Three years after the onset of the great recession, is Massachusetts an economic success story or merely an economic story successfully told?
The question lies at the heart of Common Wealth 2012, the annual statement by Associated Industries of Massachusetts of the principles and beliefs that will guide Bay State employers on public policy issues during the New Year. AIM released the report this morning.
The innovation- and technology-driven Massachusetts economy has in many ways become the envy of the country. The Bay State navigated a four-year fiscal crisis without raising income taxes and its 7 percent unemployment rate remains well below the rest of the nation.
Economic output in Massachusetts grew almost twice as fast as the national economy during 2011. Workers here earn an average of 24 percent more than their colleagues elsewhere and enjoy third highest per capita personal income. Manufacturing productivity is among the highest in the world.
But lurking behind these unprecedented accomplishments is a sobering fact – the Massachusetts economy has not created a net new job since 1999.
Amid constant rhetoric from both Democratic and Republican administrations about the importance of job creation, there were 3,247,200 jobs in Massachusetts in July of 1999, and 3,245,400 in November 2011. The commonwealth’s employment base remains 140,000 jobs below its 2001 peak and analysts estimate that another 200,000 Massachusetts residents currently work in part-time positions because they cannot find full-time employment.
The overall numbers include profound shifts in the types of jobs driving the economy. Employment in manufacturing declined from 16.1 percent to 8.0 percent of the total job base in the past two decades, while education and health services grew from 15.9 percent to 20.9 percent and professional and business services grew from 11.5 percent to 14.8 percent.
So how are we really doing in Massachusetts? Is the commonwealth leading the nation by using its considerable university, research and advanced manufacturing assets to remake its economy for the new century? Or has it failed the ultimate measure of the success for an economy or political enterprise - to create employment opportunities for citizens?
Both statements are true. While the commonwealth must continue to nurture the infrastructure of innovative people who keep Massachusetts at the forefront of economic engines such as biosciences, pharmaceuticals, financial services and manufacturing, it must simultaneously ensure that the rest of the economy from which most residents make a living does not fall off the tracks behind those engines.
The alternative is an illusory economic prosperity that looks good on the surface but really worsens income disparities as fewer people fill fewer jobs with higher incomes and educational requirements that most people can’t meet.
We have stated previously that the creation of a job and a person’s ability to do it weaves together every important aspect of social and economic stability – the desire for a better life, the ability to support a family, the confidence to start a business, and the need to support efficient government management of services such as education, health care, and public safety. The current economy has strained the delicate balance of person, employer and job, not only for the 240,000 unemployed residents of Massachusetts and 13 million jobless nationwide, but also for the millions of others who fear losing jobs enough to drive home sales to a 20-year low.
It is the challenge of simultaneously developing new and established sectors of the economy that motivates the public policy work that Associated Industries of Massachusetts conducts on behalf of Bay State employers. The work takes on a particular importance at the dawn of 2012 as the prospect of federal budget reductions and continued economic problems in Europe and elsewhere threaten the growth of key Massachusetts industries such as defense, health care and education.
AIM looks forward to working with state and federal policymakers during 2012 to create an environment to encourage the ingenuity and entrepreneurial energy that has historically driven the Massachusetts economy. AIM stands for jobs, economic opportunity, fiscal predictability, business formation, innovation, education, and a government that acknowledges that the private sector has the unique ability and responsibility to create the Common Wealth for the people of Massachusetts