Viewpoint: Boston’s greatest economic strength is our greatest vulnerability

Column appearing in the Boston Business Journal May 10, 2019

The exceptional pool of skilled workers living here is what attracts local, national and foreign employers to Massachusetts. As long as we have a sufficient supply of this key talent, growing companies will continue to expand their operations in the Commonwealth. But what happens when we begin to run out of workers with the necessary required skills?

There are more than 100,000 jobs currently going unfilled in Massachusetts because employers can’t find applicants with the right education and/or skill sets. Furthermore, according to the recent issue of MassBenchmarks, “a possible yellow light may be flashing, in a short-age of qualified labor. This is a concern for the near future.”

The Massachusetts economy remains strong with a 3.3 percent unemployment rate, near the lows seen in 2000 (the peak of the dot.com bubble) and in 1987. Alan Clayton-Matthews, economist and senior contributing editor of MassBenchmarks, has noted that an aging population may slow labor force growth to half a percent. The potential affect of increases in part-time workers and in net in-migration is relatively small. Below average growth for last year in Massachusetts reflects, in part, continuing demographic constraints on labor force growth.

It is important to remember that for most of the last three decades, the state has had a domestic net-outmigration. The growth that we experienced over these years was fueled by a substantial foreign immigration of workers. With continued outmigration and a potential drop in foreign immigration, as well as historic low unemployment and a growing economy, we have a very serious problem looming.

One of the key causes of the domestic out migration problem is the region’s high cost of living. Housing prices are one of the highest in the country, inventories are low, and the state’s ability to build its way out of this problem is unrealistic.

Is there a solution? If our worker pool is effectively stagnant, then it would be logical to try to deepen that pool, looking primarily within our state’s local resident population.

Investing directly in our workforce is a sound investment decision. Current and potential workers that live here are more likely to remain here. Statistics show that students who graduate from our local state colleges are also more likely to stay here.

This would suggest that the state should further invest (and certainly not disinvest) in two areas: education and job retraining. These are not new proposals; but prioritizing them is the best way to ensure our future economic health.

A study by the Federal Reserve Bank of Boston found that a reduction in state funding for Massachusetts public colleges has increased tuition costs and student loan debt, likely resulting in fewer higher education graduates in New England.

Regarding job retraining, we should be taking advantage of our high concentration of higher education institutions. Providing college degrees is the primary purpose of these schools, but what about enhancing the opportunities for continuing education, focusing on the talent needs of the local employers?

A good model is the AIM Photonics Academy, headquartered at MIT, whose mission is to develop a technician-training program in emerging technologies, starting with the advanced manufacturing field of integrated photonics. The growth of this industry has been constrained by the lack of qualified technicians.

We cannot be complacent. If we do not find ways to ensure that our reputation for having some of the best talent in the world is sustainable, we may begin seeing growth companies exiting our commonwealth.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s