Massachusetts Economic Outlook – The Role of Housing Barry Bluestone Dean, School of Social...

Massachusetts Economic Outlook – The Role of Housing

Barry BluestoneDean, School of Social Science, Urban Affairs, and Public PolicyDirector, Center for Urban and Regional PolicyNortheastern University

Real Share Boston Sheraton Boston Boston, MA May 16, 2007

Massachusetts Employment Trends (1995-2007)

U.S. - Employment - 1996-2006

125.7

129.6131.5

133.4

136.9 136.9 136.5 137.7139.3

141.4

144.6

115

120

125

130

135

140

145

150

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Massachusetts - Employment - 1996-2006

3105.5

3171.8

3220.5

3254.6

3283.03263.4

3234.4

3201.5 3199.5 3205.13230.6

3000

3050

3100

3150

3200

3250

3300

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

2007 Massachusetts Statistics January-March 2007: Employment up 8,000

jobs; unemployment down nearly 32,000 Unemployment rate down from 5.3% to

4.4% … But Labor Force down by 24,000 The drop in unemployment of nearly 32,000

may have been due to unemployed leaving the labor force or leaving the state

Massachusetts Total Employment (2005-2006) (Seasonally Adjusted)

2700.0

2800.0

2900.0

3000.0

3100.0

3200.0

3300.0

3400.0

3500.0

February 2001

3,372.9

2,950.4

3,167.1

3,224.7

Jan ’95 – Feb ’01: +422,500

Feb ’01 – Dec ’03: -205,800

Dec ’03 – Dec ’06: +57,600

Jan ’07 – Mar ’07: +8,086

Massachusetts Total Construction Employment (1995-2006) (Seasonally Adjusted)

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

November 2002

141,600 141,500

89,400

Jan ’95 – Nov ’02: + 52,200 Nov ’02 – Dec ’06: -100

Jan ’07 – Mar ’07: -3,700

Massachusetts Building Construction (1995-2006) (Seasonally Adjusted)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

August 2002

31,100

33,200

20,200

Jan ’95 – Aug ’02: +10,900 Aug ’02 – Dec ’06: +2,100

Employment Growth (2000-2006) Massachusetts vs. U.S.

-30%

-20%

-10%

0%

10%

20%

30%C

onst

ruct

ion

Hig

h Te

chM

fg

Fina

ncia

lS

ervi

ces

Com

pute

rS

ervi

ces

Edu

catio

nS

ervi

ces

Hea

lth C

are

Per

cent

age

Cha

nge

Mass

U.S.

U.S. Bureau of Labor Statistics

Massachusetts Population Trends

Massachusetts Population

5737.0

6016.4

6349.1 6394.8 6411.6 6417.6 6407.4 6398.7

5000.0

5200.0

5400.0

5600.0

5800.0

6000.0

6200.0

6400.0

6600.0

1980 1990 2000 2001 2002 2003 2004 2005

Popu

latio

n (in

thou

sand

s)

U.S. Bureau of the Census

Massachusetts Net Migration (2000-2005)

33,292 33,347 31,785 29,041 26,515

-22,892

-39,506-48,514

-61,980 -60,053-70,000

-50,000

-30,000

-10,000

10,000

30,000

50,000

2000-2001 2001-2002 2002-2003 2003-2004 2004-2005

Foreign Immigration Internal Migration

U.S. Census Bureau

Population Change by Age Cohort (2000-2004)

-10%

-5%

0%

5%

10%

15%

20%

25%

Under 5 5 to 19 20-24 25-34 35-54 55-64 65+

Age Cohort

Per

cent

age

Cha

nge

Mass

U.S.

U.S. Bureau of the Census

Where did they go?

TX

CA

MT

AZ

ID

NV

NM

CO

IL

OR

UT

KS

WY

IA

SD

NE

MN

ND

FL

OK

WI

MO

AL

WA

GA

AR

LA

MI

IN

NY

PA

NC

MS

TN

KYVA

OH

SC

ME

WV

MI VTNH

MD

NJ

MA

CT

DE

RI

Net Migration* Betweeen Massachusetts and Competitor States1990-2002

*Thicker line represents more migration

State Net Migration from State

Florida -99,082 New Hampshire -78,201 California -23,978 Arizona -11,033 North Carolina -8,983 Washington -4,516

The Cost of Living Challenge

The Cost of Living in Massachusetts is now a barrier to Employment and Labor Force Growth

Annual Cost of Living: 4 Person Household

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

$60,000

$65,000

$70,000

1 2 3 4 5 6 7 8 9 10

Cost of Living Decile

De

cil

e A

ve

rag

e C

os

t o

f

Liv

ing

Boston$64,656

Source: Economic Policy Institute, “Family Budget Calculator, 2005”

Universe: 304 U.S. Metro Areas

Greater Boston Family Budget 4 Person Family with 2 Children

Housing Costs: 7th Highest MSA Child Care: 7th Highest MSA Health Care: 7th Highest MSA Personal Care: 6th Highest MSA Fed/State Tax: 2nd Highest MSA

Total Cost: 1st Highest MSA

Economic Policy Institute, Family Budget Calculator, 2005

Among 304 U.S. Metropolitan Areas

Top Decile: Metro Area Cost of Living

Boston $ 64,656Washington (D.C. portion) $ 61,440Nassau-Suffolk, NY $ 60,780 Stamford-Norwalk, CN $ 60,720 Lawrence (Mass. portion) $ 59,280 New York, NY $ 58,656 Barnstable-Yarmouth, MA $ 58,236 San Francisco, CA $ 57,624 Worcester (Mass. portion) $ 55,704Springfield, MA $ 55,320Minneapolis-St. Paul, MN $ 54,948 Nashua, NH $ 54,852 Santa Cruz-Watsonville, CA $ 53,808Oakland, CA $ 53,412 San Jose, CA $ 52,800 Pittsfield, MA $ 52,632 Rochester, MN $ 51,288

Monmouth-Ocean, NJ $ 50,736San Diego, CA $ 50,088Newark, NJ $ 49,992New Haven-Meriden, CN $ 49,848Honolulu, HI $ 49,824Philadelphia (Pa. portion) $

49,716Boulder-Longmont, CO $ 49,596Bridgeport, CN $ 49,272Manchester, NH $

49,152Santa Rosa, CA $ 48,924Albany-Schenectady-Troy, NY $ 48,900Hartford, CN $ 48,684Trenton, NJ $ 48,576Rochester, NY $ 48,540

Economic Policy Institute: Family Budget Calculator


A Tale of Two CitiesBasic Budget2 Parents, 2 Children

Boston

Monthly Housing $1,266Monthly Food $ 587Monthly Child Care $1,298Monthly Transportation $ 321Monthly Health Care $ 592Monthly Other Necessity $ 500Monthly Taxes $ 824Monthly Total $5,388

Annual Total $64,656

Raleigh-Durham-Chapel Hill

Monthly Housing $ 779Monthly Food $ 587Monthly Child Care $ 866Monthly Transportation $ 358Monthly Health Care $ 368Monthly Other Necessity $ 369Monthly Taxes $ 350Monthly Total $3,677

Annual Total $44,124

A Tale of Two Cities


Regional Average Monthly Housing Costs (2004)

$892.60

$708.46 $692.82$617.23 $616.29 $566.14 $583.67

$720.00

$914.63

-$100

$100

$300

$500

$700

$900

$1,100

$1,300

Hou

sing

Cos

ts

Boston ($1,266)


Employment Growth (%) (2000-2004)

-6.00%

-5.00%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

1 2 3 4 5 6 7 8 9 10

Housing Price Decile

Per

cent

Cha

nge

Boston MSA (-4.9%)

Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of Labor Statistics


Employment Growth (%) (2000-2004)

-1%

0%

1%

2%

3%

1 2 3 4 5 6 7 8 9 10


Per

cent

Cha

nge

Low Cost High Cost

Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of Labor Statistics

-0.21%

0.93%

-0.02%

0.84%1.06%

0.50%

1.09%

1.98%

0.62%

2.53%


Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of the Census

Internal Net Migration (%) (2000-2004)

-0.8

1%

-1.0

6%

0.1

8%

0.2

7%

0.9

3%

0.3

6%

2.7

2%

3.0

5%

2.4

5%

-2.2

5%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

1 2 3 4 5 6 7 8 9 10

Housing Cost Decile

Decil

e P

erc

en

t

Boston MSA (-5.2%)


Internal Net Migration (2000-2004)

0.3

5%

-0.0

3%

0.5

9%

0.4

8% 1.2

3% 1.9

5%

1.5

2%

1.5

6%

0.1

1%

-2.1

2%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

1 2 3 4 5 6 7 8 9 10


Decil

e P

erc

en

t

Economic Policy Institute, “Family Budget Calculator, 2005”; U.S. Bureau of the Census


Massachusetts Economic Forecast

Governor Patrick’s Jobs Goal 100,000 new jobs by 2010 If the ratio of construction jobs to total

remains the same, this will mean 4,400 new construction jobs

Between January and March of this year, 8,086 new jobs

That’s a decent downpayment on 100,000 If we could keep that up, we would get

more than 129,000 new jobs

But we face challenges High cost of living could shortchange

business and employment growth $1.3 billion state deficit makes new projects

hard to justify Need 30,000 new homes over next 10

years … over and above current production levels to reduce housing price appreciation

Need to find a way to reduce health care costs

More Challenges Are cities and towns ready to permit

more housing … especially for younger families?

Are we willing to be aggressive in attracting new business investment to Massachusetts?

Are we willing to challenge the way we supply health care in the Commonwealth?

Housing Progress … A Good Start

Chapter 40R and 40S (Smart Growth Zoning Overlay Districts) have been adopted by 12 Massachusetts municipalities already and …. 30 more considering passage

These new overlay districts could provide 15,000 to 20,000 new housing units

Working on new legislation to provide incentives for rezoning residential areas for small “Starter Homes” for young families.

Massachusetts Economic Outlook – The Role of Housing Barry Bluestone Dean, School of Social...

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