University of Massachusetts

1
The State of the State Economy
Michael D. Goodman, Ph.D. Director of Economic
and Public Policy Research Office of the
President University of Massachusetts Donahue
Institute President, New England Economic
Partnership
November 17, 2006
2
State economic growth has consistently lagged
that of the US but has picked up recently as the
US has slowed
3
While the labor market has improved notably, the
Commonwealth will not regain the jobs lost during
the most recent recession until at least 2010.
4
Employment growth will be led by Professional and
Business Services, Education and Health Services
and Leisure and Hospitality.
Source New England Economic Partnership
5
Demographic trends in the Commonwealth
have been very troubling.
6
Migrants are younger, better educated, and less
likely to have been born in Massachusetts.
7
What does this mean for Massachusetts?
What does this mean for Massachusetts?

• Bay States central competitive advantage high
  quality workforce
• An aging population and very slow-growing labor
  force
• (4th lowest rate in the nation during the 1990s)
• Availability of highly educated workers essential
  to fueling our economic recovery and the states
  future prosperity
• Younger, highly-educated workers and their
  families choosing to leave the state erodes
  competitiveness

8
Housing costs have been a major reason why people
are leaving the Commonwealth.

Have you or members of your family seriously
considered moving out of Massachusetts because of
the cost of housing?
Margin of error for 2005 Statewide Questions is
/- 4.4.
Source UMass Donahue Institute/CHAPA Housing Poll
9
Over the past year the Massachusetts
housing market has begun to correct.
10
Declining prices and rising incomes are expected
to improve affordability over the next few years
Source New England Economic Partnership
11
Immigrants represent an increasingly important
source of labor
Source The Changing Face of Massachusetts,
MassINC and the Center for Labor Market Studies,
Northeastern University.
12
Many of our foreign born residents arrive with
low levels of educational attainment
Source The Changing Face of Massachusetts,
MassINC and the Center for Labor Market Studies,
Northeastern University.
13
For many, the ability to speak English is
critical to commanding a living wage in the labor
market
Source The Changing Face of Massachusetts,
MassINC and the Center for Labor Market Studies,
Northeastern University.
14
Policy implications

• Develop a workforce attraction and retention
  strategy focused on entrepreneurs and younger,
  highly skilled workers.
• Grow our own high skilled workers by upgrading
  the skills of the existing workforce by expanding
  access to Adult Basic Education, ESOL programs
  and high quality, affordable higher education.
• Create more affordable housing opportunities both
  for low and moderate income workers that support
  the regions travel and tourism industry and for
  middle-income families.
• Develop economic development policies that
  promote the diversification of the local and
  regional economy.

15
Shameless Plugs
For timely and comprehensive analysis of the
Massachusetts economy, please visit and subscribe
to MassBenchmarks at http//www.massbenchmarks.or
g For more information about the
New England Economic Partnership
see me or visit http//www.neepecon.org