michael goodman: the state of the state economy
TRANSCRIPT
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Michael D. Goodman, Ph.D. Executive Director, the Public Policy Center (PPC)
Associate Professor of Public PolicyUniversity of Massachusetts Dartmouth
Co-Editor, MassBenchmarks
http://www.umassd.edu/ppc Twitter: @Mike_Goodman
June 21, 2016
The State of the State Economy:Meeting the Challenges Presented by an “Age of Disruption”
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The Commonwealth is in the midst of its most sustained economic expansion this century
3,537.4
3,395.1
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Recent state economic growth compares favorably to the U.S.
US Growth in Q1 was recentlyrevised to 0.8
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The state jobs expansion has been broad-based of late but has largely benefitted the highly educated and skilled
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Conditions remain difficult for the young,the poorly educated, and the long-term unemployed
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The returns to education and skill are rising and thosewithout them are increasingly being left behind
Source: Autor, 2014
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Greater Boston has been leading a regionally imbalanced state recovery and expansion
Source: MA Executive Office of Labor and Workforce Development
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The Massachusetts Innovation economy is fueled by world class talent…
Source: 2015/2016 Index of the Innovation Economy, John Adams Innovation Institute
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… and billions in private and public investment in research and development & new ventures
Source: 2015/2016 Index of the Innovation Economy, John Adams Innovation Institute
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Labor Force Participation remains low for both structural and cyclical reasons
Source: Jason Furman, Chair, President’s Council of Economic Advisors (CEA)
Structural:
•The aging workforce is putting significant downward pressure on participation. Female participation has been trending down for nearly two decades.
Cyclical:
•The lingering impact of the Great Recession continues to disparately affect the long-term unemployed, and younger and lower-skilled workers.
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Conditions in the slow growing global economy are weighing heavily on our economic outlook
China is undergoing a necessary but painful transition from a manufacturing to a service economy
Which helps to explain recent dramatic declines in commodity prices and the serious problems facing natural resource dependent economies around the
world
Source: The Financial Times
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• Our aging population is driving a declining rate of labor force growth, which can be expected to significantly reduce job growth in coming years.
• Better alignment of ourK-12/Voke and community college systems with employer needs is needed.
• Our major competitive advantage remains the education, skills, and
“yankee ingenuity”of our residents.
Source: New England Economic Partnership (NEEP)
The near-term economic outlook for Massachusettsis for continued growth but demographic challenges loom
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
2011 2012 2013 2014 2015 2016 2017 2018
Total Employment, Percent Growth from Prior YearSource: Moody's Analytics (US), NEEP (MA)
MA
US
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Business investment has been weak and is increasingly in intellectual property rather than “bricks and mortar”
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Source: http://qz.com/462605/amazon-is-now-bigger-than-walmart/
Technology and globalization are changing the relationship between investment, employment, and market value
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Geopolitical conflicts, economic instability, and climate change represent large downside risks to the world economy
Source: Pew Research Center
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Long-term impediment to economic growth:The Urban K-12 Achievement Gap
Source: Massachusetts Department of Higher Education
Cohort: Massachusetts public high school students who were first-time 9th graders in 2002-03 academic year and/or who graduated high school in 2006. Source: Massachusetts Department of Elementary and Secondary Education, End-of-Year SIMS and Edwin Analytics (National Student Clearinghouse Data).
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Long-term impediment to economic growth: Inadequate Transportation Infrastructure
Source: Massachusetts Department of Transportation
Nobody rides for free
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Long-term impediment to economic growth:Inadequate Housing Production
Source: Us Census Bureau; Federal Reserve Bank of St. Louis
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Long-term impediment to economic growth: Uncompetitive energy costs
• Our growing reliance on natural gas as the fuel for electricity generation is straining our pipeline/LNG infrastructure
• Expected retirements of plants in Salem Harbor, Brayton Point, Vermont Yankee, and Pilgrim Nuclear will exacerbate system capacity issues.
• Solutions should consider impacts on emerging domestic renewable energy sectors (offshore wind and solar in particular).
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Long-term impediment to economic growth: Climate Change/Sea Level Rise
Scituate, MA, Winter Storm 2015
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Panel Discussion:Designing the Future in an Age of Disruption
1.The relationship between employer and employee is changing
• The rise in contingent labor arrangements (e.g., the “gig economy”) raises serious questions about the adequacy of programs/benefits that rely on employer participation and payroll employment.
2. Public and private organizations frequently struggle to adapt to “disruptive” technological developments
• Our medical devices can now seamlessly communicate with each other yet, our health care providers still have a hard time doing so.
• Technological developments are increasing demands for regulatory compliance, and raising security and privacy concerns (especially in regulated industries).
• Our regulatory systems are frequently insufficiently nimble to keep pacewith contemporary developments (e.g., driverless vehicles, ridesharing).
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Our distinguished panelists:
Sarah Biller, Chief Operating Officer for Innovation/Head of Innovation Ventures, State Street Global Exchange
Jim Noga, Vice President & CIO, Partners HealthCare
Tom Ryden, Executive Director, MassRobotics
Brian Tilzer, Senior Vice President and Chief Digital Officer, CVS Health Cathy Zhou, General Manager, Uber Boston
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INSERT PANELIST SLIDES IN PROPER SEQUENCE HERE AS NEEDED
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Audience Q+A
Please use the microphone and introduce yourself when asking a question