Rising income inequality, a decade of stagnant job and wage growth, and deep-rooted racial and ethnic disparities threaten Massachusetts’ economic future, according to two reports released independently this week.
One study calls 2000 to 2010 a “lost decade” for the Bay State, according to non-partisan think tank MassINC and Northeastern University’s Center for Labor Market studies.
It was the first 10-year period since World War II that Massachusetts ended with fewer jobs, a drop of 143,000 positions, the report said. Despite an increasingly educated and productive workforce, wages essentially stayed flat, the first decade where households saw no income growth in the state since the Great Depression.
By decade’s end, one in four Massachusetts workers was unemployed, held a position for which they were overqualified, had less work than they wanted or was not actively looking for a job, the study said.
The state’s problems began well before the recent recession, said Benjamin Forman, MassINC research director and one of the report’s authors.
“When you look at the 2000s as a whole, it was a difficult time for the state,” he said. “We’ve got a decade’s worth of problems to deal with.”
The report, titled “Recapturing the American Dream: Meeting the Challenges of the Bay State’s Lost Decade,” came on the heels of a study by the Metropolitan Area Planning Council highlighting social inequities in 101 cities and towns surrounding Boston.
Both reports cited the rising gap between the rich and poor as a key economic challenge for the state.
The regional planning agency’s study said on average, the richest 20 percent of the region’s population earns 10 times as much as the bottom 20 percent. Back in 1979, the top fifth earned a smaller share – six times as much as the lowest bracket.
The planning council’s report noted that while Greater Boston is becoming ever more diverse, deep racial and ethnic disparities remain in income, as well as other areas ranging from child health to access to recreation to success in school.
Marc Draisen, the council’s executive director, said the agency wanted to quantify inequality in the region and track it over time. The council plans to follow up with policy suggestions to tackle the problem in a later report.
“We like to argue a more equitable region is going to be a more prosperous and successful region for everyone,” Draisen said.
MassINC’s report says the richest 10 percent of the population took home 40.9 percent of all income in the state in 1959. As of 2010, they earned slightly more than half the state’s income, the report said.
“Economists are saying this level of inequality, it slows growth because people lose faith in the political system,” Forman said, as well as the chance to earn better jobs and wages.
The MassINC report paints a picture of untapped economic potential in Massachusetts.
The study said the Bay State’s educated workforce is its best asset, with 46 percent of residents holding at least a bachelor’s degree, up from 37 percent in 2000.
But the state’s economy grew slower than the nation’s over the past decade. Growth in professional, scientific, finance, technical and other high-skill fields also lagged behind the rest of the U.S.
Meanwhile, more older workers are delaying retirement, with the number of workers between the ages of 65 and 74 with full-time jobs increasing from 40 percent to 60 percent since 2000, the study said.
Younger workers are struggling more to find jobs and begin their careers, depriving them of experience needed to replace aging workers.
Over the past decade, the nature of unemployment has changed significantly, MassINC said. The average length of unemployment tripled since 2000 to 33 weeks as of the first five months of 2011, a record high, the report said.
Meanwhile, the lower wage earners pay almost twice as much of their incomes on taxes as the top bracket, according to the MAPC report.
The bottom 40 percent of the population, excluding the elderly, pays about 10 percent of its earnings on taxes, factoring in sales, income and property taxes, as well as federal deductions. The highest 1 percent of wage earners pays about 4.8 percent.
The MAPC report points to real-life consequences from income inequality that fall disproportionately on minorities, who often live segregated from whites despite the state’s growing diversity.
The consequences include more babies born prematurely to African American women and major disparities in early literacy for black and Latino students.
“With issues of equality and race, there’s a long and difficult history in this region to those questions,” Draisen said.
The report, he said, is meant to start the region on “a pathway to finding solutions.”
(David Riley can be reached at 508-626-4424 or driley@wickedlocal.com.)