Losing Local Labor: Retaining Workers Remains a Massachusetts Challenge

Hubwonk – Losing Local Labor: Retaining Workers Remains a Massachusetts Challenge

[00:00:00] Joe Selvaggi: This is Hubwonk. I’m Joe Selvaggi. Welcome to Hubwonk, a podcast of Pioneer Institute, a think tank in Boston. The incessant pace of change in our individual lives and communities often masks the gradual evolution of broad demographic shifts happening both nationwide and here in Massachusetts. Yearly, Pioneer Institute releases a comprehensive report on the state’s labor force, offering a comparative analysis with other regions, and the nation as a whole.

[00:00:29] This year’s findings shed light on Massachusetts alignment with national trends, such as aging workforce, declining birth rates, and increasing ethnic diversity. However, it also underscores specific features unique to Massachusetts, a state known for its affluence and educational attainment. These characteristics include higher rates of female labor force participation, increased international in migration, and stagnant natural population growth.

[00:00:56] Particularly concerning is the significant net outflow of young working age adults, resulting in a labor force 60,000 workers smaller than in 2019. These insights not only serve as a benchmark for policymakers to gauge the state’s competitiveness, but also offer a roadmap for crafting policies that leverage regional strength, and address factors contributing to talent drain.

[00:01:23] Today I’m joined by Aidan Enright, a research associate at Pioneer Institute and the author of Deep Dive, the Massachusetts Labor Force in 2023. Headwinds Persist, but Women and Immigrants Keep Participation Afloat as State Diversifies. Aidan’s meticulous analysis dissects recent demographic shifts in Massachusetts, distinguishing local trends from broader national patterns, and providing evidence based policy recommendations for the future. We’ll explore the key highlights of this report and delve into how policymakers can address pressing issues. such as resident out migration through strategic policy interventions. When I return, I’ll be joined by Pioneer Institute Research Associate Aidan Enright.

[00:02:09] Okay, we’re back. This is Hubwonk. I’m Joe Selvaggi, and I’m now pleased to be joined by Pioneer Institute’s Economic Research Associate Aidan Enright. Welcome back to Hubwonk, Aidan.

[00:02:20] Aidan Enright: Thanks for having me, Joe. I’m happy to be here.

[00:02:22] Joe Selvaggi: Great. Well, it’s good to have you back. I think in our last conversation, we talked about, I think the concerning patterns we have about the, out migration of a lot of Massachusetts residents and the reasons behind that.

[00:02:32] Today, you’ve just, put out a new research paper for Pioneer, the title of which is, Deep Dive, The Massachusetts Labor Force in 2023, Headwinds Persist, But Women and Immigrants Keep Participation Afloat as State Diversifies. That’s quite a title. So, but before we get into the meat of what’s in that paper, tell me, why did you write this paper? Is this something that Pioneer does annually? What’s behind this?

[00:02:58] Aidan Enright: So, yeah, Joe, it’s an annual report. We’re planning on releasing a new version, an updated version every year, and the fundamental reason, that we’re putting something like this out is it’s pretty crucial to track developments in the labor force, when it comes to the economic health of the state, particularly in a time of labor shortage, something that’s not going to end any time soon, being able to see the areas in the state that are particularly weak, and identifying areas of growth is important.

[00:03:27] Joe Selvaggi: Sure, I’m sure policymakers value this sort of updated report to say how the labor force aligns with, let’s say the job, jobs available.

[00:03:36] So, but there’s some complex terminology that’s in your paper. So, for the benefit of listeners who don’t study labor dynamics, all the time, let’s define some, some basic terms. What I’m talking about, of course, is simple things like, of course, state population, but of course, within that population, there’s a, what we would call a labor force.

[00:03:56] We have those people who are not working on unemployment rate, labor partition rate, participation rate. let’s start at the high level and say, is the Massachusetts population growing or shrinking?

[00:04:07] Aidan Enright: So, I think that’s a great place to begin, Joe. So, let me start by just defining those terms you mentioned briefly.

[00:04:12] So when we’re talking about unemployment, we’re talking about those who are actively seeking work, who are not currently employed. When we’re talking about the labor force, we’re talking about those who are employed, and also those who are unemployed, and the total pool of those workers. When we’re talking about labor force participation, we’re talking about that entire pool of the labor force out of the entire state’s population.

[00:04:38] Now, to answer your question, Pioneer, over the last couple years, has documented a well-documented surge of out migration, especially among domestic residents to other states, particularly New Hampshire and Florida. It’s a little bit more complicated when you look at, other types of, migration and population growth, particularly when you look at national population, because of a declining birth rate, and greater amount of deaths during the pandemic.

[00:05:08] The national population increase has significantly declined in Massachusetts by about 80%. A decade ago, we were gaining about 25,000 residents every year from natural population growth. Now it’s more along the lines of 5,000, going towards zero in the next few years. And this is especially acute when you look at domestic outmigration among younger people, particularly those 25 to 34.

[00:05:40] But according to census estimates, at least in 2023, the state gained population, particularly from an influx of immigrants, over 50,000.

[00:05:55] Joe Selvaggi: Okay, so I want to, okay, so you’re touching on a hot topic we talked about in the past. We all have ideas of why people are migrating out of Massachusetts, ultimately to a net zero where we’re actually start, we perhaps are at risk of shrinking our population.

[00:06:08] You and I discussed the fact that Massachusetts is an expensive place. One is now extremely high taxes are getting higher. number two is, it’s an expensive place to live, which I think is also a function of taxing because tax, Ultimately, the price of living here is a function of how much it costs to build and work here.

[00:06:27] So, taxes were down to everybody’s expense. So, but also again, there are troubling signs amongst, you talked about, how many native, the growth, in your paper you talk about the fact that people are having fewer children, and, and particularly not just in general, but Massachusetts people are having fewer children than the people in other states.

[00:06:48] But let’s talk about the size of the labor force. If our total population is about static, is our labor force growing or shrinking?

[00:06:57] Aidan Enright: So, the labor force has shrunk, since the pandemic. We saw new highs, or at least recent highs in 2018, 2019, beforehand, but we’re still about 50,000, fewer workers in the labor force today than there were before the pandemic.

[00:07:15] Joe Selvaggi: What about trends in unemployment? Again, you talked about labor shortages. I think that, of course, implies that unemployment is low, meaning that the demand for labor is pretty darn close to exceeding the supply of labor. What can you tell us about unemployment?

[00:07:33] Aidan Enright: So, generally, in New England, unemployment rates are Far lower than the national average, and there are several reasons for this. the states, in New England, are generally more educated. We have higher participation rate from, prime age workers and women. but, Massachusetts in particular has a higher unemployment rate than a lot of the other states in the region. This might be a result of kind of the greater unemployment benefits and duration of unemployment benefits that are particular to Massachusetts and other states.

[00:08:10] Joe Selvaggi: Yeah, so the, there’s something, it’s a bit of an anomaly. We live in a prosperous part of the country, we’ve got a booming economy, and yet we have an unusually high unemployment rate relative to our New England peers. You suggest that might be a function of the fact that lavish unemployment benefits may incentivize more people than would otherwise. We go on unemployment to go on unemployment. Is that fair? I don’t want to put words in your mouth.

[00:08:31] Aidan Enright: Yeah, that’s a fair assessment.

[00:08:33] Joe Selvaggi: All right. You mentioned a concept called the “labor participation rate”, I think you, in broad terms said, okay, that’s, everybody that could work. You look at that and you say, what percentage of everybody that could work is working? What does that look like? and I don’t want to bury the lead here. We’re Two, at least two years past all the pandemic lockdowns, or a year past all the pandemic lockdowns, I guess we have to say pre pandemic, post pandemic, why don’t you build a picture, if you can connect the dots, and pretend that the whole darn thing didn’t happen, how do we rate compared to, let’s say, pre pandemic, and then, let’s say, immediate aftermath of the pandemic?

[00:09:06] Aidan Enright: Okay, well, I’ll start with the fact that in Massachusetts, the labor force participation rate has been dropping. since the early two thousands, particularly the great after the Great Recession, the rate it uptick during, the late Trump years, 2016 to 2019. But since the pandemic, it’s dropped considerably, two to three percentage points.

[00:09:29] and this is unique to Massachusetts, the country as a whole, if you look at the national average, for states. The labor participation rate has dropped about 1%, and so 2 to 3 percent in Massachusetts, makes it 1 of the steepest declines of all states. There’s only 3 other states that had a larger decline since 2019, New Hampshire, Maryland, and Iowa. And so those, those kinds of effects. We’re seeing are more acute in Massachusetts.

[00:09:58] Joe Selvaggi: Okay, I want to circle back to that. That’s an interesting anomaly here in Massachusetts. I don’t know if you’re able to speculate why our participation rate is going down faster than others. But you also break down this participation rate by age groups. I found some intriguing trends there that some age groups are participating more, and some are trending less. To Les, who’s working more, which age groups, and who is packing it in?

[00:10:26] Aidan Enright: So, basically, younger workers, particularly the youngest, age groups, 16 to 24, are working less, in the state, and older workers, 55 and older in particular, are working a lot more. We’ve seen a doubling of the 65 plus age population in the labor force, since 2007, and almost 200,000 more workers aged 55 plus since 2013.

[00:10:54] Joe Selvaggi: Wow, again, I’m sure we could write a book on just that trend. Do you have any speculations why young people are working less and older people are working more? Whether you look at work as a cursing, curse, or a blessing, why might this trend, peculiar to Massachusetts, be the case? Why might older people be jumping in, or I guess not leaving the workforce in the future?

[00:11:18] Aidan Enright: I think part of it has to do with the makeup of the Massachusetts economy. We have a very educated population. We have a lot of people, in very professional, occupations, and so there’s less A draw for older people to exit the workforce when they become older, because a lot of them work in white collar occupations. And just the state in general has trended older.

[00:11:46] Massachusetts is 1 of the older states in the country. So, even while we’ve seen a 20 percent uptick in retirements in the last decade. There are still a lot of older workers that are sticking around because of flexible job arrangements and that sort of thing.

[00:12:05] Joe Selvaggi: I’m not sure you would be ready for this kind of question, but doubling back to the out migration, did you do any analysis by age who’s leaving the state and who’s staying in the state?

[00:12:13] If I were to guess, I would say, again, if you accept our thesis that the cost of living here is high and taxes are high, people of prime working age are probably incentivized to leave. Not that they all will, but some will. is there any, can you put meat on the bone of the saying, some people are, we have a problem without migration. Have you broken that down by age group?

[00:12:33] Aidan Enright: Yes, previous pioneer studies have looked into that. The largest group of, by age, that is out migrating from the state are younger workers, particularly 26 to, 25 to 34. and that’s probably for a lot of the reasons that you mentioned. Massachusetts is less competitive when it comes to tax rates, than other states. That’s why we’re losing a lot of residents to places like New Hampshire and Florida that don’t have income taxes. It’s also very expensive to live, when it comes to housing costs, as well as has very expensive childcare. and so, moving to other states, especially when in that age bracket, a lot of people are thinking about starting families and other things like that. They want their dollars to go further. and Massachusetts is not necessarily competitive with other states when it comes to that.

[00:13:25] Joe Selvaggi: Yes, indeed. And again, they may leave despite the fact the economy is doing well, which I want to bring it back to the unemployment rate. Your paper makes an observation that surprised me. You talked about, again, a relatively high unemployment rate, but the jobs that are not filled are actually double the number of people looking for jobs. So, we’ve got this interesting ratio that you observe that are unfilled jobs. There’s two jobs for every unemployed person. This seems remarkable to me. Can you flesh that out as well?

[00:13:53] Aidan Enright: So, that rate is one of the highest in the country. There’s always going to be a certain level of unemployment. but I think the reason that a lot of those workers are not necessarily becoming employed, even though there are so many jobs per available unemployed worker, is likely a mismatch between those workers, and there’s qualifications and the jobs that are available.

[00:14:17] Joe Selvaggi: Okay. All right. again, I think this next, observation is not going to come as a surprise to anyone you, observe in your paper and you provide a nice map of the United States that, we’ve got the highest percentage of, residents who have a bachelor’s degree or more. I think we’re four percentage points ahead of Colorado, which comes in second. it’s over 50 percent, and this is no surprise. Athens of America, we’ve got lots of schools. what did you observe, let’s say, between, those with, let’s say, higher levels of education, bachelor’s, advanced degrees, and labor participation rate? Does having a degree suggest you work more or not?

[00:14:51] Aidan Enright: So, yeah, it’d be very straightforward. Educational attainment is heavily correlated with labor participation. You can imagine workers who are highly educated are more likely to work in higher paying occupations. They’re probably less likely to have health issues or other kind of factors that are keeping them out of the labor force.

[00:15:11] So you see that, yeah, a lot of educated workers are more likely to be in the labor force than others. And this is the gap between Massachusetts and a lot of other states. One of the reasons that the labor force participation rate in Massachusetts is so high is because we have such a highly educated workforce.

[00:15:30] So if you look at states like Mississippi or West Virginia where they don’t really have a very highly educated population, their labor participation is significantly below that of Massachusetts.

[00:15:41] Joe Selvaggi: Now, we don’t dwell on these kinds of aspects, but your paper does make observations about, labor participation rates, and it breaks it down by racial demographics, between people who identify as white and those people who identify as non-white. It was interesting and I think exciting and reassuring to see that those participation rates were relatively similar. Can you talk about long-term trends in this area?

[00:16:04] Aidan Enright: Yeah, so I, I think, at least as far as looking at, the minority population in Massachusetts, the labor participation rate has been growing, compared to the white participation rate.

[00:16:16] Part of this is based off of, the age of these different demographic groups. in Massachusetts, the white population is, aging, significantly. and as. a lot later in life on average than the minority population. And so if you look at general labor participation rates, they’re a lot higher for younger people and prime age workers.

[00:16:39] And so this kind of divide is happening in the state between an older white population and a younger minority population.

[00:16:47] Joe Selvaggi: You also broke out your studies by, sex, men and women, have a different rate of participation, perhaps owing to, more, work in home raising children. Women seem to have a lower participation rate, but it seems though our women of Massachusetts have a lower rate of participation, they’re far higher than their female peers in other states. I found that interesting. Share more about your observations there.

[00:17:12] Aidan Enright: Yeah, so, women in Massachusetts have a participation rate, over 4 percent higher than the national average. I think part of this can be linked to just the general nature of the Massachusetts economy. Again, the fact that there are a lot more educated women in Massachusetts.

[00:17:29] Educated women are more likely to, postpone, child rearing and other things. there’s been a lot more career advancement for women in the state. and so, these are factors, that kind of contribute to, declining birth rate.

[00:17:42] Joe Selvaggi: Yeah, indeed. Oh, we don’t, we haven’t really talked about, declining birth rate, and I don’t want to necessarily link it to, higher participate, labor participation does not equate to lower, fertility rates, but you do observe that, again, we’re talking about total population, total workforce, kids have to be born to be able to grow up and go to work.

[00:17:59] So, we do have a declining fertility rate in general across the country, but also particularly in Massachusetts. We don’t have to link it to labor participation, but it’s a reality. We’re not replacing ourselves. Is that fair?

[00:18:12] Aidan Enright: Yeah, that’s fair. They’re not necessarily linked, but those are two trends that we’re seeing in the state.

[00:18:18] Joe Selvaggi: Okay. All right. now your paper goes, very clearly into the area of, well, if we’re not, if we have so many people, Native, Massachusetts residents leaving for, sunnier climes of Florida, perhaps, and we’re not replacing ourselves with lots of babies. we have lost as much population as we would have thought, largely owed to the fact that we’re attracting a substantial number of foreign-born workers, immigrants to Massachusetts.

[00:18:43] In fact, I was surprised to read in your paper that, when adjusted for population, Massachusetts has the higher, highest per capita acceptance of foreign born, immigrants, of all 50 states. Say more about this phenomena.

[00:18:57] Aidan Enright: Yeah, there’s just a significant influx of immigrants into the state.

[00:19:01] And while there are states, like, New York or California that are receiving more immigrants on a gross basis, as a percentage of population, per capita, Massachusetts is receiving the most. and it is really one of the only reasons why we’re not really hemorrhaging population every year is because we’re receiving so many immigrants, and it’s good and bad, in the sense that, the state is very reliant on these, international migrants coming into the state to maintain the labor force. but a lot of these immigrants are also very highly skilled. and are filling the STEM and, information sector jobs that we rely on in the States.

[00:19:39] Joe Selvaggi: Yeah, I’m sure some of our listeners are saying, oh, well, is this a good phenomenon? All, all these immigrants relative to our population, we’re taking the most. but in my mind, I’m imagining, or again, everybody has his own idea what it, what our new immigrants might be. look like and what their skills might be.

[00:19:55] but I have to say, I’m sure a lot of them arriving through our schools that attract people from all over the world. I was interested to, to read your observation that more than half of our immigration that comes to the Massachusetts have a bachelor’s degree. These are not, like, let’s say my parents and some other people who wash the shore with a couple of bucks in their pocket. These people have education. say more about, let’s say the profile of these, modern immigrants.

[00:20:19] Aidan Enright: Yeah, I think that’s just a testament to the, the strength of the Massachusetts educational system, especially higher ed, where a lot of international students are coming into Massachusetts universities.

[00:20:33] And staying afterwards, because the state has a lot of jobs, particularly in STEM fields, where international students tend to cluster. And so, we’re attracting those students to stay and work in Massachusetts. After they graduate, and so there are other immigrants coming into the state. But it is surprising and a good sign that a lot of those immigrants tend to be very highly educated.

[00:21:01] Joe Selvaggi: Indeed. I remember in graduate school asking my immigrant classmates if they would stay and said you better believe it. If I could, I would, so, I don’t blame them for getting a good education and wanting to stay here in Massachusetts. So, we’ve talked about, I think we’ve done good service to a lot of the research in your paper, but you do, offer some observations and conclusions towards the end of the paper, which is to say, look, we’ve got the following characteristics, long-term, short-term trends in our workforce.

[00:21:27] If we want the economy to remain thriving and vibrant, we want to have people filling these, good jobs, we need to make some, perhaps some adjustments. So, I want to shift our conversation from Observations from what is to perhaps, what could be in the future. Again, for the policy makers and voters listening to the podcast, what do you think, given our trends, we’re getting older, and smaller population, native population, what could we do, in light of these findings to address the gap between what we have now and what we will need in the future?

[00:22:04] Aidan Enright: I think it’s a difficult task for the state in the sense that we already have a labor participation rate. That is, higher than the national average. We have a lower unemployment rate, and so what we really need to do is tap into workers who may not be in the labor force at the current moment, who are on the sidelines for various reasons.

[00:22:28] Part of that can be looking into trying to make childcare more affordable, increasing the supply of child care in the state. It can be optimizing kind of our workforce development and training infrastructure in order to get a lot of those workers back in, retooled for the jobs that are available, and decreasing that mismatch between available jobs and the workers that are unemployed, and it can be trying to, make more flexible work arrangements for older workers who are considering retiring, but maybe are not necessarily there yet to keep them and retain them in the workforce for longer.

[00:23:11] Joe Selvaggi: So, you’re advocating for perhaps more training or, supplements for training. I, my mind immediately goes to education, just basic education, but you, are you talking about something like, vocational education or, in the trades or areas that seem to, we didn’t really touch on this, but some of the areas post pandemic, the number of people working in those areas, in some cases went way up. But in other cases it went way down. I’m thinking about retail and service, but also, like, places like nursing, the number of nurses, is declining, and surely that’s a growth area. Should we be doing more to help people get into those jobs of the future that’s, whether they be high tech or, let’s say, a very service oriented like nursing?

[00:23:53] Aidan Enright: Yeah, I think that should be the goal of kind of the workforce development infrastructure and the educational system in Mass is to better fill the occupations that are in need. So, like you said, the, like, nurses in those kinds of jobs, there’s a decline, as you mentioned, in industry, in industries related to hospitality and leisure and retail.

[00:24:17] And they’re relatively unskilled, and so workers, while employment has decreased there, a lot of the workers who are unemployed as a result could be up tooled, and up skilled into, occupations and industries that are in more need. of them, and some of that is building out kind of capacity for the state’s vocational, schools, and some of that is, just aligning our workforce development and training infrastructure to better be suited towards the in-need occupations.

[00:24:45] Joe Selvaggi: So, I’m going to go off the script of the report and just talk about just speculation. Of course, we’re ignoring, we’re taking as given that so many working age people, particularly family age, starting families, young professionals, they’re out migrating, and it’s costing us a lot of really good Massachusetts residents are leaving.

[00:25:06] What do you think we could do to encourage people to, rather than move to New Hampshire or Florida, what could we encourage them to do to stay and build their lives in their native state? What are we not doing that we could do to discourage or encourage them to stay or discourage them from leaving, however you want to shape the answer? Again, perhaps you weren’t ready for this question, but go ahead, give it a try.

[00:25:32] Aidan Enright: It all comes down to costs and affordability. And so, a lot of the kind of structural reasons why Massachusetts is so expensive are not going to be things that we can fix in the short term, like, the housing prices. Obviously, we need to build a lot more housing and institute policies that allow for that, but that’s going to be something that’s geared towards the long term, something that’s important, but it’s not going to be fixed in the next couple of years. Thank you. in the intermediate, what we should do is trying to make the state more tax competitive with a lot of the states that we’re seeing residents lead to, decreasing, lowering income tax burdens, and short term capital gains burdens and other things can create a better or more affordable environment in the short term for residents, and make it more palatable for them to stay here long term.

[00:26:26] Joe Selvaggi: Yeah, indeed, I think your demographic analysis tells a story where older people perhaps who have wealth, can afford to stay, but these income taxes are people who are trying to have wealth, and that falls directly on their shoulders.

[00:26:38] You can’t get from poor to wealthy, if there’s a constant outflow of income. of money from your paycheck. So, I think people who are trying to earn wealth are going to be discouraged. Where people already have wealth, they may not be as sympathetic to the challenges of trying to get from, starting out and building a life and a family and a career.

[00:26:55] So, I think those are good words. where can our listeners read your report and learn more about, more of your writing and your research in the future,

[00:27:04] Aidan Enright: They can find me on the Pioneer website. The report is on there, available for everybody to read.

[00:27:11] Joe Selvaggi: Okay, well, again, I’ll say that the name of the report is, Deep Dive the Massachusetts Labor Force in 2023, Headwinds Persist, but Women and Immigrants Keep Participation Afloat as State Diversifies.

[00:27:21] Big title, good paper. I hope our listeners, we’ve piqued their interest. I hope they come, go and, and read your paper. Thanks for joining me today on Hubwonk, Aidan, you’re a great guest. Thanks for having me. This has been another episode of Hubwonk. If you enjoyed today’s show, there are several ways to support Hubwonk and Pioneer Institute.

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