Commonwealth Magazine: Income up, poverty and inequality down
Sep 14, 2017
With the state moving toward major decisions over wages, income taxation and health care spending, new data published by the US Census Bureau Thursday shows Massachusetts to be a state with declining poverty and rising incomes that rank among the highest in the country.
WITH THE STATE moving toward major decisions over wages, income taxation and health care spending, new data published by the US Census Bureau Thursday shows Massachusetts to be a state with declining poverty and rising incomes that rank among the highest in the country.
An estimated 65,474 fewer residents of Massachusetts — for comparison’s sake, that’s about the size of Waltham or Haverhill — were living in poverty in 2016 than the year before, according to new data released by the federal government from the American Community Survey. But the number of Massachusetts residents still living in poverty — 686,597 — is nearly the size of the population of Boston.
Income growth in Massachusetts also ranked state workers among the highest earners in the country along with residents of Alaska, Connecticut, the District of Columbia, Hawaii, Maryland and New Jersey.
The Census statistics show 10.4 percent of the state’s 6.8 million people were living below the poverty line as the median household income in Massachusetts crept up by more than $4,600 from 2015 to $75,297 a year.
“Whether it be through increasing the earned income tax credit to help 400,000 low income workers take more pay, or through workforce skills development to help folks compete for better jobs, the Baker-Polito Administration is working to bring economic independence to every corner or Massachusetts,” Baker spokesman Brendan Moss said in a statement. “The Baker-Polito Administration looks forward to continuing our work to provide a quality education and more job opportunities across the Commonwealth to make our state the best place to live, work, and raise a family and break the cycle of poverty in every zip code.”
The poverty rate for last year dropped more than a full point from the 11.5 percent of residents in 2015, a faster clip that the nation as a whole, which saw the poverty rate fall from 14.7 percent to 14 percent.
Massachusetts was one of 10 states with a poverty rate below 11 percent.
The new data will undoubtedly help inform looming policy debates on Beacon Hill where income inequality has been a motivating factor behind a push to increase taxes on millionaires, raise the minimum wage to $15 an hour and identify strategies to wring savings out of the state’s Medicaid program, which helps insure nearly 2 million low-income and disabled Bay State residents.
Proponents of taxing income above $1 million at a higher rate have already secure the legislative votes needed to advance their proposal to the 2018 ballot, while the Raise Up Coalition is also pursuing an initiative petition to increase the state’s $11 an hour minimum wage to $15.
A legislative hearing has been scheduled for Tuesday on bills that would increase the minimum wage gradually to $15 an hour by 2021. Wage stagnation has been blamed, in part, for sluggish tax revenue growth in recent years, but the new data suggests household incomes have actually grown by nearly 6 percent in the past year.
After adjusting for inflation, the Massachusetts Budget and Policy Center reported that wages climbed 5.8 percent in the past year, second only to the 6.3 percent growth in Idaho.
“It’s good news that incomes are up and poverty is down. But too many families in our state are still struggling,” the group said in its analysis. “The state median wage remains below where it was in 2009, and more than one in eight children in our state live in poverty. The progress our state has made should encourage us to continue to work to expand opportunity and to help working families to become more economically secure.” “These numbers are a step in the right direction. But thousands of families still find themselves trapped in the elusive ‘cycle’ of poverty,” EMPath chief operating officer Mary Coleman said in a statement. “And far too many people need to work multiple low-wage jobs, just to stay above the poverty line. The knowledge economy is still leaving many people behind, on the brink of poverty—for many just one paycheck, medical expense, or job loss away from poverty.”
Policy changes in the areas of affordable housing, workforce training, and family and medical leave are needed, said Coleman, whose organization is focused on helping move people out of poverty.
According to the Census Bureau, most states did not experience a statistically significant change in income inequality from 2015 to 2016, but Massachusetts was actually one of two states, along with Alaska, to see a decline in income inequality.
The Census Bureau counted 686,597 residents in Massachusetts living below the poverty level last year compared with 752,071 in 2015.
House and Senate lawmakers are also exploring ways to control health care costs following Gov. Charlie Baker’s efforts during this past budget cycle to impose new eligibility criteria for the MassHealth program.
Despite steady growth in required spending on the health care program for low-income residents in recent years, swings in enrollment often play a big factor in whether lawmakers and the administration have to allocate additional resources during the year for program. A decline in poverty could help slow that rate of growth.
The rate of insured in Massachusetts climbed to 97.5 percent in 2016, an increase from 97.2 percent in 2015 that solidified the state’s standing as the state with greatest portion of its residents covered by public or private health insurance.
Female residents were more likely to be living in poverty than males, according to the new Census numbers, and 4.1 percent of working adults, or 142,269, were still not earning enough to claw above the poverty line.
“We’re finally seeing incomes rise for working people, after decades when the economy’s gains went mostly to those at the top. But as this report shows, far too many low wage workers can’t keep up with the cost of living, even when they work two or three jobs,” said Andrew Farnitano, a spokesman for the Raise Up coalition. “Raise Up Massachusetts’ agenda — raising the minimum wage to $15 over four years, passing paid family and medical leave, and investing in transportation and public education with the Fair Share Amendment — will give workers more money in their pockets so we can keep growing our economy from the bottom up.”
The survey also found that 42.7 percent of Bay State residents had at least a bachelor’s degree and 90.4 percent had graduated from high school or earned an equivalent certificate.
Of the 1,633,661 families recorded in the survey, 7.3 percent were living in poverty, including 11.6 percent of families with at least one child under the age of 18.