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The Public Cost of Low-Wage Work in New England

The Public Cost of Low-Wage Work in New England
Article published by the Federal Reserve Bank of Boston, spring 2016 issue of Communities & Banking

Introduction

Stagnating wages are causing many working families to end up on public assistance. More minimum-wage laws could change that scenario.

The decade 2003 to 2013 was a tough one for workers in the United States, 70 percent of whom saw their real (inflation-adjusted) wages decline. In New England, 50 percent of workers experienced a decline in real wages. Although that was less than workers nationwide, the changes were more extreme, with lower-wage workers experiencing deeper drops in their real wages and higher-wage earners making greater gains than in the nation as a whole.

The decline in employer-provided health insurance has exacerbated the pain, with the share of nonelderly New Englanders who receive insurance from their employer falling from 72.3 percent in 2003 to 67.8 percent in 2013. As job-based coverage has declined, more workers and their family members have enrolled in public health-care programs.

Stagnating wages and decreased employer benefits are a problem not only for low-wage workers, who increasingly cannot make ends meet, but also for state governments, which help finance the public safety net that many workers and their families must use.