Massachusetts Job Market Bears Watching

The Bureau of Labor Statistics’ most recent national jobs report made headlines because it indicated the US economy added just 12,000 jobs in October, falling far short of the expected 112,500-job gain. While the number is preliminary and could be revised, it got me wondering about how the Massachusetts job outlook stacks up in comparison.

The state’s economic growth hinges on its employment outlook because the state’s talented workforce tops the list of our competitive advantages, fueling past economic growth.  Massachusetts talent justifies our high average weekly wage, contributes to the wealth of the Commonwealth and is the backbone of our innovation economy.  Like federal data, recent state data show there may be some cracks in the armor.

The following are excerpts from the Annual Economic Analysis Report  – Massachusetts Workforce and Labor Area Review Program Year 2023 that I thought would be of interest to you:

• Post-pandemic recovery in MA has been markedly slower than the national recovery, with the state’s non-farm employment trailing the nation by a significant margin.
• Massachusetts has lagged the US in employment growth across nearly every major sector.
• The current unemployment rate in Massachusetts is 3.9 percent, which is up a half of percentage point from October, 2023 but still lower than the national average of 4.1 percent.

What can Massachusetts do about this?  There are two courses of action that will better position Massachusetts to accelerate its job growth trend.  One is to minimize the time people are unemployed so that the workforce is as robust as possible – a key factor for businesses in determining where to locate jobs .  There is room for improvement according to the latest monthly report on  the Unemployment Insurance Trust Fund.

• Massachusetts is projected to pay out $2.3 billion in unemployment benefits in 2024, despite there being 192,000 job vacancies and a worker shortage in most sectors.
• The Massachusetts Unemployment Trust Fund is projected to be deficient by 2028, and it may be sooner given that this estimate is based on Massachusetts maintaining a 3.7 percent unemployment rate for the next four years.
• Per the recently published Competitiveness Index, Massachusetts employers bear the highest unemployment costs in the nation at $524 per employee, 700 percent higher than Florida and 60 percent more than in California.
• Massachusetts is the most generous state in the country for unemployment benefits, with a maximum weekly amount of $1033 plus $25 for each dependent.
• According to WalletHub, Massachusetts had the largest year-over-year increase (October 2023 to October 2024) in initial unemployment claims of all of the states.

Having the most generous UI benefits allows people to take their time finding a new job. By better aligning UI benefits in terms of both weekly payout amounts and duration, we would minimize the time that people remain unemployed while also improving the financial underpinnings of the UI Trust Fund.

The second area of focus should be our workforce development system and making sure the plethora of state-funded training programs achieve their intended results.  The state spent $586 million from the operating budget on workforce training programs in FY2024, yet a full accounting of how many full-time job placements resulted from the programs by sector is not readily available. Workforce programs should serve all industry sectors of the Commonwealth and workers with a variety of skills, and be highly transparent with results.

Current workforce dollars may be too heavily concentrated in a few industry sectors. The Healey-Driscoll administration’s MassTalent initiative envisions connecting employers in life sciences, advanced manufacturing, clean energy and healthcare to skilled, diverse jobseekers for these high-growth industries and occupations. While these sectors are important, they represent a fraction of the total jobs available.

• The life science sector employs 3 percent of the population (117,000 of 3,789.596 individuals in 2023) and faces headwinds.
• The clean energy sector, very loosely defined, employs 108,000 individuals or 2.8 percent of the workforce. Clean energy does not refer to specific industries or occupations, but rather any job posting that includes at least one of a list of 315 clean energy skills.

Exceeding the national record on job creation is an important economic and retention strategy for Massachusetts.  I hope lawmakers interpret the current indicators the way I do – as early warning signs –  and take appropriate measures soon to address them.