Business

Evan Horowitz | Quick Study

So much for the Massachusetts miracle

BOSTON, MA - 8/30/2018: A view of Boston skyline (David L Ryan/Globe Staff ) SECTION: METRO TOPIC stand alone photo
David L. Ryan/Globe Staff
The Boston skyline.

The Massachusetts economy, by many measures, is humming: low unemployment, a sizzling real estate market, incomes that are among the highest in the country.

But a broad and detailed survey to be released Thursday shows that the state trailed the rest of the nation in 2017 when it comes to middle-class income growth, poverty reduction, and the expansion of health insurance coverage.

In the most glaring gap, households in the dead middle of the Massachusetts income ladder saw their incomes rise less than 1 percent, to $77,385, last year, according to the new Census Department report. By contrast, median-income households around the country saw their earnings increase 2.6 percent, a third straight year of nationwide gains.

Advertisement

Ever-rising inequality may be partly to blame for the fact that Massachusetts families aren’t enjoying the full fruits of the state’s economic growth. There was stronger growth among high earners, including a substantial increase in the number of households earning over $200,000. And the census survey also registered a big uptick in the state’s Gini coefficient, a measure generally considered one of the best and broadest gauges of overall inequality.

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

Luc Schuster, who directs the Boston Indicators project at the Boston Foundation, said the report “demonstrates what many of us have been feeling for years, that while the high-level economic indicators are strong, the benefits have not been broadly shared. We still need to do more to create good-paying jobs and reduce poverty in Massachusetts, while helping residents keep up with rising costs for things like housing, child care, and energy.”

Michael Goodman, a University of Massachusetts Dartmouth professor of public policy, noted that there are many other possible explanations. An influx of lower-wage workers could have driven down median earnings, as could a surge in new retirees. Or perhaps it’s a statistical fluke, likely to be offset by next year’s numbers.

But Goodman also emphasized that these numbers “certainly underscore the slowness of wage and income growth, in the context of very strong macroeconomic conditions here in Massachusetts.”

For many blue-collar and middle-class workers, slow-growing paychecks have remained the Achilles’ heel of America’s otherwise robust economy, which may plague Republican candidates relying on the elevated GDP growth of the Trump era to carry them to victory. Democrats in Massachusetts might point to the shortfall in median household incomes as a reminder that this growth hasn’t always trickled down.

Advertisement

Even in the rest of the country, where families saw larger income gains in 2017, the long-term picture isn’t great. Eight years after the end of the financial crisis, the median household is earning $60,336, little better than the $60,135 they made in 2007.

And as you travel further down the income ladder, the situation doesn’t improve.

Massachusetts has long had a lower poverty rate than the country as a whole: 10.5 percent, compared to the 13.4 percent nationwide. But while 21 other states saw their poverty rates decline significantly in 2017 — including some nearby Northeastern states like New York and Maine — the poverty rate in Massachusetts didn’t budge.

Likewise, there was no meaningful reduction in child poverty, despite a dramatic decline across the nation as a whole. About 180,000 children in Massachusetts — nearly one in seven — live in families that survive below the poverty line. And to give a sense for how low the bar is, a family of four anywhere in the United States has to earn less than $24,858 per year to qualify for this definition of poverty.

Among minority groups, the overall poverty rate is even higher, including for blacks (17.9 percent), Asians (15.7 percent), and Latinos (25.2 percent). Reflecting on these numbers, professor Tiziana Dearing of Boston College said that “while the economy is getting better, if you are a person of color or marginalized in some other way, you’re increasingly behind the eight ball.”

Advertisement

Perhaps most surprising among the Census Bureau’s findings is that the number of Bay Staters without health insurance actually went up a bit in 2017. The effect was small, and Massachusetts didn’t lose its status as the state with the lowest percentage of uninsured residents, but it’s an unexpected backward step for a state that has long led the way on expanding health insurance coverage.

Any explanation as to why the uninsured population rose must be preliminary, because the data are new and we’re talking about relatively small movement. But the clearest change involves residents under the age of 19, where the uninsurance rate increased from 1 percent to 1.5 percent.

John McDonough, who played an instrumental role in Massachusetts’ 2006 health insurance overhaul plan, took a cautious stance: “It could be statistical noise, and it needs to be examined in the context of other national and state surveys for comparison and context.” And while Brian Rosman from the advocacy group Health Care for All mostly agreed, he said that “the bump in the number of uninsured should focus everyone on the need to continue to work to make sure everyone has access to affordable coverage.”

But taken together, these three developments — a lack of median income growth, a stagnant poverty rate, and an uptick in the rate of uninsured — suggests some kind of pause in the long-term pattern of strength that has made Massachusetts one of the richest, highest-performing states in the country. Or worse, a first sign of reversal.

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