Massachusetts Economic Growth and Challenges

November 20, 2019

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

• This growth is not felt everywhere throughout the state.

• Growth appears to be slowing down between reductions in labor supply and

consumer demand.

• The Greater Boston Housing Report Card 2019

• Current issues facing Massachusetts

3

Massachusetts has the fastest growing population in

the Northeast.Total Population Growth by State, 2010-2018

Source: U.S. Census Bureau, Population and Housing Unit Estimates, April 1, 2010 to July 1, 2018, NST01 Table 1. Annual

Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico

4

Massachusetts population growth depends on

international migration.

Source: U.S. Census Bureau, Population and Housing Unit Estimates, April 1, 2010 to July 1, 2017, Table NST-EST2018-02:

Cumulative Estimates of the Resident Population Change for the United States, Regions, States, and Puerto Rico

5

Change in Massachusetts’ Racial & Ethnic Distribution

since 1990

73.7%

6.6%

6.1%

2.8%

10.9%

2016

Sources: U.S. Census Bureau 1990 Census STF1 Table NP1 Hispanic Origin by Race; 2016 5-Year American Community

Survey, Table B03002

Share of MA Population by Race, 1990-2016

87.8%

4.6%2.3%

0.6%

4.8%

1990

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 low

Monthly 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

0%2%4%6%8%

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

Shar

e o

f To

tal E

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Massachusetts United States

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. All Other includes: Utilities; Agriculture, Forestry, Fishing, & Hunting; Mining,

Quarrying, and Oil & Gas Extraction; and Unclassified industries.

9

Sources: Massachusetts Executive Office of Labor and Workforce Development, ES-202; Cyberstates; UMDI analysis

Knowledge-based industries are driving job growth in

the state.

Percent change in jobs by major sector in Massachusetts, 2010-2017

10

Top 10 States by Educational Attainment

Percent of Population 25 Years or Older with a Bachelor’s Degree or Higher

Rank 2018 State Percent

1 MASSACHUSETTS 44.52 Colorado 41.7

3 Maryland 40.8

4 New Jersey 40.8

5 Connecticut 39.6

6 Virginia 39.3

7 Vermont 38.7

8 New York 37.2

9 New Hampshire 36.8

10 Minnesota 36.7

Source: U.S. Census Bureau, American Community Survey, 2018 1-Year Estimates

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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

13

Research and Development Performed by State

Top 5 States (excluding California) for R&D Spending, 2010-2016

Source: National Science Foundation, National Center for Science and Engineering Statistics, National Patterns of R&D

Resources (various years), data as of June 2019

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Research and Development as a Share of GDP by State

Source: National Science Foundation, National Center for Science and Engineering Statistics, National Patterns of R&D

Resources (various years), data as of June 2019

R&D as a Share of GDP by State, 2010-2016

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Entrepreneurship: Growth in Venture Capital

Source: PricewaterhouseCoopers, https://www.pwc.com/us/en/industries/technology/moneytree.html

Massachusetts Venture Capital Funding, 2010-2019 by Quarter

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Logan Airport Passenger Volumes Surging

Source: U.S. Department of Transportation, Federal Aviation Administration Air Carrier Activity Information System (ACAIS),

Passenger Boarding (Enplanements) and All-Cargo Data for U.S. Airports; Retrieved from Wikipedia;

https://www.faa.gov/airports/planning_capacity/passenger_allcargo_stats/passenger/. Years represent full calendar years (CYs).

Overall Passenger Volume in Logan International Compared to Airports of Similar Size, 2010-2018

17

Change in International Nonstop Flights Originating from Logan

Airport, 2010-2018

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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

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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

Canada

China

Mexico

Germany

Japan

Ireland

United Kingdom

Switzerland

Italy

Republic of Korea

All Other

$Billions

Massachusetts’ 2018 Top Trading Partners (in $2018)

Source: WISERTrade; UMDI analysis

The state is performing well overall…

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but these impacts are not felt evenly.

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Unemployment by Educational Attainment

Population in Massachusetts 25 Years and over, 2010-2017

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

22

Unemployment by Race

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

Population in Massachusetts 25 Years and over, 2010-2017

23

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

Po

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01

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Projected Population Growth in Greater Boston and

Rest of Massachusetts

Source: U.S. Census Bureau, 2010 Census Summary File 1; UMass Donahue Institute Population Projections. Note:

Greater Boston is the sum of Middlesex and Suffolk counties.

Population Growth Index, 2010-2040 (2010=1.00)

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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)

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Industry Mix in Greater Boston vs. Rest of State

Share of Employment by Industry in Massachusetts Compared to the U.S., 2010 and 2018

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

the sum of Suffolk and Middlesex counties.

29

Estimated Median Age in Massachusetts by County,

2018

Source: U.S. Census Bureau; UMass Donahue Institute Population Projections

State: 39.4US: 38.2

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Housing in the Greater Boston Area:

The Greater Boston Housing Report Card 2019

Massachusetts’ growing racial diversity has been

concentrated in Greater Boston.

Share of People of Color, 1990 and 2017

Source: 1990 U.S. Census, 2013-2017 American Community Survey.

59

.0%

23

.8%

10

.8%

5.2

%

0.3

%

86

.3%

5.6

%

4.7

%

2.9

%

0.1

%

44

.1%

23

.1%

20

.4%

9.4

%

0.2

%

67

.9%

8.5

%

12

.1%

8.4

%

0.1

%

1990 2017

Boston Greater Boston

Both the city of Boston and Greater Boston have

become more diverse since 1990.

Population Share by Race and Ethnicity, 1990 and 2017

Source: 1990 U.S. Census, 2013-2017 American Community Survey.

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Home Sale Prices by Region

$0

$100,000

$200,000

$300,000

$400,000

$500,000

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

201

6

ESSEX MIDDLESEX

NORFOLK SUFFOLK

$0

$100,000

$200,000

$300,000

$400,000

$500,000

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

BRISTOL PLYMOUTH

BARNSTABLE WORCESTER

$0

$100,000

$200,000

$300,000

$400,000

$500,000

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

BERKSHIRE FRANKLINHAMPDEN HAMPSHIRE

Eastern Mass Southeast and Central Mass Western Mass

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

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Metro Boston is one of the most expensive places in the U.S.

to buy a home, currently ranking 5th, just ahead of New York,

among the top 25 metro areas.

Source: Zillow Research Center

Metro Boston also has one of the most expensive

rental markets, with the median rent for a 2 BR

apartment ($2,500) ranking 3rd behind San Francisco

and Los Angeles.

Source: Zillow Research Center

The share of households that were cost burdened

increased between 1999 and 2010, and remained

elevated among renter households through 2017.

Source: U.S. Census Bureau, Decennial Census (1999) and American Community Survey, 5-year estimates

(2013–2017)

Foreclosures have dropped by 2/3 in Greater Boston

since the recession, although they remain

concentrated in a handful of Gateway cities and some

Boston neighborhoods.

Source: The Warren Group

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Source: U.S Census Bureau, Building Permit Survey, 2013–2017 & American Community Survey, 5-year 2013–2017

Recent housing production is concentrated in a small

number of cities and towns. In the last 5 years, more than

43% of multifamily housing permitted in the state was in

Boston.

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Multifamily development is increasingly concentrated in

cities and towns on the MBTA subway system but not so

much in suburban communities served by commuter rail.

Source: U.S Census Bureau, Building Permit Survey, 2013–2017 & American Community Surveyt, 5-year 2013–2017

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If Greater Boston is able to sustain the peak post-recession

permitting levels of 2017, production will be sufficient to

achieve the state’s goal of 135,000 units by 2025….

Source: U.S. Census Bureau, Annual Building Permit Survey, various years

41

…but not sufficient to meet the Metropolitan Mayors

Coalition goal of 185,000 units between 2016 and 2030…

Source: U.S. Census Bureau, Annual Building Permit Survey, various years

…and not sufficient to meet the 20 percent increase

(+320,000) in the number of new housing units that will

be needed by 2025 to accommodate new household

growth.

Source: UMass Donahue Institute and U.S. Census Bureau

Zoning for mixed-use development has doubled in

Greater Boston from 69 communities in 2005 to 121

communities in 2018.

Source: Dain 2005 & 2019 MHP-UMDI Analysis

Chapter 40R has been approved in 41 cities and towns

with the potential to produce nearly 19,000 new units,

yet only 4,000 have been permitted to date.

Source: Department of Housing and Community Development, January 2019

Greater Boston continues to have a moderate degree of

segregation for Latinos and a high degree of segregation

for Blacks that is more severe than other metro areas.

Source: 2000 and 2010 Decennial Census, 2012–2017 American Community Survey

The consequences of segregation not only distribute

resources unequally across places but also perpetuates

a cycle of poverty for disadvantaged groups.

Source: HUD, Affirmatively Furthering Fair Housing Data and Mapping Tool (AFFH-T), November 2017

Racial segregation also limits access to opportunities,

such as high quality schools, with pockets of

opportunity concentrated in suburban communities.

Source: HUD, Affirmatively Furthering Fair Housing Data

and Mapping Tool (AFFH-T) 2017

Source: 2013–2017 ACS 5-year estimates

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

• Siting of public and subsidized housing

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Mark Melnik, Ph.D.

Director of Economic & Public Policy Research

UMass Donahue Institute

One Beacon Street, Floor 31

Boston, MA 02108

(617) 287-3988

MMelnik@donahue.umassp.edu

www.donahue.umassp.edu

Thank you!

UMass Donahue UMass Donahue Institute

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