Massachusetts Economic Growth and Challenges

January 21, 2020

Mark Melnik Ph.D., Director, Economic & Public Policy Research Group

UMass Donahue Institute

Massachusetts’ Economic Growth since the Recession

2

• MA has experienced prolonged economic growth since the end of the recession.

• What is driving economic growth in the state?

o Cutting-edge, Knowledge-based Industries (e.g., tech, life sciences, etc.)

o Research & Development

o Educated Workforce

o Foreign-born Labor

• The economy is showing some mixed signs heading in to 2020

• MA economic success is not felt the same by everyone

• Spotlight on the Cape Cod Economy and Maritime Economy

• Current issues facing Massachusetts

3

Population Growth across the United States

UMass Donahue Institute. Source: Cumulative Estimates of the Resident Population Change for the United States, Regions, States, and Puerto Rico: April 1, 2010 to July 1, 2019 (NST-EST2019-02). U.S. Census Bureau, Population Division. Release Date: December 30, 2019.

Cumulative Percent Population Change, April 1, 2010 to July 1, 2019 by U.S. State

4

Natural Increase

International Migration

Domestic Migration

-80,000

-60,000

-40,000

-20,000

0

20,000

40,000

60,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Natural Increase International Migration Domestic Migration

Estimated Components of Population Change

5

Massachusetts Population Change, with and without Immigrants

6

Massachusetts is a leader in job growth in the Northeast.Change in Employment by State, 2010-2018

Source: U.S. Bureau of Labor Statistics, Current Employment Statistics; UMDI analysis.

7

Unemployment rate is heading to historic lowMonthly Unemployment Rates in Massachusetts and the United States, January 2000-August 2019, Seasonally adjusted

Source: Massachusetts Executive Office of Labor and Workforce Development, Local Area Unemployment Statistics

8

Massachusetts Industry Mix, 2018

Sources: Massachusetts Executive Office of Labor and Workforce Development, ES-202; U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages. UMDI analysis. Note: All Other includes: Utilities; Agriculture, Forestry, Fishing, & Hunting; Mining, Quarrying, and Oil & Gas Extraction; and Unclassified industries.

14.9%8.7%

10.8%6.4%

9.5%8.7%

6.4%4.1%

5.1%5.1%

4.0%3.1%4.2%2.0%1.6%1.9%1.6%2.0%

18.1%10.1%9.9%9.2%8.7%

6.8%5.2%4.8%4.7%

3.8%3.5%3.4%3.1%2.7%2.1%1.9%1.3%0.7%

0.20 0.15 0.10 0.05 0.00 0.05 0.10 0.15 0.20

Health Care and Social AssistanceEducational Services

Retail TradeProfessional and Technical ServicesAccommodation and Food Services

ManufacturingAdministrative and Waste Services

Finance and InsuranceConstruction

Public AdministrationWholesale Trade

Other Services, Except Public AdministrationTransportation and Warehousing

InformationManagement of Companies and Enterprises

Arts, Entertainment, and RecreationReal Estate and Rental and Leasing

All Other

Massachusetts United States

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NIH Research and Development

Sources: U.S. Department of Health and Human Services, National Institutes of Health (NIH) Research Portfolio Online Reporting Tools (RePORT), NIH Awards by Location & Organization, accessed 10/15/2019; UMDI analysis.

Top 5 State Leaders in NIH Funding (in $2018), 1998-2018

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NIH Research and Development Per Capita

Sources: U.S. Department of Health and Human Services, National Institutes of Health (NIH) Research Portfolio Online Reporting Tools (RePORT), NIH Awards by Location & Organization, accessed 10/15/2019; U.S. Bureau of Economic Activity (BEA), Regional Data GDP & Personal Income, SA1 Personal Income Summary, UMDI analysis.

Top 5 State Leaders in per capita NIH Funding (in $2018), 1998-2018

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Job growth has slowed statewide.Annual Average Employment in Massachusetts by NAICS Supersector, 1990-2018

Source: U.S. Bureau of Labor Statistics (BLS), *Includes Mining & Natural Resources, Construction, Information, and Other Services

12

Canada, China, and Mexico are our top trading partners for exports and imports.

$10.5$7.9

$6.0$4.1

$3.6$3.0

$2.8$2.3

$1.9$1.8

$19.0

$0 $5 $10 $15 $20

CanadaChina

MexicoGermany

JapanIreland

United KingdomSwitzerland

ItalyRepublic of Korea

All Other

$Billions

Massachusetts’ 2018 Top Trading Partners (in $2018)

Source: WISERTrade; UMDI analysis

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The economy slowed in the fall but things have since seemed to stabilize. AIM Business Confidence Index, December 2018-December 2019

60.461.4 62.1 62.4

60.2 60.8 61.8 61.5 61.262.4 62.7 62.6 63.6

40

45

50

55

60

65

Dec-18

Jan-1

9

Feb-19

Mar-19

Apr-19

May-19

Jun-1

9Ju

l-19

Aug-19

Sep-19

Oct-19

Nov-19

Dec-19

The state is performing well overall…

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but these impacts are not felt evenly.

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Part Time for Economic ReasonsNumber of Part Time for Economic Reasons, Massachusetts (Thousands of Persons)

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Unemployment by Educational AttainmentPopulation in Massachusetts 25 Years and over, 2010-2017

Source: U.S. Census Bureau, American Community Survey, 2017 1-Year Estimates; UMDI analysis

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Massachusetts Population Growth, 2010-2018

Source: UMDI mapping analysis, U.S. Census Bureau, Population Division, April 1, 2010 to July 1, 2018, Annual Estimates of the Resident Population

State: 5.1%State: 5.1%

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Greater Boston is driving the state’s population growth.

Source: U.S. Census Bureau; UMDI analysis. Note: Greater Boston is the sum of Suffolk and Middlesex counties.

Population Growth Index, 2010-2018 (2010=1.00)

Greater Boston,1.09

Rest of MA, 1.04

United States, 1.06

0.98

1.00

1.02

1.04

1.06

1.08

1.10

2010 2011 2012 2013 2014 2015 2016 2017 2018

Popu

latio

n G

row

th In

dex,

201

0=1

19

Source: UMDI mapping analysis, Bureau of Labor Statistics (BLS), 2010 to 2018 Quarterly Census of Employment and Wages (QCEW)

Massachusetts Employment Growth, 2010-2018

State: 12.5%State: 13.9%

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Greater Boston is also driving the state’s job growth.

Source: U.S. Department of Labor, Bureau of Labor Statistics, Quarterly Census of Employment and Wages; UMDI analysis. Note: Greater Boston is Suffolk and Middlesex counties.

Employment Growth Index, 2010-2018 (2010=1.00)

Spotlight on the Cape Cod Economy and Maritime Economy

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Barnstable County Compared to the StateBarnstableCounty

Massachusetts

Bachelor’s Degree or Higher

41.7% 43.4%

Foreign Born 9.4% 17.4%

Median Age 53.8 39.5

MedianHousehold Income

$68,902 $79,835

Source: U.S. Census Bureau, American Community Survey

Barnstable, 7.6%

MA, 10.0%

0%

2%

4%

6%

8%

10%

12%

% Below Poverty Level

BarnstableCounty

Massachusetts

Owner-Occupied Dwellings 81.9% 61.8%

Children Living in Household 15% 25.9%

Vacant Housing for seasonal use 90% 45%

The median age of Barnstableresidents is 14 years greater thanthe rest of Massachusetts

Seasonal housing in Barnstable County is twice the rest of the state

Barnstable,11.2%

MA, 28.4%

0%

5%

10%

15%

20%

25%

30%

% Non-White

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Home Sale Prices by Region

$0

$100,000

$200,000

$300,000

$400,000

$500,000

2000

2002

2004

2006

2008

2010

2012

2014

2016

ESSEX MIDDLESEXNORFOLK SUFFOLK

$0

$100,000

$200,000

$300,000

$400,000

$500,000

2000

2002

2004

2006

2008

2010

2012

2014

2016

BRISTOL PLYMOUTHBARNSTABLE WORCESTER

$0

$100,000

$200,000

$300,000

$400,000

$500,000

2000

2002

2004

2006

2008

2010

2012

2014

2016

BERKSHIRE FRANKLINHAMPDEN HAMPSHIRE

Eastern Mass Southeast and Central Mass Western Mass

Source: 2000-2017 Massachusetts Association of Realtors (MAR)

Barnstable County

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Barnstable County Population in 2010 Compared to Projected Population in 2040

(10,000.00) (5 ,000.00) - 5,000.00 10,000.00

Barnstable County Population 2040

Source: UMass Donahue Institute Population Projections

(15,000) (10,000) (5 ,000) - 5,000 10,000

00 through 04 Years05 through 09 Years10 through 14 Years15 through 19 Years20 through 24 Years25 through 29 Years30 through 34 Years35 through 39 Years40 through 44 Years45 through 49 Years50 through 54 Years55 through 59 Years60 through 64 Years65 through 69 Years70 through 74 Years75 through 79 Years80 through 84 Years

85 Years Plus

Barnstable County Population 2010Male Female

(300,000.00) (200,000.00) (100,000.00) - 100,000.00 200,000.00 300,000.00

MA Population 2040

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Projected Population in 2040, Barnstable County and the State

(10,000.00) (8 ,000.00) (6 ,000.00) (4 ,000.00) (2 ,000.00) - 2,000.00 4,000.00 6,000.00 8,000.00

00 through 04 Years05 through 09 Years10 through 14 Years15 through 19 Years20 through 24 Years25 through 29 Years30 through 34 Years35 through 39 Years40 through 44 Years45 through 49 Years50 through 54 Years55 through 59 Years60 through 64 Years65 through 69 Years70 through 74 Years75 through 79 Years80 through 84 Years

85 Years Plus

Barnstable County Population 2040Male Female

Source: UMass Donahue Institute Population Projections

0%2%4%6%8%

10%12%14%16%18%20%

Accom

modati

on an

d Foo

d Serv

ices

Health

Care

and S

ocial

Ass

istan

ce

Retail T

rade

Constr

uctio

n

Educa

tiona

l Serv

ices

Admini

strati

ve an

d Was

te Serv

ices

Profes

siona

l and

Tech

nical

Service

s

Arts, E

nterta

inmen

t, and

Rec

reatio

n

Trans

porta

tion a

nd W

areho

using

Finan

ce an

d Ins

uranc

e

Manufa

cturin

g

Inform

ation

Wholes

ale Trad

e

All Othe

r Indu

stries

Shar

e of

Tot

al E

mpl

oym

ent

Cape & Islands WDAMassachusetts

Source: Massachusetts Executive Office of Labor and Workforce Development, ES-202; UMDI analysis.Note: “WDA” indicates “workforce development area”. “All Other Industries” include Real Estate, Rental and Leasing; Utilities; Management of Companies and Enterprises; Agriculture, Forestry, Fishing, and Hunting; Mining, Quarrying, and Oil and Gas Extraction, Government, and Other Services.

Cape & Islands WDA and Massachusetts, 2018

Cape Cod Industry Mix, 2018

Source: UMass Dartmouth Public Policy Center, “Navigating the Global Economy: A Comprehensive Analysis of the Massachusetts Maritime Economy”, https://www.mass.gov/files/documents/2018/01/24/Maritime_Economy.pdf

Massachusetts Maritime Economy, 2015

The Commonwealth’s Maritime Economy has a substantial impact on the overall economy.

Source: UMass Dartmouth Public Policy Center, “Navigating the Global Economy: A Comprehensive Analysis of the Massachusetts Maritime Economy”, https://www.mass.gov/files/documents/2018/01/24/Maritime_Economy.pdf

Distribution of Maritime Economy Businesses, 2015

Maritime Economy businesses are concentrated along all of the Commonwealth’s coastal areas.

The Economic Case for Municipal Wastewater Treatment1. Septic systems put wastewater treatment responsibility and compliance on

the owner

2. Septic systems are expensive to upgrade/repair/replace

3. Lack of sewerage forces businesses to operate their own septic systems or treatment plants

4. Wastewater treatment enables reuse of vacant/underutilized properties and more compact/dense downtown areas

5. Enables homeowners to expand, allowing families to stay invested in local communities

6. Provides viable wastewater treatment options for residential properties on lots too small for modern systems

7. Prevents the need for expensive and unsightly raised septic systems

8. Attracts property and business owners who want to live/operate a business in the area but do not want to be in the wastewater treatment business

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What are the options?

1. The Costs of Doing Nothing (The Do-Nothing Alternative)

o Considerations: Negative impacts on property values, tourism revenues, local investment in communities; political, regulatory and legal costs

2. Go It Alone: Building an entire wastewater treatment system for just one town

o Considerations: The town has the greatest control over the wastewater system but that means that the town is responsible for the entire cost of building the system.

3. Multi-Town Effort

o Considerations: A regionalized system takes advantage of economies of scale, spreads the costs amongst multiple municipalities and reduces the individual costs vs. going it alone. This means that the town has less control over the wastewater system.

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Summary of Current Issues Facing Massachusetts

• Housing affordability

• Aging population & attracting and retaining young workers

• Investment in public education and infrastructure

• Transportation reliability and rising congestion

• Business confidence in the state—tariffs, trade, uncertainty of federal policy

• Geographic and social equity of economic opportunity

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Mark Melnik, Ph.D.

Director of Economic & Public Policy Research GroupUMass Donahue Institute

One Beacon Street, Floor 31Boston, MA 02108

(617) 287-3988

MMelnik@donahue.umassp.edu

www.donahue.umassp.edu

Thank you!

UMass Donahue UMass Donahue Institute

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