The state’s economic strategy is selling us short
Megan Woolhouse’s piece entitled “Shut Out” in the Boston Globe told the story of several long-term unemployed Massachusetts residents. It was powerful in part because of the writing and the reality of people who are doing their best to keep looking for work, but also because the story so often goes untold in the press.
Even after many announcements about how well we are doing as a state, we have to keep in mind that Massachusetts is still 100,000 jobs short of even our 2001 employment levels. If the Commonwealth had grown at the same pace as the rest of the US since 1990, we would have 450,000 more jobs in the state; we’re currently above 3 million total, so it’s a huge opportunity lost. The opportunities lost have directly impacted John McLaughlin, Lee Bodzioch, and many others like them, who cannot find jobs. Who still want a job, but are left in a limbo that affects their finances, their ability to retire in some level of comfort, and their immediate and long-term wellbeing.
Into that debate comes a new report “set to be released Tuesday by the Boston Foundation” and highlighted in the Globe business pages, which says that the state’s billion-dollar biotech incentive program
has helped stimulate a key sector of the state’s economy, creating more than 8,000 jobs through capital grants, tax incentives, and business loans.
The report claims that the $300 million in state investments has “spurred” a billion dollars in private investment, meaning that the state is paying almost $40,000 per job created. That’s certainly one problem with the strategy. How many $40,000 jobs can we afford to pay for? And “8,000 jobs = success”? Folks, that is a limited-value proposition — and one that is not going to get us to the place with John and Lee are again employable.
Frankly, the billion dollars in private investment is likely to have come through anyway.
It is worth recalling that the governor and the legislature’s announcement of the biotech initiative came with much fanfare, with the city’s great and good cheering. The number of jobs the billion-dollar initiative was to create was not 8,000. It was not 18,000, nor even 80,000. It was 250,000 jobs.
So halfway through the initiative’s decade-long life, with 8,000 jobs created and over tens of thousands of people out of work, can we please all be grown-ups and question whether this is the right strategy?
Our “Measuring Up?” study provides a better foundation for economic development strategy, demonstrating that business costs of various kinds are impacting profit margins here in Massachusetts.
A number of our other studies have demonstrated precisely why these boutique (“sweet-spot”) state incentives are not effective. After all, there is a huge economy out there, and there are larger trends in our economy over the past 20 years:
- Loss in firm size
- The “rounding error” impact of enticing businesses to relocate here:
- The loss of 1/3 of the state’s headquartered businesses
Kind of shaking my head at this one. The authors of the report, Barry Bluestone and Alan Clayton-Matthews, fine gentlemen though they are, have in this case sold our economic future short.
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