Welcome to my Boston.com blog at www.boston.com/business/blog/economy_equity. In the months to come, I hope to provide you with food for thought about the economy and public policy — particularly about Greater Boston and Massachusetts but often about the nation and the world. There will be plenty of numbers and statistics, but I hope you will find that within those numbers there are big stories. Many you may find surprising, some I hope you find thought-provoking, and others just plain fun. As an economist, I work with numbers and statistics all the time. These can be pretty tiresome until you see the story within. I’ll do my best to reveal these stories and would appreciate hearing back from you about your own interpretations.
In his State of the Union address, President Obama asked us to consider how to rebuild America’s middle class. He talked about the need to bring manufacturing back to our shores, provide greater fairness in foreign trade, educate our workforce to compete in global markets, and train a new generation of skilled workers.
All of these are indeed critical elements in providing American workers and their families with the types of jobs that made many of our parents “solidly middle class.” But history tells us that there was one other element in America’s transformation from a working class society to a middle class society, and it has to do with a statistic reported by the U.S. Bureau of Labor Statistics at the end of January.
According to the Bureau, the percentage of American workers who belonged to trade unions fell to 11.3 percent last year, the lowest level since the 1930s and perhaps as far back as 1918. Last year, of course, was when we saw unions being blasted across the country from Wisconsin to Illinois, and New Jersey. Read More
As we enter 2013, the latest news on the housing front is encouraging. This past year sales of single-family homes in Greater Boston rebounded for the first time in seven years. Condo sales are up as well, nearly 30 percent over 2011 levels. And with mortgage rates remaining at historic lows, this coming year could see more of the same.
But the big story in housing is the dawning of a seismic shift in the region’s population and with it, a dramatic change in what kinds of housing people will want and where they are going to want it. It’s all about the greying of the baby-boom generation and the coming of age of the “millenials.”
Between 2010 and 2020, the population of Massachusetts is projected to grow by roughly 200,000 or about 3.1 percent. But as the figure below demonstrates, the age structure of the population is going to change dramatically. The number of young “prime age” individuals, aged 25-34, is expected to grow by about 91,000. These are the millenials who were 15 to 24 years old in 2010. Read More
As we approach the “fiscal cliff” President Obama is adamant about raising tax rates on high income families to help reduce the deficit. House Speaker John Boehner now says Republicans are willing to consider some form of higher tax revenue as part of the solution – but only “under the right conditions.” Lower tax rates for all families, both rich and poor, is one one of them. If the Republicans were to reconsider this position, the President and the Congress could pull off a pretty neat trick – simultaneously reducing the deficit and stimulating the economy.
How could this possibly work?
Right now, the main reason why economic growth is so sluggish is a lack of consumer spending. If we want to increase demand for goods and services, we need to put money in the hands of spenders, not savers. Savers are good for investment, but savings are not our current problem. Businesses are sitting on the sidelines with something like $2 trillion in cash which they could use for investment. They are not investing because in the current economy they fear there is not enough consumer demand to purchase the output this investment would produce. Read More
In 1965, according to a national Gallup Poll, 35 percent of Americans considered “big government” to be the biggest threat to the country in the future. Slightly fewer (29%) named “big business” as the biggest threat while just 17 percent put this onus on “big labor.” This was the era of Lyndon Johnson and the federal government’s massive “War on Poverty.”
By 1983, fully 50 percent of those polled listed big government as the biggest threat with only 20 percent naming either business or labor. This was the era of Ronald Reagan and the mantra “Get the Government off my back.” By 2001, at the beginning of George W. Bush’s presidency and “compassionate conservatism,” the Gallup poll revealed that two-thirds (65%) of Americans were most worried about big government. By contrast, less than a quarter (24%) feared big business and only 8 percent now worried about big labor. Read More
As a general rule, you will do much better taking advice from a used car salesman or, for that matter, a fortune teller than an economist. Economists, on the whole, are much better when it comes to arguing abstract theory about the past or the future than providing even the most mundane concrete advice about the present. My wife, with her training in psychology and survey research, has a much better track record than I when it comes to buying almost anything or investing in the stock market. Yet at the risk of actually giving out some advice, for whatever it is worth, let me suggest that if you are going to be in the market to buy a home sometime in the near future and can afford to buy one now, there may be no better time to do so than this summer. There are a lot of reasons for listening this one time to a card-carrying economist. Read More
The latest news on the employment front is not good. Indeed, it is terrible. Last month, employers nationwide added a total of just 80,000 to their payrolls. Back in January of this year, 275,000 jobs were created, a strong enough performance to reduce the national unemployment rate from 8.5 to 8.3 percent in a single month. If we could have kept that pace up for just five months, we would have shaved the unemployment rate by a full point. By the November election, we might have faced a jobless rate of “just” 6.5 to 7.0 percent. President Obama would have been seen as something of an economic magician, boosting his chances of reelection immensely. Read More
Nearly three years ago, the Boston Globe published an OpEd I had written about public sector unions. In that piece, I asked whether these unions would suffer the same fate of lost membership and diminished political clout to which my old union, the UAW, had succumbed. What happened in Wisconsin, San Diego, and San Jose last week seems to make that 2009 article more prescient than ever. Yet there is a now chance for organized labor to win back some popular support in Massachusetts if it follows the lead of the Massachusetts Teachers Association (MTA). The Teachers Union has just banded together with Stand for Children to push for groundbreaking state legislation that will help make teacher performance rather than strict seniority the means by which teachers are assigned to schools.
One of Massachusetts’ public high schools has a 97 percent graduation rate and a dropout rate of less than .02 percent (3 out of 1,323 students). It ranks among the highest percentage of students scoring advanced or proficient in the 2011 MCAS assessments (97% in Language Skills; 85% in Math; and 91% in Science.) The school valedictorian is headed to M.I.T. this fall and over 70% of the senior class is on its way to college.
With my Charlie Card Senior Pass, I can still ride the T for 60 cents. At the Kendall Square Cinema, I save $2.00 over the regular ticket price. Amtrak gives me a 15% discount on most trains if I merely show my ID. Wendy’s will take 10% off my tab for a quick burger and golden fries. Best of all, the National Park Service issued me a “Golden Age Passport” for a token $10 fee that provides a lifetime free pass to all National Parks, forests, and recreational areas.
Beginning July 1, MBTA fares will be going up and service will be cut. To some, the increases may seem modest: a single CharlieCard ride on the Red, Orange, or Blue line will increase by 30 cents to $2.00. Bus rides will increase by 25 cents and student fares by fifteen. Monthly passes for commuter rail riders will increase between $38 and $64. Some routes will be discontinued; others will experience service cuts on weekends. All of this is to help close a projected MBTA deficit of $160 million in fiscal year 2013.
Massachusetts. We are world famous for our health care sector – just think MGH, the Brigham, Beth Israel, Dana Farber, Children’s, and the Joslin to name a few superstars. We are world leaders in biotech and the life sciences – from Abbot Labs and Akermes to Genentech, Genzyme, Shire and Vertex. And we are known for our financial institutions from Fidelity and Putnam to the Prudential, John Hancock, and State Street. We also have a bevy of world-class universities like Northeastern where I work and a couple other good ones across the Charles. Just within Greater Boston, we have more than seventy universities and colleges, seven of them ranked in the top 100 in the nation. Statewide, there are another nine universities and colleges that U.S. News & World Report puts on their top 100 lists.
Welcome to my Boston.com blog. In the months to come, I hope to provide you with food for thought about the economy and public policy — particularly about Greater Boston and Massachusetts but often about the nation and the world. There will be plenty of numbers and statistics, but I hope you will find that within those numbers there are big stories. Many you may find surprising, some I hope you find thought-provoking, and others just plain fun. As an economist, I work with numbers and statistics all the time. These can be pretty tiresome until you see the story within. I’ll do my best to reveal these stories and would appreciate hearing back from you about your own interpretations.