Incomes in Mass. grew last year, but it might not feel that way – The Boston Globe

But given the soaring costs of so many everyday goods over the last few years, many people here may not feel wealthier than they did in 2022 — even if, on paper, they are.

“It’s not as much of a problem as it was a year or two ago,” said Mark Melnik, the director of economic and public policy research at the UMass Donahue Institute. “But I don’t want to be tone-deaf to the fact that prices that are rising slower [are] still hard on people who are lower income.”

So, why did Massachusetts lead the pack last year? To some extent, it was likely a bit of a fluke, said Melnik, since the top states — which also include New Jersey and Maryland, both of which had edged out Mass. in 2022 — are all within about a thousand dollars of one another. Alan Clayton-Matthews, senior contributing editor of the economics journal MassBenchmarks, said the uptick may have been fueled by the pandemic-driven boost to high-paying industries.

“I wonder if some of it was the big COVID-related surge in medical science here, and pharmaceuticals,” he said. “That’s waning now, but the incomes in that sector, probably a lot of those were received in 2023.″

Whatever the reason, the number, economists said, belies more concerning trends taking place in Massachusetts — not least of which is the substantial gap between the lowest and highest earners.

The share of the lowest-income households in Massachusetts shrank last year — 26.6 percent of households earned less than $50,000 in 2023, compared to 28.3 percent in 2022 — while the ranks of the most affluent grew, with more than a fifth of households earning upward of $200,000 in 2023.

“Our Commonwealth, sadly, is becoming a place where you are either very wealthy and are doing okay, or you are really struggling to make ends meet,” said Kim Janey, former acting mayor of Boston and now president and CEO of the nonprofit Economic Mobility Pathways. She pointed to an uptick in Massachusetts child poverty levels, which rose from 11.5 percent in 2022 to 12.6 percent in 2023, per Census data.

While this “hollowing out of the middle,” Melnik said, is a nationwide trend, he believes it’s thrown into particularly sharp focus in Massachusetts due to its preponderance of higher-paying industries — such as biotech and professional consulting — that drive up overall median wages.

“Because we have such a concentration in some of those industries, we end up seeing this deeper bifurcation when it comes to that spread between the high and the low end,” said Melnik.

And even for those Massachusetts households that fall on the higher end of the income range, their wealth doesn’t pack the punch it would elsewhere in the country due to the high cost-of-living in Massachusetts, with its outsized costs for everything from child care to energy to housing.

“The experiences of a middle-income family or lower-middle-income family, they’re going to look different than what they might be in other parts of the US,” said Melnik.

To be sure, the state is not an economic monolith. While areas in the Boston metropolitan region — Newton, Cambridge, Somerville — all saw median incomes well into the six figures, cities further from Greater Boston, such as Fall River and New Bedford, saw earnings well below the statewide average.

Households in Springfield, the poorest large municipality in Massachusetts, had a median income of just over $47,000 — less than half of that in the city of Boston. By contrast, Newton, the most affluent large municipality, clocked in a median household income of over $185,000.

“The median for the entire state doesn’t necessarily tell the story about where some of the struggles may occur in different places,” said Melnik.

To close these gaps, both Clayton-Matthews and Janey pointed to reviving pandemic-era supports for lower-income families, such as the expanded Child Tax Credit. To bolster the middle class, Melnik said the state should continue investments in growing industries, like clean tech and artificial intelligence.

“To whatever extent we can be at the front lines of some of these emergent things, I think it helps us be positioned to create jobs across the income spectrum,” he said.

Janey, who served as the city’s acting mayor in 2021 amid the height of COVID and its financial aftershocks, warned that even with encouraging economic indicators, the state should not fall into complacency.

“I think we could easily convince ourselves that in Massachusetts, because incomes have gotten higher, that we’re okay, but we know that is just not the case — particularly when we are talking about families who are experiencing poverty and who have other multiple challenges,” she said. “We cannot be fooled or lulled into thinking we’ve accomplished something here.”

Dana Gerber can be reached at dana.gerber@globe.com. Follow her @danagerber6. Daigo Fujiwara can be reached at daigo.fujiwara@globe.com. Follow him @DaigoFuji.