State Well Positioned, But Must Prioritize
The prospect of coming out of the recession without putting millions of the country’s unemployed back to work is inching closer and closer to reality. And recently, economists in the financial sector, at universities, in think tanks and in government have made it clear that unemployment rates will remain high even as the economy improves.
They also suggest that along with higher jobless rates for the foreseeable future, Americans may also experience a standard of living that is lower than it was in the years prior to the recession.
For Central Massachusetts, these projections are a mixed blessing. Many employers and job seekers will find themselves looking for someplace cheaper in which to do business or live than greater Boston, where the cost of living is among the most expensive in the country.
And as Gov. Deval Patrick convenes an “Economic Summit” this week in Boston, we’d like to echo his assertion that Massachusetts is poised for a faster recovery than many other states. While that recovery may be on its way, it will be felt unevenly, both throughout the country and within the state, and it is no sure thing. Such an uncertain turnaround could be jeopardized by misplaced priorities among our state’s political leadership.
While jobs are important, the steady increase in employment and the following increases in consumer spending are unlikely to materialize without meaningful reductions in the cost of doing business in Massachusetts.
A Small Business Economy
Politically, Patrick must list “job growth” among his top priorities if he aims to put a dent in the state’s current 9.3 percent unemployment rate. It seems as if Patrick understands that the industries that will drive much of the future growth in Massachusetts — life sciences, health care, education and clean energy — will not be the traditional recession-busters.
For example, the state’s construction industry lost 200 jobs in September, after losing 2,500 jobs in August. The industry has been heavily impacted by the recession, and has lost jobs at a rate of 17.2 percent year-over-year, according to the state Office of Labor and Workforce Development.
With a glut of homes on the market and a commercial real estate market in tatters, the prospect for construction leading the state out of the recession as it has in the past is dim to say the least.
However, the businesses that provide Massachusetts with its relative strength are not, by and large, the type that can be expected to hire state residents by the thousands. Half of the 30 fastest-growing private companies in Central Massachusetts employed fewer than 50 people last year, and half of those companies employed fewer than 20 people. These are the high-tech, entrepreneurial small businesses that truly form the backbone of the state’s economy. Their continued growth can be the true driver of our job recovery, but their ability to afford the cost of doing business here is critical.
Many of these small companies are born here. Many are also attracted to Massachusetts’ highly-educated workforce and high quality of life. Increasingly, they’re being attracted to Central Massachusetts because it’s less expensive than greater Boston for businesses and employees alike.
Yet cutting edge manufacturers that have successfully weathered the recession here in Central Massachusetts tell us they are nonetheless discouraged by health care costs.
Economists and health care experts at Boston University and the Massachusetts Institute of Technology estimated earlier this year that Massachusetts’ nearly uncontrollable health care apparatus spends about 33 percent more per person on health care than the national average.
Because of this disparity, it is all the more important that Patrick’s “job growth” rhetoric is matched by a thoughtful, sustained and vigorous effort to lighten the burden placed on these small businesses.
The government alone cannot become the employer of choice or the chief stimulator of our economy. What the governor, can do is create a playing field that is more even, and put his focus on lowering costs in the key areas that make Massachusetts less competitive.
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