Massachusetts: Where the Jobs Are (or Aren't)
Trying to figure out the jobs picture in Massachusetts is a challenging task these days. There’s a steady drip, drip, drip of bad news — exemplified by State Street’s announcement this week that 850 jobs are leaving Massachusetts.
At the same time, the most recent monthly jobs announcement for the state shows an increase of 10,300 private sector jobs over last month, but the unemployment rate remains unchanged at 7.6 percent, reflecting a change in the denominator countering the effect of the increase.
The job market in Massachusetts has been surprisingly dynamic for years, with roughly 17 percent of total jobs being created or destroyed in a given year (regardless of economic conditions). Massachusetts has had success creating lots of firms, but there are two problems. First, these firms are smaller (with single employee business services firms the most common start-up) than the ones they replace and the pace of new firms starting up has slowed substantially. Adding to the problem, the number of headquarters (which employ 70+ people on average) is dwindling.
These changes are making it harder to create jobs. And Massachusetts has had a long-standing lag in post-recession job creation, relative to the rest of the country.
After the 1990-1991 recession, the nation took 2.7 years to regain the jobs lost. Massachusetts took 6.6 years.
It took the U.S. four years to bounce back from the 2001 recession. Alarmingly, Massachusetts never regained the lost jobs from the 2001 recession before entering the most recent recession.
Massachusetts status as a laggard, combined with evidence that the national recovery may lag, is cause for concern. And the steady drip, drip, drip of job cut announcements only adds to that concern.
It appears we are entering an enormously challenging period for meaningful, large-scale job creation — large firms have the flexibility to allocate some jobs out of Massachusetts to lower cost locales and our start-up engine appears to have stalled (and when it works, it’s creating smaller firms).
Our traditional toolkit of economic development policies may not be up to task of dealing with this new reality. We’ll see if it can adapt to the new context of job creation.
Crossposted at Pioneer Institute’s blog.