Economic disparity grows in Massachusetts

Study says business costs remain high statewide; Jobless rate remains high beyond I-495

We often hear about how the local economy is booming, compared to other parts of the country.

But a different picture emerged when the Massachusetts Taxpayers Foundation compared wages and unemployment in the Boston area to other parts of the state in its latest report on the high cost of doing business here.

The state’s jobless rate fell to 4.6 percent in May for the first time since December 2007, at the start of the Great Recession. However, in the southeastern and western parts of the state — including Bristol, Barnstable, Hampden, and Berkshire counties — the unemployment rate in May remained notably higher than it was in May 2007.


The state’s average individual wage of nearly $65,000 was still well above the national average of $52,000 in 2014. But that’s mostly due to high wages in Suffolk and Middlesex counties — Boston and its neighbors to the north and west.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

Look beyond Interstate 495, and you’ll see a different picture. In fact, average wages in most counties were below the national average, with salaries on Cape Cod and in Western Massachusetts particularly low.

“When you think of Massachusetts, you think we’re a high-wage state, but when you look at it county by county, it’s a very different picture,” said Eileen McAnneny, president of the foundation. “In the counties that are farthest from Boston, those wages are considerably less. . . . There’s a $40,000 difference between the average wage in Franklin County and Suffolk County.”

Employers might see a silver lining in this: that a relatively inexpensive labor force can still be found within the state. But McAnneny said this regional disparity is a negative. Electricity, health insurance, and tax costs are fairly uniform throughout the state, but as a result, more of a burden for those who live far from Boston.

“While the Boston economy may be able to absorb some of the higher costs, that may not be the case in Franklin County,” McAnneny said. Particularly frustrating to the foundation is the lack of progress on electricity and health insurance costs, despite efforts to deregulate the power industry and reform health insurance.


The costs of employer-sponsored health insurance for families ranked Massachusetts in fifth place among states, a marginal improvement from third place in 2003. Meanwhile, the ranking for individual health plan costs ranked Massachusetts third this year, compared with 11th in 2003.

Electricity prices for industrial customers put Massachusetts in third place, after Hawaii and Alaska this year, versus fourth place in 2003.

The state also remained high for corporate taxes per capita: fifth place in this year’s report (based on 2012 data), compared with sixth in 2003.

“Our highly educated work force has been our strength and our biggest asset but if you look at other states, they’re catching up to that, but they do have lower cost structures,” said McAnneny.

Jon Chesto can be reached