Labor Market Problems in the Recovery from the Great Recession: Welcome to the Uncommonwealth of Massachusetts

The employment recovery from the Great Recession of 2007-2009 has left many U.S. workers behind, with lower income workers and less educated workers continuing to face far more severe unemployment, underemployment, and other labor underutilization problems then their more affluent counterparts.  The employment problems of U.S. workers that were a result of the Great Recession were very unevenly shared across household income and education groups; the gaps between the affluent and the low income population have been rising over time.  Regrettably, Massachusetts’ labor markets have performed equally as badly and in some cases even more poorly than the nation’s.  By the first quarter of 2013, the state still had not yet matched the number of payroll jobs it had generated in the first quarter of 2001, the previous historic high jobs count, and unemployment problems were two to three times as high as they were in 2000.

Our new report, “The Labor Market Problems of Massachusetts’ Workers in the Recovery from the Great Recession:  The Great Socioeconomic Divergence” is devoted to a more complete and rigorous analysis of the size and incidence of alternative labor market problems among Massachusetts workers in 2012-13, with comparisons dating back to 2000.  We show that combined labor underutilization problems among state workers have increased to a substantial degree over the past 12-13 years and that the distribution of such labor market problems has become far more unequal across key socioeconomic groups of workers, as represented by their educational attainment and household income group.  These widening socioeconomic disparities in labor market problems have contributed in an important way to the growth of earnings and income inequality in our state over the past decade.  We are no longer a true “Commonwealth” and the consequences are quite severe for the workers themselves, their families, and their communities.

Ed Mason, on the front page of the business section of the  Boston Globe, featured these research findings in the following article that ran October 27th, 2013.  “Knowledge economy is leaving some behind – The gap is widening between the poor and the rich in Massachusetts.” 

Key findings from the report on the rising gaps in unemployment rates across educational attainment and household income groups include the following:

  • 20% of workers from Massachusetts households with annual incomes of less than $20,000 were unemployed compared with 3.3% of workers from households with annual incomess of $150,000 or more.
  • 19% of high school dropouts in Massachusetts were unemployed, a rate that is three times that of the state’s overall unemployment rate of 7.2%.  The unemployment rate drops to just over 3% for those workers with a Master’s or higher degree.
  • The unemployment rate of low income, high school dropouts and high school graduates were in the 22 to 30 percent range, equivalent to a Great Depression, low-middle income high school graduates and those with some college faced unemployment rates between 9 and 12 percent, a Great Recession, while the best educated and most affluent had unemployment rates of only 1.5 to 2.5 percent, a “super full employment” environment.

The gaps in the labor market outcomes of Massachusetts workers get substantially worse when we expand our measure of the labor market problems of Massachusetts workers to those who are  underemployed and those who want jobs but have stopped actively looking for work.  Key findings:

  • 55% of Massachusetts workers who did not finish high school or have a GED and lived in a household with an annual income of less than $20,000 were unemployed, underemployed, or no longer searching for work compared to only 4% of those workers with a Master’s degree or higher and living in a household with an annual income of $150,000 or greater.

Full report: The Labor Market Problems of Massachusetts Residents in the Recovery from the Great Recession – The Great Socioeconomic Divergence