. In November, the Bay State’s jobless rate was 7 percent, compared with 8.6 percent nationally. Massachusetts also lost a smaller percentage of total jobs during the Great Recession, 1.4 percent compared with a U.S. rate of 4.5 percent.

According to 2010 figures, workers in Massachusetts also earned the second-highest median wage in the country, behind Connecticut, and the state’s median household income, while lower than four years ago, has fallen less than the U.S. as a whole. The state also has one of the lowest poverty rates in the nation.

The state’s relative success appears to correlate directly to education levels.

Forty-three percent of Massachusetts workers hold at least a bachelor’s degree, the highest proportion in the country. Workers with a bachelor’s degree or higher were more likely to have remained employed during the economic downturn: Only 2.7 percent were out of a job for 26 weeks or less, with 1.8 percent experiencing unemployment for longer periods. By contrast, 6.9 percent of workers who finished high school but did not attend college were out of work for at least half a year and 5.1 percent were unemployed for even longer periods during the recession, according to the report.

“We’ve benefited in Massachusetts from having the best-educated workforce in the country, the highest percentage of college degrees, but on the other hand, we have left too many people behind,” said Berger.

The state’s minimum wage has not risen in five years, though it remains above the federal minimum wage of $7.25. Berger said an increase would help lift some families out of poverty and reduce the income gap.

The state already has one of the top minimum wages in the country — only six states are higher, said Brian Gilmore, executive vice president of Associated Industries of Massachusetts. He said minimum-wage earners are often part-time workers or teens holding down summer jobs.

“Raising the minimum wage is not going to solve the issue; in fact, it may actually hurt,” said Gilmore, because it could discourage many small businesses from taking on part-time help.

While the state has made great strides in public education as measured by overall student performance, it still faces a significant achievement gap between students of varied socio-economic backgrounds, Berger said, and cuts in funding for public higher education could also make college less affordable for many.

Gilmore agreed that maintaining a highly skilled workforce is the key to keeping Massachusetts competitive, pointing out that despite still high unemployment rates many job vacancies go unfilled because companies cannot find candidates with the necessary technical skills to fill them.

“Most jobs today require post-high-school training. That’s what we need to concentrate on,” he said.

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