Mass. economy to grow slowly

By Megan Woolhouse, Globe Staff | The Boston Globe | June 1, 2012

The Massachusetts economy, which weathered the recession and its aftermath better than the nation’s, will grow at a slow to moderate pace through 2016, according to a forecast by the New England Economic Partnership.

Employment will expand steadily over the next few years but slow in 2016 as retiring baby boomers leave the labor force, according to the forecast, released Thursday. Massachusetts is projected to add 30,000 to 40,000 jobs a year in 2012 and 2013, an annual employment growth rate of about 1 percent.

“There will be a demand for manufacturing; it’s already happening,” said Northeastern University economist Alan Clayton-Matthews, who presented his Massachusetts analysis at the partnership’s semiannual conference. “Manufacturers are complaining about not finding replacement employees for retiring manufacturing workers.”

The partnership, which includes economists from the six New England states, presents its analysis at the Federal Reserve Bank of Boston to business, nonprofit, and government leaders who make decisions based on projected economic conditions. The theme of yesterday’s conference was “Skills and People Matching: Where are the Jobs?”

Clayton-Matthews said Massachusetts’ improving economy should cause the state’s unemployment rate to temporarily increase as improving job prospects entice people who stopped looking for work to reenter the labor market. The state jobless rate, which was 6.3 percent in April, could rise as high as 6.7 percent by mid-2013, as discouraged workers who are not counted in unemployment statistics resume job searches. The current unemployment rate would be more than 12 percent if they were included in the state estimates.

Massachusetts has gained back 81,500 of the 143,000 jobs it lost during the 2008 recession. Other states, most notably Rhode Island, have fared worse.

Rhode Island has the second-highest unemployment rate in the nation, at 11.2 percent, said Edinaldo Tebaldi, an economics professor at Bryant University in Smithfield, R.I. That rate is expected to rise, he added.

Rhode Island’s economic problems have been on display recently with former Red Sox pitcher Curt Schilling’s business venture, 38 Studios LLC. The video game company relocated from Massachusetts to Rhode Island in 2011 because of $75 million in loan guarantees offered by the state, but laid off all 400 of its employees last week. The company’s collapse led to the resignation of the director of Rhode Island’s economic development agency and several board members.

“Right now we don’t have any organization that is actively promoting economic development in Rhode Island,” Tebaldi said.

The outlook was less bleak for the New England region, which is expected to return to prerecession employment by 2015.

New England is projected to put people back to work more slowly than the nation as a whole through the end of 2016. The fastest-growing employment sectors across the region are high technology, professional and business services, private education, and health care services.

Manufacturing employment is also growing after years of decline, and could grow faster if there was a pipeline of qualified and trained workers, according to the forecast report.

“The region’s economic outlook will be strongly influenced by the matching of workforce capabilities and skills with the emerging needs of industry employers,” Ross Gittell, a University of New Hampshire economics professor and forecast manager for the partnership, wrote in the report.

Aligning workers with jobs is the challenge for government and business, said Robert Schwartz, a professor at the Harvard Graduate School of Education and the conference’s keynote speaker. Schwartz was part of a team that looked at how educational systems abroad, including those in Germany and Switzerland, provide skills training that prepares students for specific jobs.

Schwartz said he admires the system in Switzerland, where about 70 percent of students receive skills training because of the collaboration between the educational system and employers.

“How do we create these seamless systems that kids can enter?” Schwartz asked. “The challenge is creating these pathways.”

Megan Woolhouse can be reached at mwoolhouse@globe.com.

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