Mass. housing costs are high, but so are average wages

By Evan Horowitz Globe Staff 

Forget the historic sights and coastal charm, it’s the fat paychecks that make Massachusetts so great. Hour after hour, workers here out-earn their peers in every other state — and by quite a lot, according to the latest analysis from the Economic Policy Institute.

In 2017, the median wage in Massachusetts was $22.44. That was 54 cents higher than for our closest competitors, in New Jersey, and a full $4 above the national average. And it’s not because we have a lot of ultrarich executives juicing the numbers; median-wage estimates like this tell us what middle-income folks are really taking home — namely, more than they do everywhere else.


In fact, when it comes to earnings, workers in Massachusetts have been pulling away from other traditionally high-paying states.

In 2007, before the Great Recession, we had the fourth-highest wages in the United States, behind New Jersey, Connecticut, and Maryland. But since then, we seem to have found a surer path to recovery than those states, with broader benefits for the middle class.

What’s the secret? The same economic recipe that’s been boosting Massachusetts for years now, including an emphasis on education and a pivot to postindustrial, high-skill jobs.

Start with the education side. All across the country, college graduates earn substantially more than those without a degree, but Massachusetts is in the unique position of having a higher percentage of college-educated workers than any other state. That means paychecks are resized to reflect the value of those long-nurtured intellectual skills.

There’s also a spillover benefit. High-productivity businesses that need well-educated workers (like Amazon, but not just Amazon) are more likely to move to Massachusetts, confident that they will have a ready supply of qualified applicants.


Put those effects together — more college graduates, more businesses hungry for well-educated workers — and the result is a state economy at the vanguard of postindustrial America, where a faster-shrinking manufacturing sector has made room for jobs in areas like business consulting and scientific research.

Before you shout “but what about . . . ” it’s true there’s a (slight) catch in all of this. Wages may be high in Massachusetts, but so is the cost of living — particularly when it comes to housing.

Greater Boston’s core has some of the highest home and rental prices outside of California. And while this doubtless eats into Massachusetts workers’ paychecks, the effect may not be as dramatic as you’d expect.

To help give a sense for how far dollars stretch in different regions, the federal Bureau of Economic Analysis calculates the cost of living in all 50 states. But when we use those numbers to create a clearer picture of how wages compare with costs, Massachusetts still comes out on top, with the highest wages, adjusted for cost of living, in the country — albeit with a different set of peers, Minnesota and North Dakota, instead of New Jersey and Connecticut.

There may still be room to quibble about the bureau’s methods, and none of this changes the reality that Massachusetts has some of the widest divides between high- and low-income residents. But the mere fact that we still have the nation’s highest wages, even after accounting for outsize housing costs, shows just how healthy our economy is — not just for those at the top, but also for workers in the middle.

If only we could do something about the weather.

Evan Horowitz digs through data to find information that illuminates the policy issues facing Massachusetts and the nation He can be reached at
Follow him on Twitter @GlobeHorowitz.