Mass. destruction: Why we lose jobs
Here is a set of statistics that should get your attention. In the last 15 years, the nation has added more than 23 million jobs. Over the same period Massachusetts has added 14,500 jobs.
Boston, we've got a problem.
The heart of the problem seems to be the boom and bust nature of the local economy. Massachusetts soared in both the 1980s and 1990s. Trouble is, when the state fell to earth at the ends of both decades it fell harder and farther than just about any place in the country. ''Our highs are higher but our lows are also lower," said Michael Goodman, an economist at the University of Massachusetts.
In the recession that began in the late 1980s, Massachusetts lost 11.4 percent of its jobs. Only Rhode Island suffered more. Since the beginning of 2001, Massachusetts has shed 6.2 percent of its jobs, far and away the worst performance in the country.
The two downturns were quite different but they share a common thread: In both cases Massachusetts had too many eggs in the technology basket. In the 1980s it was minicomputers. In the 1990s it was the Internet and telecommunications.
Technology is exciting but volatile.
''The same thing that makes us good makes us vulnerable," said Frederick Breimyer, regional economist with the Federal Deposit Insurance Corp. New technologies are always in danger of being replaced by still newer technologies. That is essentially what happened to minicomputers, which were supplanted by personal computers. Technology can also attract too much investment and too much competition. The end result is a bubble, and the bubble that built up in the late 1990s was a doozy.
When it burst, Massachusetts didn't lose just technology jobs. It lost tens of thousands of jobs that fed off the bubble -- lawyers who worked on initial public offerings, financiers who did deals, and real estate brokers who leased office space.
In the past three years Massachusetts has lost 78,000 jobs, many of them high-paying, that the government classifies as professional and business services.
Massachusetts has a second major problem. It isn't very attractive -- at least to other Americans. Maybe it's the weather, maybe the price of housing, maybe both. The upshot: In good times roughly as many people move to Massachusetts as leave. In tough times, people head for the exits. Between July 2002 and June 2003, the state suffered an out-migration of 45,000 people. That number counts only movements within the United States.
According to Alan Clayton-Matthews, a University of Massachusetts economist, the state's modest supply of people and housing is a brake on growth. During upturns Massachusetts bumps up against its limits quickly, which drives up prices and wages, which in turn damages the state's competitive position still further. Clayton-Matthews has reviewed the past three decades of economic history here and his conclusion isn't a cheery one: Massachusetts has shorter expansions and longer recessions than the country as a whole.
Before you jump out the window or sell your house, keep this in mind: The best economy isn't necessarily one that creates the most jobs. What we want from an economy is a rising standard of living, and over time, the Massachusetts economy has delivered that. Over the past 20 years average household incomes here have climbed faster than they have nationally. We may not have many jobs but, like the Marines, we have a few good ones.
Think of Massachusetts as America's equivalent of Switzerland -- without the great skiing and scenery. We are small, wealthy, and slow growing. Massachusetts still has strengths in technology, healthcare, education, and finance that other states would love to have.
''We have a franchise no one wants to give up," said Breimyer. But in the next breath he points out that our economy is a small one that over time represents a smaller and smaller share of total national employment. Said Breimyer, ''That has to cause some concern."
Charles Stein is a Globe columnist. He can be reached at stein@globe.com.
