Mass. buoyed in recession, data indicate

Poverty stable, but facts may mask trouble

By Maria Sacchetti
Globe Staff / September 29, 2010

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Massachusetts appeared to weather the recession better than other states last year, according to census figures released yesterday, with stable poverty rates and stagnant annual income. But analysts disagree about whether the figures reflect a strong economy or instead mask more serious troubles statewide.

Some analysts and economists said the 10.3 percent poverty rate, one of the nation’s lowest, and other indicators show that Massachusetts is buoyed by its higher education, technology, and health sectors — professions that attract highly educated workers who are less likely to be unemployed.

“This is not a great economy for anybody,’’ said Kurt Wise, a policy analyst at the Massachusetts Budget and Policy Center, warning that Massachusetts should reverse cuts to education to preserve its economic stability. “The fact that Massachusetts is doing better is good and there are reasons for it. It’s not a fluke.’’

But others say the state’s income levels have become increasingly unequal, with the top 10 percent garnering most of the wealth, leaving the lower and middle classes to bear the brunt of the recession’s hits.

“We’ve become one of the most unequal states in the entire country,’’ said Andrew Sum, di rector of the Center for Labor Market Studies at Northeastern University, adding that the state’s gubernatorial candidates should be called on to address the issue. “We haven’t made it in Massachusetts for 10 years and why? We need to answer that question.’’

The census figures released yesterday are part of the American Community Survey of economic, social, and demographic data of geographical areas with 65,000 or more people. About 3 million people are surveyed annually nationwide. Data for smaller areas will be released in December.

According to the figures, more than 654,000 of the state’s 6.6 million residents were living below the poverty line last year, similar to 2008. Nationwide, the poverty rate rose to 14.3 percent, the highest rate since 1994 and an increase from 13 percent the previous year.

Massachusetts residents are also taking home a stable, if lower, median household income, earning $64,081 last year compared with $64,941 the year before, a 1.3 percent decline that is not considered statistically significant.

Some were also encouraged by a drop in the state unemployment rate last month to 8.8 percent.

“It’s further vindication of what we’ve been saying all along, mainly that the economy is inherently strong in Massachusetts,’’ said David Tuerck, executive director of the Beacon Hill Institute at Suffolk University, who added that Massachusetts still needs to reduce taxes to attract and sustain businesses. “It’s no surprise that we are doing slightly better by that standard than the rest of the country.’’

But others point to troubling signs in the census and beyond.

Yesterday’s data revealed that Lawrence, Lynn, New Bedford, Fall River, and Springfield all posted poverty rates above 20 percent. Lawrence had the highest rate, 30.6 percent, triple the state average. (In Boston, where many of the jobs, hospitals, and tech companies are concentrated, the rate declined from 18.7 percent in 2008 to 16.9 percent last year).

The number of people on food stamps in the state climbed 22 percent last year, faster than the national average. In addition, 13 percent of children and 23 percent of families headed by a single mother were below the poverty level.

Several analysts noted that poverty figures can be misleading, because the same level is applied to all states nationwide — $10,956 in annual income for an individual and nearly $22,000 for a family of four. Because Massachusetts has one of the highest costs of living in the United States, analysts say that a resident could earn more than the limit and still struggle.

Benita Danzing, a project coordinator at Massachusetts Citizens for Children, expressed concern that the 2009 census figures do not yet reflect the current state of the economy in Massachusetts, given the long lines at food banks and soaring foreclosure rates. Last month 1,207 homeowners lost their homes, up 83 percent from the same month a year ago, according to Warren Group, a Boston-based real estate-tracking firm.

She warned that if state and federal support is cut, more families will fall into poverty.

“We’ve had a lot of cuts for families and that’s not helping,’’ Danzing said, adding that the effect is “going to be a tsunami in terms of the way it’s going to affect our children and families.’’

Sum said his most recent research shows that Massachusetts is tied with Arizona for the widest income gap in the nation.

He said the top 10 percent of the state’s households earn an amount that is equivalent to the bottom 70 percent.

The gap is a major concern and Sum said it is exacerbated by the fact that the state has lost 100,000 jobs since 2007. He said the gap could lead to lower education levels and put the state’s economic future at risk.

Wise, of the budget project, and others say Massachusetts should examine the reasons behind its relative stability so far — and try to prevent problems it may face in the future.

In the past, Massachusetts has taken a long time to recover from devastating recessions. If this stability is because of strong education levels — it boasts one of the best K-12 school systems in the country and some of the world’s premier education institutions — then the state is reaping those benefits now.

But those sectors have also suffered cuts in recent years that could destabilize the state down the road.

“In the long run, what helps is a highly educated labor force because of the globalization of the economy,’’ said Professor Alan Clayton-Matthews of the School of Public Policy and Urban Affairs at Northeastern University. “The reputation we have actually encourages people to come and move here.’’

Maria Sacchetti can be reached at