Globe 100 | The Big Think

Porter: Mid-level jobs key to recovery

Massachusetts must make changes to keep a competitive edge

“The state's best strategy is to reinforce its strengths and address its competitive weaknesses. There is no silver bullet here.”

Michael Porter, Harvard Business School professor

on the Massachusetts job market

By Michael Porter

May 19, 2009

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The challenge for Massachusetts is that some of our areas of strength are being hit hard by the economic crisis. Firms that manage money have seen their assets under management go down by 20 or 30 percent; that reduces their fees. Universities have been strongly affected by their endowments being down. So some of the areas that have supported and sustained us are feeling the impact.

I don't expect a fast recovery. But I'm not worried about our fundamental competitiveness in our sophisticated clusters such as life sciences and financial services. What I am worried about is that we're at risk of losing a lot of medium-skilled, medium-wage jobs. If you look at our large companies, I'd be surprised if they were adding a lot of jobs in the state. It's not high-end jobs, research jobs, that are moving out. It's people that are doing the processing, the back office work, the sales administration; people who make $50,000, $60,000, $70,000 a year. Those jobs face great risk because of our state's high costs.

The state's best strategy is to reinforce its strengths and address its competitive weaknesses. There is no silver bullet here. It's critical, for example, the state keep funding for students so universities are able to maintain their student base, because the students they train are critical to the state. We need to continue to invest behind our high-skill, high-technology clusters.

But a greater challenge will be retaining and attracting jobs that don't involve high-end skills and PhDs. And there's only one way to do that: bring down the cost of doing business and the cost of living in the state.

Our wages are high, and that's not bad. But our benefit costs are high, our unemployment insurance costs are high, our utility costs are high, our rental costs are high, our corporate income tax is high. Many of the changes necessary do not involve money, but changing our practices. Until we deal with those things, we're just fooling ourselves if we think the state's going to create a lot of jobs.

Michael Porter, an expert on competitiveness, is Harvard's Bishop William Lawrence University Professor at Harvard Business School.