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Smart growth funds running out
BY: Paul Mcmorrow
December 29, 2011
THE ACCOUNT THAT funds the state's smart growth law is running out of cash, raising the prospect that the state's first major effort at using incentives to promote housing construction could grind to a halt before it really gets rolling.
Less than $1.4 million remains in the state's Smart Growth Housing Trust Fund, which pays municipalities bonuses for approving and building dense housing developments. Budgeted payments over the next few months will further deplete the fund, leaving just $177,000 left in the account.
"I hope the commonwealth would honor its own legislation," says Barry Bluestone, an economist at Northeastern University's Dukakis Center for Urban and Regional Policy. "We're starting to get some real results. Housing is finally going up, even in this weak economy, and with a very strong market for rental housing, I'm hoping we'll see a lot more."
The smart growth trust fund finances Chapter 40R, the state development statute that was enacted in 2004 to promote dense, transit-oriented development. Under Chapter 40R, municipalities designate smart growth development areas, pre-zoning them for dense housing or mixed-use construction. The trust fund pays cash bonuses, based on the number of units approved in each smart growth district. Payments range from $10,000, for allowing the construction of 20 new housing units, to $600,000 for approving more than 500 units. In addition, the trust fund pays out $3,000-per-unit density bonuses when developers break ground on construction projects in 40R districts.
Chapter 40R is an incentive-based alternative to Chapter 40B, the affordable housing law that allows developers to bypass local zoning in communities with a paucity of affordable housing. Chapter 40B projects often put municipalities in a reactive stance, responding to housing projects developers put on the table. By contrast, Chapter 40R allows municipalities to proactively identify and zone growth districts.
To date, the state has approved 33 Chapter 40R districts in 31 municipalities. Those municipalities have built or begun construction on 1,270 housing units, with an additional 1,275 units expected to break ground over the next six months, and 9,000 pre-zoned units remaining in the development pipeline. The Smart Growth Housing Trust Fund has paid out $14 million connected to this development activity. Grants range from a $10,000 payment to support a project in Belmont to $1.7 million for the revitalization of Haverhill's downtown.
The dwindling trust fund balance throws Chapter 40R's future into doubt. There isn't enough money in the fund to meet density bonus commitments to every municipality that has created a smart growth district, and the smart growth program becomes less attractive to municipalities without financial incentives.
"It would be incredibly challenging to pitch 40R without the incentive package," says Jennifer Raitt, chief housing planner at the Metropolitan Area Planning Council. Raitt says Chapter 40R is attractive to cities and towns as a zoning overlay district, but one of the program's chief selling points has been the availability of grants that help offset development impacts on local budgets.
Bluestone says the trust fund is "about more than just 40R or affordable housing." When the Legislature was fashioning Chapter 40R, he says, municipalities were worried that the state would fail to follow through on the statute's financial incentives. Policymakers are now considering incentive-based programs to shape a range of municipal behavior, from budget management to regionalization.
"It would be a terrible thing to now have one of the first [incentive] programs remain unfunded," Bluestone argues. "It would be a signal to communities that if the state develops analogous programs, the state cannot be trusted."
The trust fund has seen its balance diminish because there's no steady revenue stream to support it. Currently, the fund is backed by surplus land sales. Rep. Kevin Honan, co-chair of the Legislature's housing committee, has filed a bill that would replenish the trust fund by dedicating a portion of the income taxes paid by residents of Chapter 40R districts. The bill's legislative prospects are unclear.
"At the time, taking revenue from the sale of state land struck me as a short-term solution," says Doug Foy, the Romney administration official who spearheaded Chapter 40R's creation. "The advantage to having communities embrace zoning reform is, it saves everyone a lot of money. You save on transportation and sewer infrastructure, kids are able to walk to school, housing is more affordable. The benefits dwarf incentive costs, so it would be a pity if they were allowed to fall apart."
To view the original article online, click here.
R.E. Panel Offers Little Cheer Heading Into Holiday Season
By Colleen M. Sullivan, Banker & Tradesman
November 30, 2011
At a recent panel discussion held at the Federal Reserve Bank of Boston, it was difficult to disagree with Senior Economist Paul Willen when he said, "The technical term for what's going on right now is that the economy sucks."
But the unanimity of opinion was among the lone bright spots at the Greater Boston Association of Realtors' event that offered much to lament, but little to help reassure. Willen's frank assessment was largely echoed by fellow panelists Paul Bishop, vice president of research at the National Association of Realtors (NAR); Christopher Herbert, research director of the Joint Center for Housing Studies at Harvard; and Barry Bluestone, director of the Dukakis Center at Northeastern University. Frank Nothaft, chief economist at Freddie Mac, gave the keynote speech at the event. Though each presenter tackled different aspects of the housing sector, they agreed that the state and the country face a "long slog" back toward a healthy market.
The overall economy will likely continue to grow slowly over the next year, and the Fed will almost certainly keep rates low, helping keep mortgage affordability "sky high," Nothaft said. But the main factor holding back sales this year – fearful consumers reluctant to commit to big-ticket purchases – will persist through 2012, he suggested. Nothaft forecasted that sales will grow only 1 percent to 4 percent next year. Tight underwriting will also continue to put downward pressure on home sales, whether or not the proposed 20 percent down standards for qualified residential mortgages are adopted.
Bishop presented new figures from NAR's annual survey of buyers and sellers showing that since the expiration of the first-time homebuyer's tax credit last year, the average age of buyers in Massachusetts has shot up from 38 to 42. First-time buyers are finding it tougher to qualify, with 17 percent listing "saving for a down payment" and 15 percent listing "getting a mortgage" as their most difficult hurdles in obtaining a home, while 39 percent found the mortgage qualification process more difficult than expected.
Current owners are relying more on savings and less on equity to make down payments on their next purchase, and are staying in their old homes for longer before buying again, Bishop said.
But Herbert said there may be some hope on the horizon in the long term. The most important reasons people want to buy have to do with quality of life, rather than pure wealth building, and the desire for ownership has remained strong throughout the crisis, he said. The industry will have to figure out better ways to encourage more homeownership among minorities, however, as they will form an increasing proportion of the potential buyer pool in decades to come, he said.
Though excess inventory is plaguing the current market and likely to remain an issue over the next few years, the dearth of new construction and long-term demographic trends will inspire more new household formation. Right now, high unemployment, especially among the young, is keeping roughly 700,000 people per year from striking out on their own, according to Herbert. But as the economy continues to grow, "that 700,000 represent an enormous amount of pent-up demand," he said. "All those people are going to be moving out of their parent's basements."
But first, the housing market will have to work through the current backlog of problem loans. Of loans currently in foreclosure, "two-thirds haven't made a payment in a year, and 40 percent haven't made a payment in two years, so that's a pretty big hole to try to dig out of," said Herbert. Bluestone urged policymakers to do more to help fill in that hole, saying the downturn in housing is a huge part of what's keeping the economy from a more robust recovery.
"Fixing the housing market is absolutely critical to the recovery of the national economy," he said, provoking a round of spontaneous applause from the auditorium full of Realtors.
To view the original article online, click here.
Like rest of nation, Mass. residents not moving
By David Riley, Taunton Daily Gazette
November 30, 2011
Stung by job losses, a shaky housing market and mortgage woes, Bay State residents are reflecting a national trend the U.S. Census unveiled recently: They are staying put.
Only 11.6 percent of U.S. residents packed up and relocated between 2010 and 2011, the lowest reate recorded since the Census Bureau began tracking that data in 1948. In Massachusetts, people are moving even less than the national rate, according to new Census data.
Economists and housing analysts see mobility as a sign of financial health – an indication of whether people are willing or able to pull up stakes and pursue new jobs or better homes. Both may be out of reach for many people who stick where they are. "People move in large part for new jobs," said Randy Albelda, an economics professor at UMass-Boston. "If there aren't new jobs, they're not moving."
Potential home buyers with decent credit have been unable to find mortgages since the market collapsed, said Barry Bluestone, director of the Dukakis Center for Urban and Regional Policy at Northeastern University. Others owe more on their mortgages than their homes are worth, making it impossible to sell or refinance. Some potential buyers are just waiting for home prices to level out.
"A lot of people have stayed on the sidelines who have perfectly good credit, could get a good mortgage, but are staying in the rental market," said Bluestone, whose center puts out an annual report card on housing in Greater Boston. By comparison, about one in five Americans moved to new homes in 1985, according to Census data. The rate had dipped to 11.8 percent as of 2008. In an alternate measure of how often people move, new data from the 2010 American Community Survey – an ongoing U.S. Census project – pegs the national rate a bit higher, at 14.8 percent last year. The same survey said even fewer Massachusetts residents moved last year: about 13 percent. That estimate represents more than 800,000 of the state's roughly 6.5 million residents, a vast majority of whom moved within the state, the survey said.
One factor could be the high cost of renting in Massachusetts, Albelda said. If a tenant has a landlord who is not raising the rent, he or she might decide to stay put, finding new cheaper options on the market, she said. The most recent Greater Boston Housing Report Card found rents are higher than ever, thanks in part to additional pressure from people who might buy their own homes in a better market or others forced into rentals by foreclosures, Bluestone said.
"All of that combines to have extremely slow sales," he said. Massachusetts has an older population compared to other states, which also may curb the number of people who are looking to move, Bluestone said. Years of migration from northeastern states to the growing Sun Belt also has slowed, according to Census data. "There's much less migration of any kind, coming in and out," Bluestone said. In the longer term, Massachusetts residents have moved less than the rest of the United States for years. The state ranks eighth lowest in the nation for its percentage of residents who moved into their homes in or after 2000, or about 56.2 percent of the population, according to the 2008-10 American Community Survey. Other northeastern states saw similar trends, including New York, Rhode Island, Vermont, Maine and New Hampshire.
Within Massachusetts, there are wide disparities in which communities have seen the most movers in the past decade. In Arlington, Mansfield, Brockton and Taunton, fewer than 20 percent of residents moved into their homes since 2000. In Boxford, Dennis, Georgetown and Wellesley, the rate was more than 48 percent. The latest Census data for Quincy shows 81 percent of residents stayed put between 2005 and 2007. This much is clear: The overall number of single-family home sales in Massachusetts has declined steadily since 2004, surely contributing to a drop in movers, said Timothy Warren Jr., CEO of the Warren Group, which tracks real estate transactions.
To view the original article online, click here.
Michael Dukakis on ACOs: "We tried that, folks. It didn't work."
By Chelsea Conaboy, The Boston Globe
November 28, 2011
The creation of accountable care organizations or a global payment structure won't fix the health care system in Massachusetts and make it more affordable, former governor Michael Dukakis told an audience at Harvard last week. Speaking during the Harvard School of Public Health Voices from the Field series, Dukakis said urging the health care market to fix itself is "a colossal waste of time."
"If the market doesn't work you have to regulate," he said. "R-E-G-U-L-A-T-E. Thoughtfully, responsibly, and with the active involvement of all of the people who provide health care and who are very important to us."
Dukakis said Governor Deval Patrick today has all of the authority he needs to regulate the health care market. He cautioned that if Patrick submits a bill asking for regulatory power "it might come back with half of his authority stripped from him."
Here's an excerpt from the event. See more of Dukakis's comments on the Harvard Voices from the Field series website (scroll down for the embedded video), including harsh words for Mitt Romney, his thoughts on what role preventive care should have in the national conversation about health care, and the intersection of public policy and politics:
If we paid a little attention, it might be a good idea, to the experience of other countries around the world who are doing this and who, for some reason, seem to be able to provide rather good health care to their people at half the cost we do — whatever the siltstone, whether it's Australian medicare or a multi-player system in Germany or an essentially privatized system in Switzerland — every one of them regulates cost, without exception.
What do we do? Come up with this ACO, global payment thing… We've done it. ACOs and global payments. What did we used to call them? HMOs and capitation. We tried that, folks. It didn't work. Why are we doing it again?
Now don't get me wrong. Nobody loves having to regulate. We had something called the rate-setting commission when I was governor… We treated hospitals as public utilities. They couldn't raise their rates a nickel unless they went to the rate-setting commission. We certainly didn't have these huge disparities between what Partners gets and what the BI gets. Wouldn't allow it. So, we've got to get on with the business of regulating costs. And I think the least bureaucratic way to do it, rather than getting into setting elaborate fee schedules and so forth, is essentially to use the authority we have in this state under the state insurance statutes to regulate the rate of increase and the cost of premiums… You've got to involve the key players — providers, consumers, legislators, and so forth — in the process of developing how we're going to regulate and then carefully monitoring it so that, in point of fact, it work and works effectively and at the same time make sure that we provide people with excellent health care, which we do in this state.
What I'm worried about is that we're futzing around with new institutional arrangements, accountable care organizations.
Boston Rents Rank Third Highest in U.S., up to 70% Higher than National Average
By Lisa DeCanio, BostInnovation
October 25, 2011
Feel like you're paying an arm and a leg to live in Boston? Well, you probably are. Today, the Boston Foundation, in conjunction with the Kitty and Michael Dukakis Center for Urban and Regional Policy at Northeastern University, published its 2011 Greater Boston Housing Report Card, which analyzes the Boston area's housing market as it relates to the city's entire economy.
The findings from this year's report, especially those pertaining to the rental market, will have you kicking yourself for choosing to live in Boston. This year, Boston set a new all-time record for average rent at $1,665 in the second quarter of 2011. Additionally, one- and two-bedroom apartments were 51 percent higher than the national average, and three-bedroom apartments were 70 percent higher than the national average. Based on these numbers, as of spring of 2011, Boston holds the title for third highest average rent of major U.S. cities, beat out only by New York and San Francisco.
Below are several charts from the report that reveal more about the rental market in Boston, measuring total apartment units and rents over the past 20 years.
Additionally, below are some numbers looking at the average rents of studios, one-, two- and three-bedroom apartments in Boston, as well as rental cost per square foot. These numbers seem to be low compared to number from Craigslist and RentJuice's Rent Index that we analyzed previously.
Long story short, the Greater Boston Housing Report Card didn't really tell us anything new. We live in one of the most expensive cities, and we know this by now. It'll be real news when rents here drop significantly… like that'll ever happen.
Housing Market Losing Steam, Affordability
By Chris Lovett, Neighborhood Network News/Boston
October 25, 2011
A new report for The Boston Foundation and the Citizens Housing & Planning Association finds two main problems in Greater Boston housing markets: a downturn for ownership, driven by sagging prices, and an influx in the rental market, putting new strains on affordability. Report for BNN News.
Click here to see the video!
Mass. Housing Market: How Does It Affect the Greater Boston Economy?
By Adam Ragusea, RadioBoston
October 25, 2011
The latest numbers on the region's housing market show we've been less affected by the downturn than the rest of the country, but rental rates in the metropolitan region are higher than all but New York and San Francisco, raising questions about the cost of housing's affect on the Greater Boston economy.
And a new report released today finds that home prices in the Greater Boston area are at risk of dipping again.
Guest: Barry Bluestone, author of the study, director of the Kitty and Michael Dukakis Center for Urban and Regional Policy Listen here!
Housing prices key to recovery, study says
By Jenifer B. McKim, The Boston Globe
October 25, 2011
Stable housing prices are key to an economic recovery in Massachusetts and across the country, according to a new report sponsored by the nonprofit Boston Foundation.
The Greater Boston Housing Report Card 2011, scheduled to be released today, reflects a turnaround for its authors, who have long advocated for more affordable housing. Lead author Barry Bluestone, founding director of the Kitty and Michael Dukakis Center for Urban and Regional Policy at Northeastern University, sad the struggling housing market is "actually driving" the slow economy. Until the housing market recovers, he said, high unemployment and slow growth will continue in Massachusetts and elsewhere.
Bluestone added that high rents in the Boston area won't begin to moderate until home prices start rising, enticing more prospective buyers to get off the sidelines and slowing the number of foreclosures. A combination of sparse inventory and high demand have pushed rents higher. In the second quarter, the average monthly rent in the Boston area reached $1,665, an all-time high, according to the report. "We need to stabilize prices so people will go back into the housing market," Bluestone said. "Then we need to create enough housing so that prices won't accelerate."
He is expected to present the report today to a cross-section of housing industry professionals at the Boston Foundation's headquarters. The report found that because the state's housing market has suffered less than those in many other areas of the country, the local economy also has recovered more quickly from the recession. But home sales remain weak and median single-family home prices probably will be lower in 2011 than last year. Also, the report said, the homeownership gap between black and white families in Massachusetts has reached about 35 percent, one of the highest in the country.
Aaron Gornstein, executive director of Citizens' Housing and Planning Association, a Boston nonprofit that focuses on affordable housing and contributed to the study, said that despite lower home prices, many people still cannot afford to buy because of underemployment and tight financing requirements. "We need to try and stabilize the market, but also address the lack of affordable housing," Gornstein said. "I don't think they are at odds."
Tim Davis, a real estate researcher and also a report contributor, said consumer confidence is tightly linked to housing values. While he does not believe homeowners should rely on their homes as equity banks, like many did six years ago at the height of the market, an end to falling prices will prompt more people to start spending, providing a needed boost to the economy. "We need to restore household confidence," Davis said.
Report: Troubled Economy Threatens to Push Home Prices Down, Again
By Cut Nickisch, WBUR
October 25, 2011
The housing market in Greater Boston may have its rockiest days ahead of it. A new report from The Boston Foundation says that there are troublesome signs in the economy threatening to push home prices downward again. And one big worry is that the staggering housing market will send young working families to seek their fortunes somewhere else.
The Roddas, A Young, Home-Buying Family
The Roddas are just the sort of young working family that Boston civic leaders want to keep around. A few years ago, Ben and Irene met and married in upstate New York. He'd gone to college in Boston, and he and Irene were ready to begin a long, happy life. "I grew up in New York City. I said, 'I wanna live somewhere different.' We picked up and so three months later we were living in Boston," Irene said. Ben's an engineer and got a job at a telecom company. They bought a condo in Dorchester and moved in in 2007. They had a baby. Great medical care. Boston was treating them well, until, "On April 1st, he was laid off," Irene said.
Boston's economy and the uncertain housing market are now pushing young families like the Roddas to a tipping point. That's the conclusion of a report from the Boston Foundation out Tuesday. "Well, I worry that we could see a continued double-dip in home prices," said Barry Bluestone, who runs Northeastern University's School of Public Policy and Urban Affairs, which wrote the report. "I would like to think that we'll bounce along the bottom and things won't get worse. But there's too much bad news out there for me to have much hope of that," Bluestone said. Bluestone said the weak economy makes people afraid to blow their savings on a down payment. After all, like the Rodda family, they might lose their job any day, and that can lead to foreclosure. Bank-owned homes have gotten so common that realtor Ryan Covino lists all the new properties in online videos.
Renting Prices on the Rise
Meanwhile, all the potential home buyers sitting on the sidelines need a place to stay. So do all the people who have lost their homes. And they've all been renting. "Renting are at an all-time high," Bluestone said. "Here we're in the middle of the Great Recession, and yet rents in 2011 are higher than they've ever been in Greater Boston's history." And those record-high rents really worry him, because they often push people to do something. "Now we've seen home prices dip here a bit, they're down about 13, 14 percent from their peak. But they're much, much lower and have fallen much further in other communities where young people might seek jobs and seek lower-cost housing," he said. Until now, that has not been much of a danger, with the Massachusetts economy outperforming the rest of the country. Why go somewhere else if there aren't any jobs there? But now, Bluestone is worried that as the economy here slows down again, other parts of the country will get their footing, leading to an exodus of young working families out of Boston.
Leaving Boston In Search of Better Options
That's exactly what happened to the Dorchester couple after Ben lost his job. Irene remembers when Ben got an interview in Memphis. "He said to me, 'Is this a place you're willing to move, because if you're not willing to, I'm not even gonna go," Irene said. "I said, 'Well, it doesn't even matter where I want to live right now. It's really where you're going to get paid.'" Ben got the job and they put their Dorchester condo on the market. And Irene was astounded to see what she could get for the same price in Memphis. "Down here, I could have 3,000 square feet, four bedrooms. It's insane! I could have a mini-mansion down here for the same price," she said. At first, the Roddas were sad to leave Boston, but that didn't last long. "Everybody's friendly; things are cheaper down here. There's tax on clothing, but everything else — food, entertainment, so many things are free. It's wonderful! So I'm actually happy," she said. Young people leaving Boston…happy. City leaders don't want to see that become a trend. But the new report says that unless more is done on the state and federal level to shore up the housing market, people like the Roddas will become a growing reality.
TWIB: Mass. unemployment
Fears of a double-dip recession
October 23, 2011
In this week's edition of "This Week in Business", Barry Bluestone, Director of the Dukakis Center for Urban and Regional Policy at Northeastern University talks about the latest Massachusetts jobless figures, the Occupy Boston movement, fears of a double dip recession and facing the head winds of national and international economic trends.
He also shares details of a new framework for collective bargaining using teachers as a model. Watch the attached video to catch the entire discussion.
More collective, less bargaining
Editorial | Union Contracts, The Boston Globe
October 19, 2011
If there's one thing that's broken in Boston, it's the collective-bargaining process. Contract negotiations with major unions are usually protracted and testy, while needed changes are often limited, late, and easily undermined even after being agreed upon. Today, two well-known local academics will present a plan aimed at reducing the rancor in negotiations and replacing the thicket of work rules that restrict flexibility with more collaborative decision-making.
"We are either going to take a major step forward by using the modern tools of negotiations or risk frustrating the public and experience a backlash like Wiconsin's," predicts Thomas Kochan, co-director of the Institute of Work and Employment Research at MIT.
He and Barry Bluestone, dean of Northeastern University's School of Public Policy and Urban Affairs, will outline their "grand bargain" for labor relations at the Boston Foundation, focusing initially on public schools. Instead of teacher contracts that run for several hundred pages, the two envision slim pacts that set basic workplace parameters while pushing more problem-solving to the school level. Decisions would be made collaboratively, with problems addressed as they arose by a joint teacher-administrator panel. Peer review would become more integral to the process, while compensation would be tied in part to performance or new duties.
The goal is to replace traditional contract negotiations – along with their demands, counter-demands, posturing, hyperbole, and acrimony – with "interest-based bargaining."
"You begin not with demands but by asking: What are your interests and what are my interests, and where do they coincide? And where they don't, how can we find some way of getting to agreement that meets our ongoing interests?" explains Bluestone, whose father was a storied labor leader and who himself has been a member of three unions.
Such a retooled negotiation process puts a premium on outlining the problems and generating solutions. The two will call for a statewide leadership academy to familiarize management and union members with the new way of bargaining and a pilot program to show how the new approach would work. Although experience counsels a certain pessimism, both those steps are well worth taking. The two are right: Things need to change.
Economists: Housing Market Suffering Confidence Crisis
By Matt Pilon, Worcester Business Journal
October 17, 2011
Reviving the sputtering U.S. housing market will be central to a thus far elusive economic recovery, two Boston-based economists said today in Worcester. The event, called The Future of Homeownership in Massachusetts, was organized by the Massachusetts Association of Realtors and the MassHousing, a state agency. Interest rates at historic lows and foreclosures bringing down median sale prices, but Americans still aren't buying.
"The question is, why aren't there takers out there?" said Eric Belsky, director of the Joint Center on Housing Studies at Northeastern University. Barry Bluestone, director of the Northeastern University Dukakis Center for Urban and Regional Policy, said the answer is that consumer and business confidence is at historic lows. This summer, he said, consumer confidence hit its lowest point since 1980. A major reason for that confidence crisis is that American homes have lost 28 percent of their value since 2006, he said, which has translated to a 2.3 percent reduction in household consumption of goods and services, a development which has negative implications for the broader economy. "There's a very close relationship between losses in home value and where the economy is going," Bluestone said. Massachusetts homes have seen a less severe drop in housing prices of 17 percent. A recovery here would be less important to the economy than in other states, but would be vital for the remodeling industry, Bluestone said. Potential homebuyers aren't the only ones leery of financial commitments.
Corporate profits are up 25 percent over the past three years. But companies are sitting on the money and not building new plants or buying a lot of equipment. Such spending, called non-residential fixed investment spending, has fallen 11.3 percent since 2008, despite big profits. The sluggish housing market has played an even stronger role in dampening GDP growth. Residential fixed investment spending (home building and remodeling) dropped 29.9 percent during that period, Bluestone said. Economists estimated GDP growth this year will be about 1.5 percent. The economy needs to grow at 2.5 percent to 3 percent to significantly reduce unemployment levels, something some economists now think may not occur until 2017.
Belsky said the most important step the federal government has taken so far to save the housing market is when it put Fannie Mae and Freddie Mac into conservatorship in 2008. With a combined $5.4 trillion in mortgage-backed securities and debt outstanding at the time, a default by either would have sent financial markets into turmoil and made the housing market illiquid, according to the Federal Housing Administration. "We would have had an unbelievable global meltdown," Belsky said. "That was the single most important thing they've done." But with the market still anemic, the question now is: What next?
Bluestone said another major federal stimulus package is needed, but he admitted that the odds for that seem poor. President Obama's $447 billion American Jobs Act would not do enough to spur the economy, Bluestone said, and even that plan appears to be facing long odds of passing Congress. Bluestone also pushed for a federal home price insurance program, under which the government would cover 80 percent of any loss a homeowner incurs in selling his home.
To Have and Have Not: The Growing Economic and Social Divide and its Implications for Educational Leaders
October 16, 2011
This week, we have a panel discussion titled "To Have and Have Not: The Growing Economic and Social Divide and its Implications for Educational Leaders." Our speakers include: British researcher and author, Richard Wilkinson; Connecticut Governor, Dannel Malloy; Maguire Associates chairman and founder, Jack Maguire; and the Dean of Northeastern University's School of Public Policy and Urban Affairs, Barry Bluestone. Moderating the discussion is WBUR reporter, Monica Brady-Myerov.
Listen to this show
Op Ed submitted to the New York Times
A Last Minute Plan to Save the Economy
By Barry Bluestone
September 4, 2011
The latest statistics on the U.S. economy are in and they are all dismal. In the face of the economic crisis, the federal government has all but declared unilateral disarmament. President Obama's new economic plan will likely call for more infrastructure investment, another year of payroll tax relief, a jobs tax credit for business, and some more cash to cover unemployment benefits.
Even if he can get a recalcitrant Congress to buy into his plan, it will not fix the economy. Infrastructure investment will take too long to work. The existing cut in payroll taxes and extended unemployment benefits help struggling families but so far have done little to reignite a comatose economy. Moreover, economists do not believe firms will rush out to hire more workers to take advantage of a jobs credit.
With a double dip recession a growing prospect and warnings that we may not get back to full employment until 2017, we need something more powerful and quicker acting. It is well past the time for the President to try something exceedingly conservative, but refreshingly liberal. Here is a four step program he should embrace.
Step 1: The Commander-in-Chief should call together the leaders of all the public sector unions in the country – most of whom supported him in 2008 – and ask them to agree to a two-year freeze on federal, state, and local public employee wages and benefits in return for a commitment to no further government employee layoffs. This is critical to secure public support for Step 2.
Step 2: The White House and Congress should create a two-year $100 billion program of federal aid to state governments to help them and their municipalities weather this economic storm. The money allocated to each state based on their respective unemployment rates could be used for keeping police officers, firefighters, teachers, and other public servants on the job providing the public services most of us take for granted. With the union pledge in Step 1, all of the $100 billion will be spent on keeping services from disappearing and keeping civil servants on the job and not on the unemployment line.
Step 3: To pay for the federal aid program, the White House and the Congress should levy a two-year 5.5% "profits tax" on corporations operating in the U.S. and which earned more than $1 million in profits in 2010. Profits have rebounded nicely from the Great Recession and now stand at close to $1.8 trillion, but very little of this is going into producing jobs. If half those profits were made at companies with $1 million or more in corporate earnings, this tax would raise the $100 million we need to pay for Step 2. Note, not a single penny would come from increasing taxes on the poor, working families, or even the rich.
Step 4: The collapse of the housing market was the proximate cause of the Great Recession. With home prices falling, nearly 30 percent of housing wealth has disappeared since 2006. In response, homeowners with less equity in their homes have cut back their consumption by about $250 billion a year, enough to drive the real GDP growth rate down from what would have been a healthy 3 percent to 1 percent this year. Moreover, with sales down, home production has plummeted, reducing new housing investment by another $250 billion. Even with the economy in vast disarray, there are millions of credit-worthy families who might buy a home if they were not so worried about seeing their new homes lose value.
Step 4 would have the U.S. Department of Housing and Urban Development create a federal "home price insurance" program that would insure home buyers against a catastrophic loss if home prices were to fall. For a $500 processing fee, for two years applicants would be permitted to purchase the insurance plan that would cover 80 percent of any loss in home value. To benefit from the program, a homeowner would have to keep the home for a minimum of three years and maintain it in good order. The cost to the government would almost surely be de minimus. If no one took advantage of the plan, it would pay out nothing in insurance coverage. If one or two million potential homeowners took advantage, the price of homes would rebound and the government would be on the hook for little or nothing.
Altogether, these four steps could accelerate growth and reduce unemployment this year and next and not add much, if anything, to the federal deficit. Finally, we would be putting up a real fight rather than surrendering to a punishing economy.
Barry Bluestone is the dean of the School of Public Policy and Urban Affairs and director of the Dukakis Center for Urban and Regional Policy at Northeastern University.
Link to Op Ed as published in the New York Times | PDF of Original Op Ed
By James Aloisi, Commonwealth Magazine
August 15, 2011
Ronald Reagan used to say that political campaigns are won by those who make their case in primary colors, not soft or muted pastels. What he was really saying was that strong and compelling leadership requires a clear and candid statement of principles – what you are for and what you are against. Franklin Delano Roosevelt similarly quoted Dante's warning that the worst places in hell are reserved for those who are mired in indecision.
The views of Reagan and Roosevelt came to mind when I saw the response of transportation advocates to US Sen. Scott Brown's letter advocating no increase in the state's gasoline tax. The advocates opposed Brown's position but couldn't bring themselves to endorse a gas tax increase. Many of the advocates are friends of mine and good people, so it pains me to write that this weak response is a good example of why we failed to get a gas tax increase in 2009, and why we will likely fail again. The transportation "advocates" cannot seem to gather the courage to take a strong and decisive position.
How can they be taken seriously when they state: "We do not endorse the gasoline tax or any particular revenue option at this time." If they cannot endorse a gas tax increase at this time, when will the time come when they can? The governor and lieutenant governor and I made a strong but failed effort to get a gas tax increase in 2009. The governor and lieutenant governor have once again signaled their desire to lead on this issue. But they need strong and decisive and unequivocal support from advocates – not wishy washy evasion. When I said that "reform without revenue is an empty slogan, " I was right – and we are facing the consequences today. My decision as transportation secretary to tell inconvenient truths may have been unpopular with some, but if we don't have leadership that speaks frankly, we will continue down the path of inaction and disinvestment that have sadly led us to a chronic transportation funding crisis.
Political and government leaders will feel safe to speak frankly and make difficult decisions if they know that the advocates have their backs. This kind of response puts that in some doubt – and I hope it is corrected by a clear and unequivocal statement in support of a long overdue gas tax increase. The advocates might even consider this: There should be no fare increase without a concomitant gas tax increase – lets have a level playing field, lets have some social and economic justice, and lets have strong and principled and effective leadership from those who choose to call themselves transportation advocates.
(James Aliosi was Secretary of Transportation from January through October 2009. He posted this comment in response to an Aug. 8 package of letters on the gas tax from US Sen. Scott Brown and Stephanie Pollack of Northeastern University and other environmental activists.)
By Stephanie Pollack, Boston Herald | Letters to the Editor
August 9, 2011
Sen. Scott Brown is wrong that "Massachusetts motorists already pay a higher gas tax than the national average." Massachusetts has a 21 cents a gallon tax which was last increased more than 20 years ago ("Brown, Kerry agree: Don't hike gas tax," Aug. 5). When other state taxes applicable to Massachusetts and the federal gasoline tax of 18.4 cents a gallon are included, Massachusetts motorists pay 41.9 cents a gallon. A report produced by Ernst and Young for the Urban Land Institute found that the national average is 48.1 cents a gallon. Combined local, state and federal gas taxes are much higher in Rhode Island (51.4 cpg), New York (65.6 cpg) and Connecticut (63.6 cpg).
If Massachusetts is to have the transportation system that we all want and need, all users and taxpayers are going to have to make at least a modest financial contribution toward preserving, maintaining and improving that system.
— Stephanie Pollack, Associate Director
Dukakis Center for Urban and Regional Policy at Northeastern University
Link to letter at www.bostonherald.com.
By Jessica Van Sack, Boston Herald
August 9, 2011
Standard & Poor's — the same rating agency that touted insurance giant AIG, Fannie Mae and subprime mortgage-backed securities before their collapses nearly sank the economy — is now taking heavy fire after downgrading U.S. credit, a move that drove markets down sharply yesterday.
"It doesn't make sense to me," said Alan Clayton-Matthews, economics professor at Northeastern University. "The debt ceiling was raised and both sides, even as they were playing chicken, said the country would not default."
S&P is one of the "Big Three" companies — along with Moody's and Fitch — engaged in the dark art of credit rating, but it's the only one to have downgraded U.S. credit, putting the company in the cross hairs of President Obama and many experts.
Dean Baker, co-director of the Center for Economic and Policy Research, slammed S&P for lowering the country's credit rating after the United States actually raised the borrowing limit, pointing out that its decision was based partly on calculations that were later revealed to contain a $2 trillion error.
"This suggests that S&P had made the decision to downgrade independent of the evidence," Baker said.
Treasury Secretary Tim Geithner also blasted S&P, saying the company "has shown really terrible judgment" and "a stunning lack of knowledge about basic U.S. fiscal budget math."
S&P won't say who at the company made the decision to downgrade U.S. debt from its AAA rating to AA+, only that it was made by a panel of five to nine executives. But company president Deven Sharma defended S&P in a CNBC interview yesterday.
Said Sharma: "Our role is to call the risks effectively and transparently, and that's what we have done."
Link to article at www.bostonherald.com.
Alan Clayton-Matthews On the Local Impact of the Debt Deal
August 2, 2011
Northeastern University's economist Alan Clayton-Matthews discusses the local impact of the debt deal with WRKO Audio. To listen, please visit this site.
Rents hit a record high in Hub area
By Jenifer B. McKim, The Boston Globe
July 25, 2011
Boston-area rents are hitting new heights – with the median price recently reaching $1,665 a month – as the vacancy rate falls to the lowest level in almost a decade, new data show. In a region long known for its costly housing, the tight rental market has left many frustrated apartment seekers scrambling to find places they can afford before Sept. 1, the area's traditional changeover date. Facing competition, some renters are taking properties sight unseen. Others, answering ads, find apartments already snatched up before they can get a tour.
"This is the tightest it's been," said Ishay Grinberg, chief executive of RentalBeast.com, a Somerville company that has provided a database of apartments for renters since 2003. "We have a significant number of companies that have zero vacancies."
Record-high rents in the Boston area – loosely defined as the region bounded by Interstate 495 – were reached during the second quarter of this year after recovering from the 2008 financial crisis, which deflated rents around the country, according to Reis Inc., a New York company that tracks rental data. Boston is the fifth-most-expensive rental market in the country, behind Fairfield County in Connecticut, Westchester County in New York, San Francisco, and New York City, according to Reis. The vacancy rate for Boston-area apartments dropped to 4.4 percent in the second quarter of the year, down from 6.2 percent a year earlier, and is the lowest it has been since the end of 2002, according to Reis. RentalBeast.com reports that availability in some neighborhoods such as Beacon Hill and the Back Bay is even tighter – at about 1.2 percent. Rents are also higher, with a two-bedroom in the Back Bay averaging $2,658, compared to $2,316 in Charlestown, according to RentalBeast.com.
Prices are heading up as inventory shrinks, largely because of the stalled housing market, the foreclosure crisis, and the growing graduate student population, said Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University. In Massachusetts, the foreclosure crisis forced many homeowners into apartments, while many young people who normally would purchase homes can't get financing or are concerned home prices will continue to slide. Sales of single-family homes in the state slowed by nearly 20 percent during the first five months of the year, according to the Warren Group, a Boston company that tracks real estate. At the same time, Boston's population of graduate students is growing, while few new housing units are being built. Over the past decade, about 20,000 graduate students have been added to the Boston area, Bluestone said. "We continue to have a serious affordability problem," he said. "Prices stay high and are now at an all-time high level, despite the fact the economy is very weak."
Nancy McCreary, the manager of Hammond Rental Group in Chestnut Hill, said this is good news for landlords, many of whom were not able to raise rents for several years. She said it also will help the real estate market; more investors – seeing a potential for profit – are becoming interested in purchasing rental properties. Unfortunately, she said, some landlords have gone too far with rent hikes – a prerogative owners can exercise at will after a lease expires or if they provide at least 30 days' notice to tenants who lack a written agreement. "I've been getting calls from people who say their landlords have raised their rents astronomically, " she said. "They are upset. They don't know what their recourse is, and they are probably going to move."
Andrea Whitcomb, director of residential leasing for Gibson Sotheby's International Realty in Boston, said her rental listings are down about 20 percent from last year as many prospective home buyers stay put. She is seeing multiple applications for some apartments, submitted by hopeful would-be tenants. "It's not a frenzy, " she said, "but it is definitely easier to rent out an apartment these days." Indeed, many renters have began their apartment searches early, leaving the last-minute types out of luck or forced to expand their searches. Angela Weininger, leasing manager at Coppola Realty Management, which manages 375 units, said the company is completely booked for Sept. 1. "It was not like this last year," she said.
Erin Sagin, 23, a marketing intern and waitress from Miami, recently went out with a real estate agent to look at seven properties. As they were driving around the city, she learned that three had just been leased. Eventually, Sagin decided on an Allston one-bedroom for $1,400 a month. Getting approved, she said, was a challenge. She and her boyfriend had to undergo credit checks, have their parents cosign their lease agreement, and pay first and last month's rent as well as a $1,400 security deposit and a $700 broker's fee. "It's hard for people just coming out of school, " she said. "We don't have any money to begin with. It's virtually impossible to find a job." Tiffany Ma, who is starting graduate school in Cambridge in the fall, feels lucky she was able to lock in a studio for $1,350 a month for Sept. 1. "There is not a lot out there, and the turnover is extremely quick," she said.
As apartments fill up, some seekers, including Janis Pryor, 61, are feeling hopeless. Pryor, who hosts a public affairs show on WUMB radio, said she has rented apartments in Cambridge for decades and has never had such a hard time finding something that would accommodate her and her two cocker spaniels – even though she is willing to pay as much as $2,800 a month. Landlords, enjoying the upper hand, are excessively demanding, she said. One wanted to see her tax returns, while another required the equivalent of four months' rent to start. "The prices are absurd, " she said. "The expectations from landlords are absurd. I'm seriously thinking of leaving the area." Edward Glaeser, a Harvard University economist, said higher rental costs are a burden for tenants, but at the same time a good omen for the region. "It is a positive sign that there is some life in the housing market and some life in the economy," he said.
Bay State sales decline 18% for fifth straight monthly loss
By Brendan Lynch, Boston Herald
July 20, 2011
As Bay State temperatures have rise, year-over-year home sales have dropped, marking a fifth straight month of declines with 18 percent fewer deals in June, according to figures compiled for the Herald. "In Massachusetts, we're doing better, but we're not immune," said Barry Bluestone, director of the Kitty and Michael Dukakis Center for Urban and Regional Policy at Northeastern University. "People are being skittish about the market. When people are nervous, the last thing you buy is a house."
June sales of single-family homes dropped to 4,094 from 4,995 in June 2010, according to the MLS Property Information Network. Sales of condominium units dropped 19 percent to 1,717 compared to 2,131 in the same period a year ago. In May, home sales had fallen 19 percent from a year earlier to 3,050 and condo deals had dropped 22 percent to 1,265. The months of disappointing numbers may be exacerbated by the absence of last year's first-time homebuyer credit, said Laurie Cadigan, president of the Massachusetts Association of Realtors. In 2010, thousands of homebuyers rushed to close by June 30 to take advantage of the credit. "The next several months will be telling, because we'll be able to compare non-tax-credit months," Cadigan said. The only bright spot in the Massachusetts numbers came in median condo prices, which rose 4.9 percent to $300,000.
Meanwhile, the median single-family price dropped to $328,250 from $331,000 in June 2010. Nationally, home construction hit a five-month peak of 629,000 in June, up 16.7 percent from June 2010. But even that news didn't encourage economists, who look for about 1 million home starts as a healthy monthly number. "Production always picks up in the summer," Bluestone said. "Still, everything looks up when you're so far down." Cadigan said if you have a steady job and a good savings history, now is a great time to buy, given the relatively low home prices and interest rates. "No one blows a whistle and says 'OK, we've hit bottom,' "she said. "People who wait are going to say 'I wish I bought last year.' "
Mullan to quit as chief of transit
Move comes after pay raise is denied; has been under fire over Big Dig woes
By Frank Phillips and Noah Bierman, Boston Globe
July 15, 2011
Governor Deval Patrick's embattled transportation secretary, Jeffrey B. Mullan, said he will step down by year's end for personal reasons, a decision he said he conveyed to the administration in May. Mullan confirmed his intentions yesterday after the Globe published an online report about his forthcoming departure. The transportation secretary's allies and administration officials emphasized that he made his decision long before the most recent controversy over the handling of a 110-pound light fixture that fell in a Big Dig tunnel in February.
Word of his departure came five days after the Globe reported that the falling fixture represented a bigger threat to public safety than Mullan had acknowledged and that, within days of its February crash, inspectors found nine other light fixtures that were corroding to the point that they could have also collapsed, but the inspectors did not report them. The Globe report created an uproar that has engulfed Mullan and his agency, already under fire for poorly communicating the depth of the problem. But two people close to Patrick said Mullan, who became secretary in October 2009, said he had asked the governor for a salary increase in May because he was facing a financial strain from his children's school tuition. He argued that his duties had greatly expanded since the 2009 state law that merged all the state's roads, rails, and bridges under his authority.
When Patrick rejected his request, Mullan told him that he needed to return to the private sector and earn a higher salary, the people said. Mullan took a salary cut when he moved from his $160,000-a-year job as director of the now-defunct Massachusetts Turnpike Authority to become Patrick's secretary of transportation in 2009, with a $150,000 salary. Mullan's statement yesterday explained his "intention to transition from the administration within the year for personal reasons." He added that when he discussed the issue with the governor in May, he "made no final decisions regarding my future at that time. While I still intend to transition out this year, I have made no final plans." Patrick, while upset over the way the light fixture problem was handled, has repeatedly expressed confidence in Mullan's leadership of the agency. He reaffirmed that support yesterday.
"Mullan continues to be a creative and effective partner to this administration," the governor said in his own statement. "Whenever he leaves, we will all feel that loss, and his leadership at MassDOT will be missed. I will continue to support Jeff and his family in whatever he decides to do next." Mullan's handling of the light fixture controversy, which he has openly acknowledged was problematic, was an embarrassment for the leader who had been charged with merging the state's transportation bureaucracy. He fired the interim highway director following the February accident, and this week he suspended the Big Dig's top engineer, who told the Globe he had been trained not to leave a paper trail documenting safety concerns out of fear of litigation. Administration officials praise Mullan for the way he has been able to pull together warring factions, fiefdoms, and unions within the sprawling agency. But some critics say it remains a divided workplace.
Mullan's departure is a blow to the Patrick administration, which would be forced to find its fourth transportation secretary since the governor took office in 2007. No other Cabinet position has had as much turnover. "My inclination is that Jeff is next to impossible to replace and the governor ought to give him a raise to keep him," said Frederick P. Salvucci, who served as transportation secretary from 1975 to 1978 and from 1983 to 1990. Salvucci said Mullan, faced with the complex task of merging multiple transportation agencies, "has worked it better than I thought possible." "It's clear from the events of last week that old habits die hard," Salvucci said, "and I don't think the public can afford to lose the momentum that Jeff has created." Mullan's biggest challenge has been restoring public confidence in the agency, which has 4,000 employees, many of whom are still trying to emerge from the cloud created by the Big Dig.
"I think he's done as good a job as a person could have done," said Stephanie Pollack, a transportation policy specialist at Northeastern University. "It's a really tough task."
But even as Mullan has drawn criticism in recent days from some Beacon Hill lawmakers, none have called for his ouster. Senator Robert L. Hedlund, a Weymouth Republican who serves on the Transportation Committee and demanded hearings earlier this week to review Mullan's response to the light fixture hazard, said he believes that Mullan has done a better job than Patrick's previous transportation secretaries. "I'd prefer the guy stay on," Hedlund said. "To have someone come in and try to get up to speed is going to be a problem. I'm not sure they have anyone in-house they can bring in." Members of the Transportation Department's board were also surprised by his announcement. Mullan met with the board Wednesday and did not mention he might leave. Ferdinand Alvaro Jr. said he had never seen anyone so passionate for the job.
"When these commitments are fully funded and implemented, 140,000 people will receive access to job training, 1,000 information technology jobs will be created in rural America, and $3.5 million will be loaned to small businesses in the U.S.," President Clinton said. "Initiatives like these prove that organizations and individuals around the country have the power to take action to spur economic growth."
Board member Elizabeth Levin said "he's been a very good leader in many ways, and I think it's a very difficult period right now." "I support him," she said. "Every season has things that are really strong and there's a little bit of rain and there have been some events here that have been a little bit of rain, but we're going to have the sun again soon."
Clinton Convenes Summit on U.S. Job Creation and Economic Growth
By Carissa Huang and John Sarvey, Dukakis Center staff
July 6, 2011
Former President Bill Clinton brought together over 750 leaders — ranging from business owners to government officials to academics – for two days in Chicago to focus on job creation and economic growth.
Although the United States has technically been out of the recession since June of 2009, job growth has lagged and the unemployment rate remained high – particularly for certain demographic groups.
Constraints on Job Creation Efforts
With interest rates near zero, monetary policy has long run out of room to stimulate the economy through rate reductions. More recently, the Federal Reserve Bank resorted to quantitative easing to blow more life into the economic recovery.
Meanwhile, President Obama and the Congress seem at an impasse regarding additional measures to stimulate economic growth, particularly job creation. In the beginning, Republicans in Congress prevented President Obama's stimulus from being as robust and assertive as the President would have preferred and as many economists said was necessary. The resulting stimulus, constrained by compromise, failed to achieve the full desired effect. Although many economists point out that the reason is because it was too small and too slow, GOP lawmakers use the results to dismiss fiscal policy entirely, and claim that you can't stimulate job creation with additional government spending and tax cuts (at least the kind of tax cuts that were in the stimulus). Along with the newly adopted priority of deficit reduction, GOP congressional leaders remain opposed to any additional stimulus. President Obama is left pursuing other job creation efforts that don't necessarily require Congressional approval.
CGI America – Highlighting New, Innovative Solutions
Through CGI America, President Clinton seeks to help break through the impasse in DC by highlighting or developing new innovative solutions to job creation – not only those requiring government action, but many that can be carried out by the corporate or nonprofit sectors as well: "Innovative job creation initiatives are being implemented across the country, and CGI America will bring together leaders from all sectors to share their ideas so we can replicate and expand the most successful strategies."
Speaking to more than 700 leaders from businesses, nonprofits, and government at the opening session, President Clinton announced three "Commitments to Action" that will be implemented by CGI America participants. These commitments, presented by Kiva, Visa, Onshore Technology Services, and the AFL-CIO, will expand access to microfinance, train workers, and fund infrastructure development.
"When these commitments are fully funded and implemented, 140,000 people will receive access to job training, 1,000 information technology jobs will be created in rural America, and $3.5 million will be loaned to small businesses in the U.S.," President Clinton said. "Initiatives like these prove that organizations and individuals around the country have the power to take action to spur economic growth."
The Clinton Global Initiative
Established in 2005 by President Bill Clinton, the Clinton Global Initiative (CGI) convenes global leaders to devise and implement innovative solutions to some of the world's most pressing challenges (clintonglobalinitiative.org). CGI brings together prestigious world leaders to combat current issues relating to the world's struggling economy and issues. Members of CGI have made over 1,800 Commitments to Action, which have already improved the lives of over 300 million people worldwide.
CGI America is the first Clinton Global Initiative (CGI) meeting focused exclusively on the U.S. The purpose of the event is to develop new ideas for spurring economic growth and to highlight existing programs that can be replicated and scaled.
CGI has researched other countries and their successful economies in order to find the best ways to help the United States. "At CGI America, participants will focus on strengthening American industries, unlocking capital for innovation and entrepreneurship, advancing energy efficiency and smart infrastructure, and educating the next generation for the workforce (Sweet)."
One of the main issues addressed at CGI America was the increasing unemployment rate. The current unemployment rate is negatively affecting the nation's economy, therefore Clinton provided some suggestions to ameliorate the current situation. Clinton stated one way to lower the unemployment rate is to seek out the unemployed workers and provide training for the job openings that are being advertised. Clinton also suggested, "paying unemployed construction workers to upgrade buildings to make them more energy efficient (McCormick)." These ideas could be costly depending on a company's willingness to put in extra effort to increase their workers. Clinton had several ideas for improvement, but whether they could actually be executed is questionable.
Working Groups
Participants of CGI America were organized into distinct working groups:
- Green Building
- Healthcare Workforce
- Infrastructure
- Manufacturing
- Rural Economy
- Service Corps
- Start-ups
- STEM Education
- Veterans
- Workforce Development
Dukakis Center and Manufacturing
Barry Bluestone, Director of the Dukakis Center for Urban and Regional Policy, was invited to serve as a co-leader of the working group on manufacturing. With our 2007 "Staying Power" report on the manufacturing sector in Massachusetts, the Dukakis Center was one of the first to call attention to the manufacturing sector and to challenge recent conventional thinking. Many had begun to believe that manufacturing was either already gone to other nations or quickly on its way out of existence in America. Some felt there was nothing we could do as long as labor was cheaper in other parts of the world. Others felt there was nothing we should do, as long as we held on to the creative, innovative jobs and high-end management and service-related jobs.
Contrasting this conventional thinking, the U.S. still remains the number one manufacturing economy in the world. In our Staying Power report, we discovered that the manufacturing firms remaining in Massachusetts are likely to stay. We are not on a path down a trend line toward zero. Yet there are some specific challenges faced by manufacturers, and therefore opportunities for efforts to help retain and grow manufacturing concerns in Massachusetts and the United States.
The Dukakis Center has been working closely with the Patrick Administration in Massachusetts and the Obama Administration on new efforts to strengthen and grow our manufacturing base. Both President Obama and Governor Patrick have launched advanced manufacturing initiatives designed to reinvigorate manufacturing.
Dukakis Center Assists City of Lynn in an Economic Development Self Assessment
By Carissa Huang and Nancy Lee, Dukakis Center Staff
July 2011
On June 27, Barry Bluestone, Director of the Dukakis Center, and two members of the Dukakis Center staff, Nancy Lee and Daniel Spiess, assisted the City of Lynn in facilitating the city's participation in the Economic Development Self Assessment Tool (EDSAT). The EDSAT is an online questionnaire of over 200 questions developed by the Dukakis Center to help cities and towns identify their strengths and weaknesses for attracting new businesses and growing existing ones. Local Economic Development is one of six Focus Areas in which the Dukakis Center conducts interdisciplinary research, in collaboration with civic leaders and scholars to identify and implement real solutions to the critical challenges facing urban areas throughout Greater Boston, the Commonwealth, and the nation.
Success with the City of Lynn Bluestone led the 4-hour facilitation that resulted in a candid and rich discussion among the participants that included Mayor Judith Flanagan Kennedy and over 25 business and civic leaders from the community. Lynn's participation in EDSAT was driven and co-sponsored by the Lynn Area Chamber of Commerce (LACC), the City of Lynn, and the Lynn Economic Development and Industrial Corporation (EDIC). Leslie Gould, Executive Director of the LACC, requested Bluestone and his team facilitate the self assessment so that Lynn could get the most out of the process. "The process went beautifully. The participants were engaged and I could see them making connections about the many aspects of what it takes to bring new businesses to Lynn, "says Bluestone. "Not only was it a successful meeting for the City of Lynn, this was the first time my team and I have seen this process in action. We advise municipalities to convene a group such as this and based on what we've seen and heard here, we will continue refine and improve the EDSAT process."
Results The results of Lynn's self assessment will be finalized in a few weeks. Bluestone and his team will return to Lynn and present the results to the same group of participants and assist them in devising realistic strategies to focus on creating a robust and resilient local economy.
EDSAT and a Partnership with the National League of Cities The Dukakis Center and the National League of Cities (NLC) formed a close working partnership in March 2010 to rollout the EDSAT nationwide. At the time, use of the self assessment was concentrated in the Northeast, but its functions are not limited by geography. Bluestone explains, "The location factors that are important to businesses are the same regardless of geography. One example is time-to-market. In a global economy, businesses want to locate in a municipality that allows them to get their products to market as soon as possible." For additional information about EDSAT please click here.
Dukakis on Mitt Romney: 'Smart & slippery'
Interviewed by Eliot Spitzer, In the Arena on CNN
June 6, 2011
Former Massachussetts governor – and former presidential candidate – Michael Dukakis tells Eliot that former Gov. Mitt Romney is the proverbial weather vane. Dukakis says, "He's smart, he's slick–unfortuntately, he's slippery."
Click here to watch the video.
See the entire interview In The Arena, Monday, June 6, 2011 at 8pm ET
Editor's Note: In The Arena has reached out to the Romney campaign for a response and we will post it once it arrives.
Making Things in Massachusetts
By Rachel Slade, Boston Magazine
June 3, 2011
We've spent a lot of time at Boston Home tracking down local manufacturers of residential products. There are plenty of artisans (that's the good news), but it's harder to find big shops cranking out multiples — you know, the way they used to do it around here.
Which is why I was extremely intrigued when I got a flier from DIGMA (Design Industry Group of Massachusetts) announcing a conference called Mass. Made, exploring that state of local industry. Bracing myself for bad news, I took the train over to the Gillette World Shaving Headquarters in South Boston where, you might be surprised to hear, they still make razors. I mean, it's a real factory, complete with emergency warnings, hardhats, and workers.
The conference kicked off with a glowing report from Northeastern professor Barry Bluestone (who presciently authored The Deindustrialization of America in 1982) and whose recent study revealed that manufacturing is alive and well in this state, increasing revenue over the decade and holding strong as an economic driver. Further, Bluestone maintains, as labor and transportation costs increase overseas, things are only going to get better right here. That's what I've been saying, but I'm not a highfalutin' prof.
Then followed presentations by those brave manufacturers themselves including Kathleen Fulton, co-founder of Taza Chocolates in Somerville. Taza is the only company in the US to offer organic, stone ground, direct trade chocolate — and that's the key to their success. Fulton (who, against all laws of chocolate making, is very thin) explains that if you're going to compete on the home turf, you won't win on price, so be sure to provide a niche product that no one else offers. And just to drive her point home, she had samples of her orange, chipotle, ginger, and cacao puro bars on-hand. Eat up, kids, and enjoy that excellent Somerville stock.
Made right here!
Another highlight was third-generation sheet manufacturer George Matouk. I kind of love his story. Based in Fall River, his grandfather's company was heading for certain doom 1999 as a contract manufacturer, selling to Bed, Bath, and Beyond and the like. He couldn't offer competitive pricing AND pay his employees, so it looked like the end was nigh. As a fresh Columbia MBA, Matouk the younger proposed plan B: go upscale, create a designer brand, and demand high prices for their unique product. Now Matouk is doing fine, offering high-end bedding and towels in boutiques around the country. And their stuff is really classy.
Now I'm going to get all political on you. While those "innovators" in Kendall are chasing down the next Facebook or finding new ways to trick us into buying more crap, maybe a few will realize that if we don't make and sell actual stuff, there won't be much money to move around the board. Manufacturing is messy business — there are a lot of moving parts and you can't just park yourself in front of a computer all day — but it's absolutely necessary. Here's to producing tangible goods!
Make Working Longer Worth It
Career reinvention may be more of a necessity than a virtue for older Americans, but working longer can make a difference beyond your bottom line.
By Mark Miller, Morningstar.com
June 2, 2011
Career reinvention was a big buzzword among many baby boomers even before the economy crashed in 2008. Surveys showed a large majority of the biggest generation aspired to launch new careers in their 50s and 60s–often in fields where they hoped to make a difference–teaching, health care, or the nonprofit world.
Tough new economic realities have transformed career reinvention from a virtue into a necessity for millions of older Americans who aren't ready to retire or simply can't afford to quit working. For example, just 23% of Americans age 50-59 have saved more than $250,000 toward retirement, according to the 12th Annual Transamerica Retirement Survey.
But hard times have not forced many older boomers to give up their dreams of second careers with meaning. The aspirations are tied to the broader idea that our traditional notion of retirement needs reinvention–a concept that many retirement gurus have struggled to label, so far without much success. The name that comes closest, in my view: the encore career.
The phrase was coined by Civic Ventures, a California-based nonprofit think tank and incubator for social entrepreneurship led by Marc Freedman, author of the new book The Big Shift: Navigating The New Stage Beyond Midlife (Public Affairs, 2011). Freedman is one of the nation's leading thinkers on how America can redefine the second half of life with a sense of social and individual renewal.
Civic Ventures has launched a movement around encore careers with two main themes: second careers with meaning, and social entrepreneurship. It operates a social networking site, local events all over the country, and a high-profile annual award program called the Purpose Prize. Now in its sixth year, the award recognizes older career trailblazers who have demonstrated creative and effective work tackling social problems. It has evolved into a sort of Oscar for social entrepreneurship. Last year's winners were chosen from 1,400 nominees; five winners received $100,000 prizes, with another five recipients getting $50,000 awards.
At a time when the jobs picture looks bleak, Freedman remains optimistic about the potential contributions of older workers. The jobless rate for workers over age 55 stood at 6.5% in April–considerably lower than its peak of 7.3% last August, and much lower than the overall 9% rate. But older unemployed workers are having a much more difficult time finding new work. Last month, job searches required 44.6 weeks for workers age 55-64, much higher than for younger workers.
Freedman's new book looks far beyond the immediate economic crisis. With people living healthier, longer lives, he argues for creating a new map that includes a new stage between the middle years and anything resembling old age. "People who are coming up to that juncture right now are realizing they are not going to be old for 20 years, and probably can't sustain a retirement that's decades in duration," he says. "So they're thinking about this chapter in a new way."
But more is at stake than how boomers will spend their time. Freedman sees encore careers as a key solution to the challenges we face as the population ages. "We've got people who have an enormous amount of experience, and I think for the first time in our history in these big numbers, the time to do something with it," he says. Productive older workers can have a positive impact as taxpayers and by lightening the demands on entitlement programs such as Social Security and Medicare.
Freedman's book urges adoption of policy ideas to help people save and train for midlife career transitions–like tax-advantaged Individual Purpose Accounts, flexible access to Social Security benefits, and new approaches to education and national service. (To learn more, click to see my recent video interview with Freedman.)
Promising Post-Recession Careers
Can the encore career movement have a significant impact in a job-starved economy?
Civic Ventures took a stab at answering that question last year with a research report it commissioned that sought to identify the most promising post-recession careers.
The report, by economist Barry Bluestone of Northeastern University in Boston, was based on long-range labor force projections by the U.S. Department of Labor's Bureau of Labor Statistics, which point toward worker shortages in key social sector jobs. Bluestone predicts that within the next eight years, there could be at least 5 million job vacancies in the United States, nearly half of them in social sector jobs in education, health-care, government, and nonprofit organizations.
Even if boomers retire at the same rate and age as previous generations, the echo boomer demographic now coming of age will be too small to fill all the expected openings, he argues. That will create more demand for older workers to stay on the job–something baby boomers have said all along they intend to do.
"We're going to see a remarkable reshaping of our labor force," Bluestone says. "The rate of labor force participation by the 55-plus population is going to be much higher, and older workers will represent a much higher percentage of the overall workforce."
Bluestone's report envisions nearly 75% of 55- to 64-year-olds working in 2018, far higher than the 65% who were working in 2008. Likewise, he thinks 30% of Americans age 65-74 could be working in 2018, much higher than the current rate of 25%.
Bluestone forecasts that the fast-growing encore job categories will include primary, secondary and special education teachers, registered nurses, home health aids, and medical assistants.
Total Social/Government Sector —
Projected Encore Career Growth 2008-2018 (in thousands)
|Primary, Secondary, and Special Education Teachers
|Registered Nurses
|Home Health Aides
|Personal and Home Care Aides
|Nursing Aides, Orderlies, and Attendants
|Medical Assistants
|Licensed Practical and Licensed Vocational Nurses
|Business Operations Specialists
|General and Operations Managers
|Child Care Workers
|Teacher Assistants
|Receptionists and Information Clerks
|Medical and Health Service Managers
|Social and Human Service Assistants
|Maids and Housekeeping Cleaners
|Educational, Vocational, and School Counselors
|Computer Support Specialists
|Office Clerks, General
|Managers, All Other
|Social and Community Service Managers
|Mental Health and Substance Abuse Social Workers
|Accountants and Auditors
|Rehabilitation Counselors
|Medical and Public Health Social Workers
|Bookkeeping, Accounting, and Auditing Clerks
|Administrative Services Managers
|Computer Systems Analysts
|Human Resources, Trading, Labor Relations Specialists
|Cooks, Institution and Cafeteria
Source: Lacey and Wright, 'Occupational Employment Projections to 2018,' Analysis of Labor Market Assessment Tool
Prize-Winning Social Entrepreneurs
The Purpose Prize award provides a high-profile storytelling venue and showcase for courageous and effective older social entrepreneurs. Here are two recent examples of award-winners; read and watch more videos on social entrepreneurship at the Purpose Prize website.
Barry Childs
Barry Childs grew up in Tanzania, where his British father worked as a botanist. Barry left the country as a teenager in 1969 for college and a successful corporate career spanning three decades, working all over the world for ExxonMobil (XOM) and Abbott Laboratories (ABT).
In 1998, Childs returned for the first time to the high mountain villages in Tanzania that he remembered from his childhood. The country was in many ways the same beautiful, peaceful place he remembered. "What hadn't changed were the people. They were wonderful and welcoming," says Childs. "What had changed was the poverty and HIV/AIDS. The combination was devastating."
Childs retired early from Abbott Laboratories at age 55 to launch Africa Bridge, a nonprofit that works to improve economic conditions in Tanzanian villages and to provide direct support to children orphaned by the HIV/AIDS crisis.
Africa Bridge, whose U.S. headquarters are based near Portland, Ore., has set up 28 income-generating farming cooperatives for caregivers and built classrooms and clinics for thousands of children. In 2009 alone, the organization implemented comprehensive care plans–covering housing, clothing and food, social and legal support, and schooling–for 3,557 children.
Tim Will
Tim Will and his wife Eleanor moved to rural North Carolina a few years ago hoping to pursue a decades-old dream to become organic farmers. Tim had spent his career working for big telecommunications companies as a systems analyst, and more recently had taught history and geography in an urban Miami high school.
But Will unexpectedly found himself leading a unique effort to transform a region hit hard by globalization into an Internet-fueled center for locally-grown organic food. The initiative is taking residents back to their agricultural roots–and putting them back to work.
More Encore Career and Social Entrepreneurship Resources
- Bridgestar is a resource organization for nonprofit groups and individuals interested in making a transition from for-profit to nonprofit work. The focus is on management-level positions.
- CommonGood Careers is a resource for employers and job seekers in the world of social entrepreneurship.
- Encore.org, the social networking site operated by Civic Ventures, offers in-depth resources on encore careers.
- Experience Corps recruits adults over age 55 to mentor and tutor elementary students, with a focus on developing reading skills.
- Idealist.org offers job postings in a wide array of nonprofit jobs and volunteer opportunities all over the world.
- FedExperience Transitions to Government, a project of the Partnership for Public Service, recruits older workers for federal government positions. A database listing available federal positions can be found at USAJobs.gov.
- Taproot Foundation recruits marketing, HR, and IT professionals for pro bono projects at nonprofit groups–a great way to test the waters.
Mark Miller is a retirement expert and author of The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work and Living. The views expressed in this article do not necessarily reflect the views of Morningstar.com.
Link to the original article at morningstar.com.
Boston-area home prices off 2.7% in a year
But other metro areas see even steeper losses, blamed on overbuilding
By Jenifer B. McKim, The Boston Globe
June 1, 2011
Boston-area home values dropped in March as another downturn in sales pushed prices across the country to new lows since the US housing market collapsed in 2006.
Home prices in the region fell 2.7 percent, compared to March 2010 prices, according to the S&P/Case-Shiller Home Price Indices, which measure repeat home sales and are considered by many to be the best industry markers for real estate.
Other metropolitan areas suffered deeper losses. Minneapolis fell 10 percent in one year, Charlotte, N.C., dropped 6.8 percent, and Miami was down 6 percent, according to Case-Shiller.
For Boston, March was the eighth straight month that housing prices declined. Median prices remain above the lows registered when the Boston market hit bottom in 2009, however.
Barry Bluestone, dean of Northeastern University's School of Public Policy and Urban Affairs, said the Boston-area market has fared better than others because there was less overbuilding. Elsewhere, overbuilding often led to swaths of houses falling into foreclosure.
"We are in a better place," Bluestone said. "People haven't loss as much value."
Many housing specialists say the numbers for Boston and the United States are disappointing, but not cause for alarm. Harvard University economics professor Edward Glaeser believes home values are slowly stabilizing, not having a double dip downward.
"It's correct to be mildly depressed," he said. "It is incorrect to be panicking. We are bumping along the bottom."
Paul S. Willen, a senior economist with the Federal Reserve Bank of Boston, doesn't expect prices to spiral downward, either. Buyers who plan to live in a property for at least five years can still take advantage of relatively lower prices and low interest rates, he said.
"If you are thinking that far into the future and you are ready for homeownership and you don't expect to have to move at the drop of a hat, it is good time to buy," he said.
The Boston-area housing market experienced a smaller boom and bust than the national average — with values currently down about 19 percent from their peak, compared to a 33 percent drop for the 20 major cities tracked by Case-Shiller. The median price for a single-family home in Massachusetts is currently $274,000, according to Warren Group, a Boston company that also tracks real estate.
In 2009, home values began to swell, propped up by eager buyers armed with a now-expired tax credit that gave them up to $8,000 in incentives.
The tax credit brought many additional buyers into the market, but when it ended last year, sales slumped — sending home values down again.
Housing prices also are being depressed by the many foreclosed homes on the market, said Nicolas Retsinas, a real estate professor at Harvard Business School.
"Until we get through this foreclosure quagmire," Retsinas said, "you are going to continue to have downward price pressure."
Jenifer B. McKim can be reached at email@example.com.
To view the original article online, click here.
Companies with the Most Older Workers
These Fortune 500 companies employ the most workers age 50 and over
By Emily Brandon, US News and World Report
May 31, 2011
As baby boomers begin to approach traditional retirement age, the workforce is aging rapidly. But not all industries are aging at the same rate. Some companies employ significantly more older workers than others.
Just over a quarter (26 percent) of employees at Fortune 500 companies are age 50 or older, according to a new RetirementJobs.com study. However, the proportion of older workers at individual Fortune 500 companies ranges from 6 percent at AECOM Technology to 39 percent at American Airlines, the analysis of public records and employer surveys found. Airlines, utilities, and insurance companies generally have the largest proportion of older workers, while food and beverage companies typically employ primarily young employees.
Just because a company employs a large number of older workers doesn't necessarily mean it's hiring older workers. In many cases, companies have long-tenured employees who have aged on the job, says Bill Coleman, vice president of research and certification at RetirementJobs.com and author of the report. But the study "does give a sense of where older workers are and where many of them would be most comfortable," he says.
When a company has a large proportion of workers in a given peer group, workers of the same age may be more likely to fit in with the culture of the organization. "Consider this as a way of vetting or considering the likelihood you would get a job and be comfortable in the environment," says Coleman. "[These employers] understand older people and their value and benefits and they are not favoring younger workers." Many of the organizations with a lot of older workers have a strong union presence, which could help protect workers with the longest job tenure from layoffs.
"When they have had layoffs and they use seniority as the basis for that, it will appear that they have a preference for older workers," says Barry Bluestone, a political economy professor and director of the Dukakis Center for Urban and Regional Policy at Northeastern University, who is not affiliated with the RetirementJobs study.
Forest products company Weyerhaeuser, where approximately 37 percent of employees are age 50 or older, has made a conscious effort to retain older workers. "We view it as a competitive advantage to have people with more experience because there is a great deal of knowledge and expertise that goes into our field," says Bruce Amundson, a spokesperson for Weyerhaeuser. "We have developed retention plans and benefits packages that we offer to incent people to stay in the workforce longer." However, the company also realizes that the baby boomers will eventually retire and will have to be to be replaced by younger workers. "There are opportunities for a young, high-potential person to come in here and see their career path move up much quicker than if they were among peers their own age group," Amundson says.
Companies without many older workers aren't necessarily making a deliberate effort not to hire them, says Coleman. "The reason those companies rate low on the list is because of the nature of what they do or the nature of their organizations," he says. "Places like Goldman Sachs have large numbers of young employees because they bring in large pools of people just out of college or just out of business school." Logistics company C.H. Robinson Worldwide, where just 12 percent of employees are age 50 or older, hired 450 new employees in the first quarter of this year. "We target entry-level, recent college graduates because our pay and positions are entry-level, but we'll hire anyone that has an interest in sales," says Eric Mesenburg, director of recruiting for C.H. Robinson Worldwide. "We typically hire entry-level and then promote from within."
Younger employees could use this list to find companies where older workers will be retiring, which means openings for advancement. "Firms see their workforce aging and they want to make sure they have a good team behind them," says Bluestone. However, older employees increasingly need and want to continue to work, so there is no guarantee that baby boomers will retire in the near future. "There are probably going to be more people leaving those firms where the prevailing retirement plan is a defined-benefit pension rather than a 401(k)," says Carl Van Horn, a public policy professor and director of the John J. Heldrich Center for Workforce Development at Rutgers University. "When you have the presence of a strong defined-benefit pension plan they have a financial incentive to retire that a person with a defined contribution plan doesn't have."
Here are the Fortune 500 companies that employ the most and least older workers:
Fortune 500 Companies with the Most Older Workers
1. American Airlines; 39.157 percent of employees are age 50 and older
2. Eastman Kodak; 38.420 percent
3. TravelCenters of America; 38.387 percent
4. Delta Air Lines; 37.688 percent
5. United Airlines; 37.648 percent
6. Weyerhaeuser; 36.877 percent
7. Edison International; 36.225 percent
8. Northeast Utilities; 36.127 percent
9. Smithfield Foods; 35.948 percent
10. United Services Automobile Association; 35.459 percent
Fortune 500 Companies with the Least Older Workers
1. AECOM Technology; 6.041 percent of employees age 50 and older
2. Auto-Owners Insurance; 9.802 percent
3. Goldman Sachs Group; 11.331 percent
4. C.H. Robinson Worldwide; 12.042 percent
5. Google; 12.855 percent
6. Electronic Arts; 13.620 percent
7. Freeport-McMoRan Copper & Gold; 14.216 percent
8. Chesapeake Energy; 14.269 percent
9. Nordstrom; 14.269 percent
10. Consol Energy; 14.278 percent
Source: RetirementJobs.com.
To view the original article online, click here.
A manufacturing revival:
For some high-tech companies, making products in Massachusetts is making more sense
By Kyle Alspach, Boston Business Journal
May 27, 2011
On the assembly line at Kiva Systems Inc. in North Reading, the company's manufacturing team starts with a blank chassis, adds motors, wheels and other parts, and finally installs firmware and a cover.
The end product: a mobile robot, ready to assist warehouse workers with filling online retail orders.
Kiva might have chosen to do the work in California, where the company was founded, or in some other state or country. But the company chose to locate in Massachusetts, and this month completed a major expansion to allow for more production.
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State's jobless rate hits a two-year low
But economists remain cautious
By Megan Woolhouse, The Boston Globe
May 20, 2011
The Massachusetts economy continued to show surprising strength as the state unemployment rate hit a two-year low in April and employers added nearly 20,000 new jobs, officials reported yesterday.
The April jobless rate was 7.8 percent, down from 8 percent in March, according to the Massachusetts Executive Office of Labor and Workforce Development. Unemployment here remains well below the national average of 8.8 percent.
And the net increase in new jobs – 19,500 in April – represented the seventh consecutive month employers added to their payrolls.
The April employment report follows a report two weeks ago that the economy in Massachu setts grew at a much faster pace in the first quarter of this year than in the nation as a whole.
But a local economist cautioned that job conditions may not be as robust as they appear, and reiterated that Massachusetts is more likely to experience slower growth in the near future.
Alan Clayton-Matthews, a Northeastern University economics professor, questioned whether some of the new hiring is seasonal or involves temporary jobs that could disappear by fall.
"It's a strong employment report, but not as strong as it looks on its face," he said. "This is an economy that, like the nation's, is still recovering and will be for a couple years."
Another reason for caution on the April numbers: Other employment figures that once painted a brighter picture of the Massachusetts economy were recently revised by the US government, showing the state gained fewer new jobs than first thought as it emerged from the recession.
Nonetheless, the April report shows new jobs added throughout the economy, with Massachusetts companies in the leisure and hospitality sector adding 5,600 jobs, while the trade, transportation, and utilities and retail sectors each gained 4,200 jobs. Education and health services companies added 2,700 jobs. Meanwhile, jobs in government fell by 1,000.
One of the beneficiaries is Thomas Lindstrom, a 46-year-old Army veteran from New Bedford who is starting a new job at a nursing home after searching for work for two years. Trained in electronics in the Army, Lindstrom undertook a worker-retraining course and is now certified as a nursing assistant.
"I feel great; I'm standing on top of the world," Lindstrom said.
Acme Packet Inc., a Bedford company that sells Internet voice and video delivery systems, yesterday said it plans to hire 180 employees in Massachusetts this year. The company recently reported that revenue surged 45 percent from last year, and profit during the same period grew 65 percent.
And in Cambridge, the technology company Pegasystems Inc., said it will hire 100 new employees this year – including 75 in Massachusetts.
The original article can be found at www.boston.com.
By Claude Fischer, Professor of Sociology, UC Berkeley, The Berkeley Blog
May 19, 2011
Owning one's own home seems vital to being an American; it is intimately tied to our understanding of the "American Dream." The headline of a 2008 Newsweek story on the foreclosure crisis blared "The American Dream – Only This Time in Reverse." When NPR recently broadcast a story that rates of home ownership had dropped from a peak of 69% in 2005 to 66%, the voices on the radio carried the melancholy tone of loss.
However, the dream of home ownership, complete with a white picket fence, was not always considered the ultimate test of making it in America. There was a time when many affluent Americans preferred to rent, leaving home-buying to striving immigrants. Then, in the mid-twentieth century, Uncle Sam helped make home ownership the American Dream.
Home Sweet Rental
In 2002, President George W. Bush launched an effort to encourage home ownership among minorities with a speech in which he said,
[W]e want everybody in America to own their own home. . . . an ownership society is a compassionate society. . . . Yet we have a problem . . . because fewer than half of the Hispanics and half the African Americans own the home. . . . All of us here in America should believe, and I think we do, that we should be . . . a nation of owners. Owning something is freedom . . . And ownership of a home helps bring stability to neighborhoods. . . . It brings pride to people . . . It helps people build up their own individual portfolio . . . it's an important part of America. . . . And so we've called upon Congress to set up what's called the American Dream Down Payment Fund . . .
Bush was one of many presidents, Republican and Democratic, who extolled and promoted greater home ownership as part of the American Dream.
The connection was not, however, so apparent earlier in American history. To be sure, for generations most Americans sought to own their own farms. That so many managed to do so was critical in making America the society it is today. And farms usually come with homes. But owning a home apart from a farm was not nearly as common. In the late 19th and early 20th century (when we start getting some hard evidence), only about one-third of nonfarm homes were occupied by people who owned them. Most Americans were renters.
Notably, middle-class Americans were not all that interested in home owning. Buying a home in those days required tying up a lot of cash in a building. Mortgages, even if available, were short-term and covered half or less of the cost. Home values actually fell from the 1880s into the 1920s (see Schiller chart near end of this post), so it was not a good investment. Indeed, houses just wore out. Working-class and immigrant Americans, on the other hand, were much likelier to buy once they could scrape together the money, which was usually not until middle age. For them, having a home was a source of some security – at least one had a roof overhead – and by taking in boarders, tending a vegetable garden, and perhaps having a goat or two, a house could be turned into a way of earning income.
Then, American home ownership took off. The graph below shows the trends: a drop in the percentage of nonfarm/urban homes that were owner-occupied during the Great Depression but then a boom in ownership from 1940 to 1960. Rates stayed flat through about 2000. After that, not shown, home ownership ticked up a few points to a high in 2005. What happened? What made urban home ownership the norm instead of the exception? What made it part of becoming an adult? Of the American Dream?
Uncle Sam's Housing Service
Part of what happened was growing affluence; average Americans got wealthier. But that was far from the whole story. In the Depression, the New Deal government of FDR tried all sorts of ways to stimulate the economy. One was to help spur home-buying (which also fit into its social justice mission of uplifting the working class). The Feds did so in various ways. Critical was the creation of agencies to insure or re-purchase mortgages so that banks became willing to extend 30-year loans at low interest rates; another was to inject money directly into housing or land preparation. Later, the G.I. Bill helped put millions of young American families into their own homes. House-building, especially in the suburbs, was indirectly subsidized by the vast interstate highway system started in the 1950s and all sorts of federal funding for new community-building projects like sewer systems and electrification.
Home ownership became much more common and part of the settling-down stage of life. The expanding demand for homes, the increasing tendency to "trade up," the continuing flow of tax subsidies (including, for high-income families, the mortgage interest deduction) all helped keep prices at least level from the end of the War to the 1990s – as can be seen in the Shiller data below. Then came the housing bubble, the mortgage mania, and the collapse we are struggling with now.
Political economist Barry Bluestone recently explained to a meeting of realtors that their industry rested heavily on government assistance. Federal financial backstopping, regulation, and housing subsidies directly made the home buying and selling business lucrative. More generally, the federal systems of retirement pensions, elderly healthcare, unemployment insurance, union protections, college loans, and the like made a large American middle class with the money to buy houses possible. It helped create what we now take for granted, what we now worry is under threat: the American Dream home.
Claude Fischer can be reached at firstname.lastname@example.com.
The original article can be found at http://blogs.berkeley.edu/2011/05/19/home-owning-dreams/.
Foreclosure petitions rise for 2d month
But for year so far, Mass. figure down
By Jenifer B. McKim, The Boston Globe
May 18, 2011
In April lenders began the process of seizing Massachusetts homes at a faster rate for the second straight month, a sign that foreclosures could rise again, according to some housing specialists.
The 1,192 foreclosure petitions filed last month marked a nearly 14 percent increase over March and was the highest monthly total since September, according to data released yesterday by Warren Group, a Boston company that tracks local real estate. A petition is typically triggered when a homeowner is more than three months behind on mortgage payments, and is the first step in the foreclosure process.
For the year, however, petitions are still down 58.6 percent compared with the first four months of 2010, Warren Group said.
Property takings across the United States slowed last year following widespread concerns about flawed and illegal foreclosures, causing major lenders such as Bank of America Corp. to halt proceedings temporarily while they examined their internal procedures. But economists were quick to warn that the lull did nothing to solve the nation's foreclosure crisis, which has crippled the housing market.
"Banks are picking up their foreclosure activity," said Nadine Cohen, a managing attorney with the Greater Boston Legal Services, a nonprofit that works with low-income clients. "The economy is never going to improve until we deal with the foreclosure crisis."
Melonie Griffiths, a community organizer with the Jamaica Plain housing advocacy group City Life/Vida Urbana said there are indications that lenders are starting to process more foreclosures locally. In particular, she said, many homeowners are coming to community meetings to complain that they can't get lenders to approve loan modi fications that would help them keep their homes.
"They can't get modifications that work," Griffiths said.
Even as petitions rise, foreclosure deeds – indicating a completed home seizure – fell last month.
There were 518 in April, a 6.2 percent decline from March and a 62.3 percent slide from the 1,375 recorded in April 2010. Through the first four months of 2011, there have been 2,111 deeds recorded, a 56.2 percent decrease from January through April of last year.
Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University, said it is too early to tell whether a two-month increase in petitions will have longer-term implications. The local economy is starting to improve, he said, something which should help limit the number of foreclosures in Massachusetts. Instead of a warning, Bluestone saw good news in yesterday's foreclosure data.
"During the rest of this year we should continue to see foreclosures at a reasonable low level," said Bluestone. "It is another piece of statistical evidence which gives me some greater confidence in the Massachusetts economy."
Paul Willen, a senior economist with the Federal Reserve Bank of Boston, also expects housing news to improve.
"I anticipate the numbers will get better as the recovery solidifies and house prices bottom out," said Willen. "I don't think it means we are about to go into a wave of foreclosures."
Jenifer B. McKim can be reached at email@example.com.
The original article can be found athttp://www.boston.com/business/articles/2011/05/18/foreclosure_petitions_in_mass_up_for_2d_month/.
Shoppers feel bite of higher food costs
By Thomas Grillo, Boston Herald
May 16, 2011
Despite a modest dip in some food prices over last month, shoppers say they're not feeling any relief in what has become a chronically painful trip to the supermarket, and experts aren't surprised – the overall trend is upward.
"Decrease?" said Mark Elliott, an ironworker from Dorchester who was shopping yesterday at Stop & Shop in South Bay. "I don't think so. Food prices are still wicked outrageous. There's pain everywhere – at the pumps and the grocery store."
The Herald's Inflation Watch, a sampling of staples from four supermarkets, found average prices fell 96 cents over a month ago, to about the same level they were in March. A dozen items, including bread, milk, eggs, chicken and coffee, that cost an average of $35.32 in April, cost $34.98 last month, a less than 1 percent drop. The survey was conducted at Stop & Shop, Shaw's and Roche Brothers in Boston and Market Basket's Somerville store.
Nine out of 10 Americans say they are paying more for groceries now than they were a year ago, according to a Rasmussen Reports poll. Ninety-one percent of those surveyed said they were spending more on groceries now than last year. That was up from 87 percent in April. The Bureau of Labor Statistics reports food prices are up by 3.2 percent for the 12-month period ending in April while gasoline prices soared by 33 percent.
Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University, said despite the Herald survey results, it's clear that food prices in general are rising. The factors fueling the record high prices are a combination of bad weather in food producing regions, soaring transportation costs and global demand for food.
"People are worried that their paychecks are not going as far as they did six months or a year ago," he said. "Consumers are hurting from a combination of sticker shock at the pumps and supermarkets. It's a race between rising prices and slower growing wages."
Charlene Brown, a first-grade teacher in Dorchester, said, "I'm paying more for food than I did last year. We're eating at home more and eating out less."
Lori Hurley of Dorchester, shopping with her 1-year-old son, Chase, said her $50 shopping trip is up to $75. "I buy less produce now or only the items on sale. Red peppers are $4 a pound this week, so I chose green peppers instead."
Thomas Grillo can be reached at firstname.lastname@example.com
The original article can be found athttp://news.bostonherald.com/news/regional/view/2011_0516shoppers_feel_bite_of_higher_food_costs.
Labor's love lost
How public sector unions became the bête noire of uneasy times
By Michael Jonas, Commonwealth Magazine
Spring 2011
When it comes to rising anger toward public sector unions, Wisconsin's hard-charging Republican governor, Scott Walker, has taken the battle to a new – and caustic – level. But think of Barry Bluestone as the canary in the coal mine. Nearly two years ago, Bluestone penned an op-ed in the Boston Globe warning of a growing backlash against public sector unions that resist everything from changes in generous health care and retirement benefits to reform of outmoded teachers contracts. That backlash (along with the backlash to the backlash) is now in full fury, as cash-strapped states and local government struggle to maintain services, while education reform advocates target hidebound union contracts that they say hold back schools.
It's not just that Bluestone, dean of the school of social science at Northeastern University, was ahead of the curve in warning public sector unions to change their ways or see their fortunes and public support slip further. It's that he was such an unlikely guy to deliver this message. The liberal-leaning economist is not only a believer in the union cause, his late father, Irving Bluestone, spent 40 years as a top United Auto Workers union official.
The industrial union movement "is what converted an insecure working class into a more secure middle class," says Bluestone. But public sector unions seem to be turning that idea on its head. With taxpayers fretting over cuts to services and schools, the squeeze that public sector unions are putting on public coffers can make them look more like a threat to the middle class than a guardian of its security and quality of life.
In the labor movement's heyday in the 1950s, when one-third of all US workers were union members, the union surge caused a rising tide that lifted all boats, as non-union employers felt pressure to increase wages and improve benefits. But today just 11.9 percent of the US workforce belongs to a union.
What's more, with almost all the falloff in union membership occurring in the private sector, public sector workers now make up a majority of all union members. That is a dramatic change, and it has turned union battles into a zero-sum scramble over scarce public dollars, where union gains are often seen as a community's loss.
"The problem today with public-sector unions is too many taxpayers, too many cities, too many parents of school children see unions not as fighting for them but as only defending their own members," says Bluestone. That view is reflected in policy shifts by even union-friendly liberals like Gov. Deval Patrick, who has significantly altered his stand on issues such as charter schools and the need to force savings in municipal health care costs.
Labor leaders say the assault on public sector unions is simply driving a race to the bottom — a deterioration of public workers' benefits that will only put them on the same shaky ground as those in the private sector. While some, like Wisconsin's anti-union governor, are seizing on the budget stress to try to drive a stake through the heart of labor, Bluestone fervently hopes unions can save themselves. Nearly 20 years ago, he coauthored a book with his father, Negotiating the Future: A Labor Perspective on American Business, that may help point the way. They argued that traditional, adversarial negotiations over labor contracts, which imply conflicting interests, should give way to "enterprise compacts," agreements that build off of shared interests.
There are some glimmers of hope. Bluestone hails the recent election of Paul Toner as the new president of the Massachusetts Teachers Association. In contrast with other union chiefs, Toner has signaled the MTA's willingness to help craft new teacher evaluation tools that include measures of student achievement, a reform embraced by everyone from President Obama and his education secretary, Arne Duncan, to state education leaders.
MIT management professor Thomas Kochan helped mediate negotiations between state officials and unions under the new merged state Department of Transportation. Agreements were reached that "got rid of a lot of complicated and costly work rules," he says, with a share of the savings directed to workers. "This is the moment for really transformative change," says Kochan.
Bluestone says public sector unions must recognize the need to embrace reforms, not fight them, and help fashion solutions to the problems facing public budgets. "Progressive unions are crucial to society and I rue the day when unions are so weak that they will not be able to play that traditional role," he says.
But the time for unions to step up is now. "It's the eleventh hour," he says.
Bluestone: Rental Housing Prices Will Only Increase
By Colleen M. Sullivan, Banker & Tradesman
May 11, 2011
Pressure on rental housing is set to increase over the coming decades, suggested Northeastern University economist Barry Bluestone. The number of Massachusetts households will grow more slowly than the rest of the country, but the graying baby boomers and surging growth in Boston's student population will continue to drive rental growth, the professor suggested. Bluestone spoke at a Wednesday morning panel discussion sponsored by commercial real estate development association NAIOP Massachusetts. The panel included Wendy Nowokunski, president of The Northbridge Cos.; Douglas Straus, senior vice president at National Development; and Lawrence Curtis, president of WinnDevelopment.
While Boston area housing prices have fallen more than 20 percent from their 2005 peak, rents have dipped only 2 percent in the past few years, Bluestone pointed out. He added that tight credit standards and economic uncertainty are keeping some young families renting; many former homeowners have been pushed into rental by foreclosure; and the student population has continued to rise.
"To reduce pressure on the rental housing market, we need to house more undergraduates in on-campus housing," Bluestone said, pointing to developments such as his own university's conversion of the Huntington Avenue Y into student housing as a helpful development. "But more importantly, in the private sector, we need to find more opportunities for housing for graduate students."
He said the state should do more to help keep the student population to stick around after graduation, to help counter the graying of the state's households. The percentage of householders 55 and over is set to increase 133 percent in Massachusetts over the next 10 years, according to Census figures, compared to a national increase of a little less than 100 percent.
But building the kind of housing that's appealing and affordable to young families and recent graduates can be difficult in the Boston market, Curtis countered. "In order to have a vibrant economy, we need to build more than $4 a-square-foot-housing for oil sheik's and college professor's sons," said Curtis, but without extensive subsidies, "the math doesn't work."
All panelists agreed that rising expectation for the quality of amenities are putting pressure on development costs, and suggested that the some of the most frequently used affordable housing mechanisms — in which a small percentage of affordable units are required to be included in a larger development, with all units build to the same standards — provide less bang for the buck, helping to drive up the costs of market rate housing while creating relatively few affordable units.
Advocates know the squeaky wheel gets the Green
By Danielle Drellinger, The Boston Globe
May 6, 2011
The May 3 Somerville meet-and-greet should have been a pure celebration — the start of the real work on the Green Line Extension. However, as the project's new consultant team showed off the same schematics the old consultants displayed last year, the mood was not entirely positive.
"This is like first graders — let's pretend," said Cambridge engineer Stephen Kaiser in a small group of anxious advocates.
They've been abuzz since state transportation secretary Jeffrey Mullan declared at an April 25 conference that federal funding for the Green Line Extension looked shaky.
Widening railbeds, squeezing tracks through a tight bend, making residents happy — that's nothing next to one big issue: "The finance is definitely the biggest challenge," said Jim McGinnis, a Somerville representative on the state's Green Line Extension advisory group.
No doubt about it: the Green Line Extension needs green.
Though the Federal Transit Administration declined to comment directly, there's clearly reason to worry about the New Starts federal funding the state has counted on to cover about three-quarters of the nearly $1 billion Green Line Extension costs. Massachusetts is currently preparing its application for the program, MBTA spokesman Joe Pesaturo said in an e-mail.
To qualify, states must come up with partial funding and show they can afford to run the finished product. Evaluators assess the state's "current capital condition," check for "sufficient capital funding capacity," and make sure the operation cost projections are reasonable, according to the latest evaluation guide.
The MBTA, however, is over $8.6 billion in the hole, with annual payments of over $400 million for the next decade, according to a Conservation Law Foundation/Dukakis Center report released April 8. The operating deficits just keep growing.
In February, the MBTA board revealed its uneasiness by authorizing only $22 million for 14 months of design work for the extension instead of the requested $95 million, five-year contract. Board members voiced their unwillingness to spend more with the federal piece not set. To date, the state has spent $15 million of transportation bonds, Pesaturo said.
To top it all off, federal funds from a different source recently failed to materialize for the new Orange Line stop at Assembly Square — increasing the sense of unease.
The reassurance for Somerville is always one simple fact: "The state is legally commited to build this whether there's federal money or not," said Ellin Reisner, president of the Somerville Transportation Equity Partnership. It's part of a 1990 agreement to mitigate the negative environmental impacts of the Big Dig.
But what if there's no money?
Ask the question and the result is anywhere from panic to paralysis. The MBTA is still counting on Plan A. "As the project is a legal commitment, the Commonwealth must identify ways to fund it — and right now, the efforts of everyone involved are focused on proving to federal officials that the Green Line extension is an excellent project that meets or exceeds all of the criteria for New Starts funding," Pesaturo said.
Meanhwhile, think tanks are working overtime issuing recommendations. Fare increases and further efficiencies in MBTA operations won't do it all.
"Massachusetts needs to expand the sources and types of revenue available for public transportation — an effort which may take many years," Rafael Mares and Stephanie Pollack write in the CLF report. Their ideas include university contributions; new city parking fees for transit; and a payroll tax surcharge.
One "sort of crazy proposal," McGinnis said, is for the inner-ring cities to in effect "buy a T pass" for their residents. It's not uncommon in Europe, but, he admitted, not likely to fly here.
Similarly, Somerville state Senator Pat Jehlen has advocated "an increase in the gas tax — but it has very little support," she said.
Which is a source of frustration for Reisner. "The state Legislature has not taken any leadership" on figuring out how to fund transit, she said. "They won't do anything to raise revenue." It's not just the Green Line: Bridges and roads need repair.
Time is growing short. Most projects that enter the official New Starts pipeline do get funded, according to the FTA. However, it usually takes a few years and it's all subject to Congressional appropriation. The state's current projected date to open the Green Line Extension is October 2015, already pushed back from the legal deadline of December 31, 2014.
"Every time there's a delay the state is required to mitigate the delay," Jehlen said. "It's in our interests to build soon."
If the state fails to build, Reisner said, the Conservation Law Foundation or even the federal Environmental Protection Agency could sue the state for being out of compliance with the Clean Air Act.
More than that, "It could jeopardize federal funding for transportation projects in the state in general," Reisner said: If the state isn't building the Green Line, "technically they really can't spend any money on other projects."
Advocates agree on one strategy: The squeaky wheel gets the Green.
"If nobody bothered [the state], they'd do whatever they want," Reisner said. "We're not going to sit back."
The last time the state dragged its feet on the Green Line, the City of Somerville and Conservation Law Foundation sued, and won.
Contact Danielle at email@example.com.
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'If they don't have a job by now, they're kind of out of luck': Summer jobs sparse for teens this year
By Will Buss, BND.com
May 9, 2011
This summer might be another bummer for high school and college students looking for seasonal employment.
Already local park districts that traditionally hire teens and college students during the summer months have completed their hiring. Collinsville Area Recreation District spokeswoman Elizabeth Davis said hiring began at beginning of the year and wrapped up earlier this spring.
"We're done hiring," Davis said. "A lot of our hiring started in January."
Jordan Woods is happy to have landed one of those jobs at the park district's water park, Splash City. The 20-year-old was doing some landscaping last week around the parking lot in preparing the water park's opening May 28. He said he was looking for summer work for three months before he found his job.
"A couple of my friends have not had a job for a couple years," Woods said. "A lot of people I know are looking for a job."
Zak Woodward is back for his fifth season at the water park and also works in construction when the work is available. He said it is not easy to find a summer job.
"All I've really done is work here," Woodward said. "I've got construction jobs lined up, but it's just whenever I get it or when they need help." "One of my friends can't get a job at all. If they've got a job, it's because they had it already."
Aquatics supervisor Stephanie Whittington said 10 more lifeguards were hired this year than last year, but otherwise staffing remains the same.
"We set deadlines," Whittington said. "We had a lot of referrals from some of our prior lifeguards and other staff members. By the deadline, we hired all of our employees by the end of February."
In O'Fallon, the O'Fallon Parks and Recreation Department is still looking for a few more lifeguards, but most of its summer hiring is completed. Director Mary Jeanne Hutchison said that out of 261 applicants, 80 have been hired for the season.
"We are basically done hiring," Hutchison said. "It had started several months ago. We started posting in January to get our rehires completed in March and then in early April started interviewing for any openings."
This year stands to be one of the worst, especially for those 16- to 19-year-olds still looking for summer employment. According to a new report by Northeastern University's Center for Labor Market Studies in Boston, only one in four U.S. teens will find work this summer. The forecast predicts that the teen employment rate during the summer months will only reach 27 percent –the lowest ever and second-lowest summer employment rate for teens since World War II.
"That's how much this has fallen," said center director Andrew Sum. "It's unbelievable." He also said the nation's teen employment rate during the past decade has been whittled down from 45 percent in 2000 to 25.6 percent in 2010.
"We just didn't create any jobs during the last decade," he said. "None."
He and fellow researchers point to the emergence of workers 55 and older who, over the past decade, have pursued more jobs that had traditionally been held by teens. He also said illegal immigrants have pushed more teens out of the job market.
In Illinois, teen unemployment has been on the rise over recent summers. Figures from the Illinois Department of Employment Security in Chicago reveal that the teen jobless rate was 16.7 percent in 2007. Last summer, teen unemployment across the state climbed to 27.5 percent.
"It's been building in every age group," said department spokesman Greg Rivara. "The unemployment rates are unacceptably high everywhere."
"Given the trends, the difficult part of this is we've never been here before," Rivara said. "We have had economic downturns and had severe recession, but never had a recession that has been this deep or this long. And the conventional wisdom that had been used previously is challenged when we look forward."
Hutchison said the O'Fallon park district has witnessed about 90 fewer applicants than a year ago, when about 350 applied for work. There are only a very small number of jobs that are still open for this summer.
"If they don't have a job by now, they're kind of out of luck," Hutchison said.
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Will Buss can be reached at firstname.lastname@example.com.
Tech sector lifts Mass. economy to start '11
By Megan Woolhouse, The Boston Globe
May 8, 2011
Massachusetts' technology sector is fueling strong growth, helping the state's economy expand more than twice as fast as the nation's in the first three months of this year, the University of Massachusetts reported yesterday.
Global demand for technology products and increased business spending on software and equipment have provided a strong boost in Massachusetts, which has a high concentration of companies that sell high-tech equipment, components, and services, particularly to other businesses.
Alan Clayton-Matthews, an economics professor at Northeastern University and a senior contributing editor to MassBenchmarks, the UMass journal that released the analysis, said despite struggles with high unemployment and a stagnant housing market, the state's "robust" technology sector has been an economic bright spot.
"It's the reason we have a stronger economy than the country as a whole," Clayton-Matthews said. "We export a lot of science and technology-based goods and services to other countries around the world, especially developing countries like China and India."
The global tech boom helped the Massachusetts economy grow at a 4.2 percent annual rate, accelerating from 3.3 percent in the last quarter of 2010, UMass said. The US economy expanded at a 1.8 percent rate in the first quarter, after growing at a 3.1 percent rate the previous period, the Commerce Department reported yesterday.
In March, the state's 8 percent unemployment rate, though historically high, remained well below the national rate of 8.8 percent.
Reflecting technology's strength, some Massachusetts companies are fiercely competing for skilled workers, offering cash bounties to find them.
Hubspot, a Cambridge marketing software start-up, recently offered $10,000 to anyone who could recommend the company's next software development hire. Not to be outdone, Performable, another Cambridge marketing software start-up, offered $12,000 for a referral leading to the hiring of a software engineer.
"We basically have to offer cash to the public to help us find people," Performable chief technology officer Elias Torres said. "Our recruiter cannot get us enough candidates."
Those extreme lengths might come as a surprise to those coping with job losses and sudden increases in gas and food prices. Hiring in many sectors has been slow, particularly in blue-collar industries such as construction and manufacturing. The housing market continues to struggle: sales are sluggish and prices are declining again.
Michael D. Goodman, the chairman of the public policy department at UMass Dartmouth and editor of MassBenchmarks, said the tech industry's growth is good for the state, though the benefits are spread unevenly.
"The folks that benefit from technology growth are generally located in the Greater Boston area and work in firms where you have to have a level of training or technical skill," Goodman said. "Underneath this robust growth remains a lot of inequity."
Technology's relatively fast recovery from the recession was driven by strong business spending on equipment and software. Corporate spending on tech products and services accelerated in the first quarter, increasing at a 12 percent annual rate, after growing at an 8 percent rate at the end of 2010, the Commerce Department reported.
The Massachusetts economy has benefited from this trend. Two bellwethers of the state's technology industry – Teradyne Inc. of North Reading and EMC Corp. of Hopkinton – both recently reported first-quarter revenues that grew nearly 20 percent from a year ago.
Teradyne, which makes semiconductor test equipment, said orders for its advanced machinery, which tests electronic components used in smartphones, tablets, and automobiles, increased by 30 percent while profits nearly doubled from a year earlier. Data storage and software giant EMC saw a 28 percent increase in first-quarter profits over last year.
Acme Packet Inc., a Bedford company that sells Internet voice and video delivery systems, recently reported that its revenues surged 45 percent from last year. Profits during the same period grew 65 percent.
Andre Mayer, senior vice president for research at Associated Industries of Massachusetts, the state's largest employer group, said corporate profits, including successful high-tech companies, have been very high, yet many companies are sitting on their cash, preferring to spend it on new equipment rather than new employees.
"They're not using it to hire a whole lot of people," he said. "But they are investing in their production capacity and making themselves more efficient. They're retooling for an economy that looks different than the one we're used to."
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How Youth Unemployment Drags Down Economic Recovery
By Jordan Lee, Annenberg Digital News
April 24, 2011
When Yanek Kondryszyn was a sophomore in high school, he got a job at a local law firm in Spokane, Washington. For three years, he was able to work alongside patent attorneys who were doing high-profile cases for companies like Microsoft, Amazon, and Boeing. That was in 2005. Today the college junior would have trouble finding a job as a barista.
Over the past few years, teen employment has fallen through the floor. In March 2011, the teen unemployment rate was 23.6 percent, according to the Bureau of Labor Statistics. This is a drop from the 38 percent employment rate in 2000, according to Andrew Sum, the director of the Center for Labor Market Studies at Northeastern University. "I have never seen a percentage that low in my entire life," said Sum.
Teens aren't huge contributors to GDP, but they can have a pronounced impact on the economy that can show up years later. Teens are the next wave of the American workforce. The fact that few of them are working now can impact future labor productivity and education levels. The current generation of teens is coming of age with far less work experience than their predecessors.
That can have an outsized impact, as something as simple as a summer internship can spark future ambitions and career visions that can shape a young person's professional career.
Teen employment is particularly vulnerable when the economy is struggling. Teens without degrees and experience are often the first to go when a company downsizes. But some are now concerned that the teen employment rate has fallen so dramatically that it might not recover with the economy.
Historically, the employment rate for U.S. teens has risen and fallen with business cycles. The rate declined significantly during recessions but rose significantly during periods of recovery and job growth. But that pattern broke down during the past decade. From 2003 to 2007, even as the larger economy grew, teen employment posted only modest gains. Teen employment recovered, but the recovery was slow and erratic, lagging behind the employment recovery of other groups.
Ten years ago, a high school student would have no problem getting a job at McDonald's. The chain marketed itself as a great place to work a first job, going to great lengths to be legally allowed to hire 16-year-olds and offering teens flexible shifts that they could fit into their school schedules.
Today, the average McDonald's employee is not worrying about balancing his shift and biology homework. "Over the past three years, the employees who we've hired have been mostly in their mid-20s" said Alberto Estrada, the assistant manager at the McDonald's on Venice Blvd.
On April 6, McDonald's announced it will be hiring 50,000 new workers on a single day, a push that is marketed to adults looking for full-time jobs. "A McJob is one with career growth and endless possibilities," the company said in a statement. That's a shift from previous efforts to sign up high-school kids.
"In the 90s, you would have found teenagers in restaurant, retail sales, and mall jobs," said Sum. But now these teens face competition from three separate forces: older workers looking to subsidize their falling income, recent college graduates who can't find work, and, in some parts of the country, illegal immigrants.
Many companies have had to cut internship programs for students. The British Broadcasting Corporation had to suspend its internship program for 2009 due to spending cuts. Many of the nation's premier law firms cut their summer internship programs by 30 to 50 percent in 2009, according to Law.com. The FBI canceled its internship program for 2010. These are fields where students have an opportunity to build unique skill sets and to work alongside professionals, rather than other teens.
The shrinking opportunities for young people today can impact how productive they become as workers later in life. When you don't work as a 16- or 17-year-old, you will do a lot less work as a 19-year-old, and even less as a 25-year-old," said Sum. Urban youth have been hit particularly hard.
In Los Angeles, a mere 13 percent of teens held jobs. In cities like Philadelphia, Boston, and New York City, only 3-4 percent of high school students are employed, said Sum. Compare this to 1998, when New York City's youth labor-force participation rate was 27.2 percent, according to a 2001 report by Alan G. Hevesi from the New York City Office of the Comptroller.
Neil Sullivan is the director of Boston Private Industry, a non-profit that places high school kids into private and publicly-funded jobs. "Ten years ago, things changed dramatically," said Sullivan, "After 9/11, there was around a 5 percent drop in teen employment. But instead of recovering, the rate went stagnant. Then 2008 hit." At this point, about half the jobs teens were able to find on their own disappeared, according to Sullivan. That prompted what Sullivan called a "youth depression."
The situation was exacerbated by the mass layoffs that came with the 2008 financial crash. An aging American workforce began sliding into jobs that would have been occupied by the next working generation.
Just under 70 million workers are 40 years of age or older, totaling 48 percent of the total U.S. workforce. The number of workers 55 and older will increase from 13 percent in 2000 to 20 percent in 2020, representing one out of five people in the workforce, according to a study done by Illinois Manufacturing Extension Center (IMEC), a non-profit economic development organization. American employees are getting older and are locked into working longer to subsidize depleted incomes and the next generation of the American workforce is underdeveloped beyond recovery.
Those teens hit hardest are from low-income families. Nationally, only 7 percent of teens from families who qualified as low-income were working last year, said Sum. For this group, high school jobs are the gateway to other opportunities, such as college or a full-time job.
Upper-income teens need jobs too, but for them, not getting a job isn't the determining factor as to whether they will go to college or not. But statistically, upper-income teens are more likely to find jobs. "If you are from an upper income family, you are 5 times more likely to work," said Sum. "The kids that most need the work exposure, get it the least."
The social implications of teen unemployment can be severe. "Teens are more likely to become involved in delinquent behavior or criminal activity when they do not have the opportunity to be working or going on to school," said Sum. A study done by MIT economics professor Jonathan Gruber shows that the rate of teen pregnancies, drug experimentation and gang involvement increases when the teen unemployment rate shoots up.
Another problem is that there is a shortage of jobs in diverse and specialized industries. "It's not just that kids are working a lot less, it's that the range of jobs they are getting is narrower than ever before," said Sum. The three primary industries where teens find jobs are restaurant, retail, and arts and entertainment, according to Sum. Fewer and fewer teens are able to secure jobs in construction, office support, banking, and other professional businesses.
Sullivan said that his organization has had success placing students into certain specialized industries. For example, the Red Sox recently hired teen workers, as well as several Boston hospitals. If teens can't get a job in a hospital, it follows that fewer will pursue the medical track (assuming they can even afford college), then ten years down the road, the hospitals could face a shortage of medical personnel.
A few decades ago, high school and college students would get summer and part-time jobs to pay their way through college. In today's economy, this is almost unheard of. College is more expensive, jobs are scarcer, and financial aid is needed but less available. A growing demand for college intersects the falling availability of scholarship money.
Times have been tough on the benefactors too, and there has been a decreased availability of scholarships and funding for programs that help low-income students afford college. Fulfillment Fund is an LA nonprofit organization that works with Los Angeles public high school students. In 2009, they cut the scholarships by half and tightened requirements for students.
"People just need to realize how bad it's gotten for kids, and it's time for someone to step up," says Sum.
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For many grads, the old college try's not enough
By Alejandra Cancino, Chicago Tribune
April 19, 2011
Tiffany Groene is waiting tables.
Erin Crites is making lattes and iced coffees.
And Anna Holcombe is buying and selling gold.
These three Chicago women share more than just scraping by with low-paying jobs: They all have master's degrees and are unable to find work in their specialty areas.
There's even a name for their situation. They are referred to as mal-employed, a term coined in the '70s for college graduates who could not find jobs that require a degree. Instead, they settle for low-skilled jobs.
Even in rosier economic times, people with college degrees sometimes can't find jobs in their fields. But their numbers and the trend show no sign of easing during the slow and bumpy recovery from the recession.
Nationwide, about 1.94 million graduates under age 30 were mal-employed between September and January, according data compiled by Andrew Sum, director of the Center for Labor Market Studies at Northeastern University.
Sum said mal-employment has significantly increased in the past decade, making it the biggest challenge facing college graduates today. In 2000, Sum said, about 75 percent of college graduates held a job that required a college degree. Today that's closer to 60 percent.
Though the economy is growing and new jobs are being created, Sum said, those graduating in June are not likely to see major improvements. About 1.7 million students are projected to graduate this spring with a bachelor's degree and 687,000 with a master's, according to the U.S. Department of Education.
"We are doing a great disservice by not admitting how bad it is for young people (to get a job)," Sum said.
And the longer college graduates go without working in their field, the harder it is to land interviews for jobs where they would use their degree.
"It's hard to convince people that what I am doing is relevant," said Groene, 27, who has tended bar and waitressed during the two years she's looked for a job related to her master's degree in public administration.
In that time, she's had one offer in her field. It came in 2009 from Chicago Public Schools but disappeared before she could start, due to budget cuts. Desperate, she took a job as a bartender in Rogers Park. She said she quit six months later, upset by the sexual advances of bar patrons.
With no income, she moved back to her father's house in Rockford. At times, she found it difficult to leave her bedroom because she felt depressed.
She said she wasn't used to not succeeding. An avid soccer player, Groene was drafted to go to college and drafted again to become an assistant coach at Columbus State University in Georgia, where she earned her master's degree.
"You feel so down," Groene said.
With the support of her family, she ventured out again last month and took a job as a waitress in Lincoln Park. She said it's the best job she's had in two years. She also slowed down her job search and is back in school pursuing a master's in education.
"I can't find anything anyway," she said, adding that more schooling allows her to start from scratch.
Experts say Groene's situation is hardly unique. When everything else fails, graduates are more likely to go back for more education. Those with a bachelor's sign up for a master's, and so on. Some take a step back, either to look for new opportunities or retool their fields of interest.
Bill White, for example, is pursuing a second bachelor's degree. He looked for a job for about six months before graduating in December with a master's in public relations and advertising. Unable to land one, the 28-year-old has shifted his focus to mechanical engineering.
While college graduates are still more likely to land a job than those without a degree, the fact that so many are not finding a job in their fields has raised questions about the payoff of a college education.
Since he got his bachelor's degree last May, Kirk Devezin II has worked full-time a little more than six months and has freelanced. He has never made more than the $10.36 an hour he earned as a barista at Starbucks when he was a student at Eastern Connecticut State University.
"I apply to jobs constantly, constantly, constantly," he said.
He has interviewed for positions related to his communications degree, but lately, all the interviews have been for barista and cook jobs, and one at a carwash. Sensing that employers in low-wage industries might think he is overqualified, he has left his college degree off the applications.
"It just seems like it was just a big waste of time," said Devezin, 24, who still lives in Connecticut. "And I'm $20,000 in debt."
The numbers show that he's wrong – experts say earning a college degree is still the best way to avoid unemployment.
"The value of the degree is still there, it is just not returning as much in investment as it would a few years ago," said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University.
In fact, those who land a job in their field do well, but those who are mal-employed earn just slightly more than high school graduates, according to Sum's research. For example, the mean wage for those mal-employed is $476 a week, while those with a job that requires a degree earn $761. By comparison, a high school graduate earns $433.
Erin Crites, 27, makes $10.55 an hour as a barista at a coffee shop in downtown Chicago. She is struggling to pay her bills and has considered cutting her health insurance – a situation she was hoping to avoid by earning a master's degree.
Crites graduated in June from Dell'Arte International, a theater school based in California. She sought a master's degree in ensemble-based physical theater, figuring that such a specialized degree would make it easier for her to land a job. But Crites graduated as schools cut back art programs and arts-based nonprofits struggled to secure grants.
"You can get as close as you can to work solely as an artist without a source of secondary income…but it's almost impossible," she said.
Still, Crites is determined to make it in her field. As long as she keeps her passion, she will find a way in, she said.
Though barely getting by, Crites is lucky. Nationwide, there were about 2 million unemployed people over 25 years old with at least a bachelor's degree – nearly 1.3 million more than in March 2007, according to the U.S. Labor Department.
On a small plaza near the DePaul University College of Law, a group of students about to graduate were socializing when a reporter approached. Most said they didn't expect to land a law-related job. One student said he was told by a potential employer that there was no reason to hire him when the firm could hire an experienced lawyer for the same salary.
That situation is becoming more commonplace.
Anna Holcombe, who has a master's degree in public relations and advertising, said she's often competing for jobs against people who only have bachelor's degrees or are willing to work for free just to get their foot in the door.
"It's a struggle," she said, adding that at age 31 she doesn't have the luxury of being able to work for free. She has responsibilities, including bills due at the end of the month.
Until she gets a position in her field, Holcombe is holding on to her job as a sales associate at a retail store. She got the job to pay bills while at school, never thinking it would be so difficult to let it go.
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Recent Graduates Not Only Move Back Home, But Stay There
The Huffington Post
April 22, 2011
NEW YORK — Ashley Moore never planned on moving back in with her parents.
Nearly a year after graduating from college, Moore, 22, also never expected to still be waking up in her old twin bed every morning.
"It's been difficult because not only was I on my own, I was really far away," explains Moore, a St. Louis, Mo., native who graduated from Pace University in New York City. At one point, she spent an entire year away. "What I miss most is my freedom and having my own space."
Like many 20-somethings, Moore is experiencing what it's like to not only move back home, but stay there. Despite a recent report released by the National Association of Colleges and Employers, which predicts that 2011 graduates may enter into an improved job market, many remain skeptical.
Andrew Sum, an economist at Northeastern University, concedes that while "it's better to be plus than minus, we've still got a really long way to go until we restore things back to the way they used to be."
Sum calls it the war against the young. Specifically, he's seen a record number of college graduates forced to move home.
Using data from the U.S. Bureau of Labor Statistics, Sum reports that 12.8 million young people under the age of 30 are either unemployed, working part-time or working at a job that doesn't require a college degree.
Such jobs can make it difficult for young people to establish a steady stream of income — to get the money required to not only move out of their parents' house, but stay out.
Further, Sum finds that young adults without a college degree have been pushed out of the labor market entirely and are finding work at a lower rate than anytime since the end of World War II.
"The kids not working today will have a difficult time working tomorrow," concludes Sum. "The evidence is overwhelming."
Since moving back home last June, Moore has been unsuccessful in securing a full-time job. She works part-time as a teaching assistant at a nearby pre-school. Her mother is an in vitro technician; her father owns a small carpentry business.
For others forced into a similar situation, Moore stresses that communication is key to making the living arrangement work as best it can.
"Your parents might regress and start treating you like you're back in high school because, well, you're back in their house." Moore also advises to save, not spend. "Just because you're not paying rent, doesn't mean it's a good time to go shopping."
The financial burden of going to college has always been her own. Moore is carrying $45,000 in undergraduate student loans and another $5,000 of debt split between two credit cards. Each month, she puts $250 of her part-time paycheck toward paying each of them down.
As an undergraduate, Moore majored in political science and minored in communications. She plans to attend law school and someday run for political office. In the meantime, she is keen on first getting her own apartment.
Recently, Moore set a new deadline for herself: Come August, her goal is to finally be out from under her parents' roof.
"I know they love me, but it's time for me to go," says Moore, who despite all of the challenges associated with moving back home has appreciated the extra time it's given her to be with her family. "I just hope that I can."
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State's federal employees brace for bumpy times
By Dave Abel, The Boston Globe
April 8, 2011
As the political maneuvering in Washington draws to within hours of a federal government shutdown, Cecile Caruso wants politicians jockeying for influence or hewing to ideology to know what it would mean if she cannot collect a paycheck.
"There will be a lot of people like me who will suffer, meaning paying bills will be a problem," said Caruso, a secretary for the Internal Revenue Service in Boston. "It will be very difficult. We survive on our paychecks and can't just dig up money in our yard. We're scared."
Caruso is one of about 65,000 federal employees in Massachusetts, including postal workers, according to the state Executive Office of Labor and Workforce Development.Officials at the National Active and Retired Federal Employees Association, a Washington-based advocacy group, said about 25 percent of the state's federal employees are unlikely to receive paychecks if the government closes.
"The bigger issue is that the federal government does extraordinary work for the American people, and during the shutdown, many of those services will be temporarily unavailable," said Dan Adcock, an association spokesman. "The secondary effect is the lost wages to federal workers, who like all Americans are having a hard time making ends meet in the difficult economy."
A shutdown of the government would affect many historical sites, including the Bunker Hill Monument in Charlestown, President Kennedy's birthplace in Brookline, Adams National Historical Park in Quincy, and Minute Man National Historical Park in Lexington.
Sean Hennessey, a National Park Service spokesman, said teachers who booked field trips to the sites next week are worried.
"We're telling them to stay posted," he said, adding there is still time for the president and Congress to avert a shutdown. Without an agreement, the government would be shut down at midnight tonight.
Governor Deval Patrick said the impact in Massachusetts would depend on the length of a shutdown.
"But we're very concerned about support for students who are getting federal aid for colleges," Patrick said. "We're worried about the continued flow of support for our infrastructure, to the extent that the federal government has a role in some of those projects. We're concerned about the continual flow of Medicaid dollars for the MassHealth program. You know there are . . . all kinds of ways in which we partner with the federal government."
Economists say a shutdown that lasts beyond a few weeks could hurt the economy.
"The real question is how long it will last," said Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University."If it's 24 hours or 48 hours, I don't think it will have much impact."
Bluestone said the government could sustain a prolonged shutdown, because it plans to keep many essential services running. But that could exacerbate the impact on workers who are furloughed.
"To the extent the shutdown is a minor inconvenience, rather than a major event, it doesn't hold the Republicans and Democrats' feet to the fire," Bluestone said.
One of the biggest impacts of a shutdown could be on tax returns. IRS spokesman Peggy Riley said the agency would not be able to process paper returns. The "operational plans are still being finalized," she said, adding that the IRS has no plans to extend the April 18 filing deadline.
Additionally, the IRS would slash staffing for hotlines to answer tax questions. The shutdown could also put audits on hold.
And some federal contracts could be interrupted. The government awarded $15.4 billion in contracts for work done primarily in Massachusetts last fiscal year, mostly through the Defense Department. Major recipients included Raytheon, which accounted for more than one-quarter of that amount, General Dynamics, General Electric, and MIT.
For home buyers, a lengthy shutdown could significantly delay mortgage processing.
The US Department of Housing and Urban Development would largely shutter its offices nationwide, putting nearly all its 9,700 employees on furlough, a spokesman said. The Federal Housing Administration would stop insuring mortgage loans for single-family homes.
Federal court and postal employees would not be affected, at least temporarily.
"We are going to . . . continue to operate," said Tracy McLaughlin, who works in the clerk's office at US District Court in Boston.
Among families of military service members from Massachusetts, the threat of a shutdown is stoking anxiety.
"We're already behind to begin with," said Maureen Johnson, an Abington mother of two whose husband, Carl, is deployed with the Massachusetts National Guard in Baghdad. "It makes me scared, because you don't know when the next check is going to come in."
Yesterday, Defense Department officials assured service members, who have to work because their jobs are related to national security, that they will be paid retroactively for the length of any shutdown. If a shutdown lasted for a week, service members would be paid through today and receive half of their regular, two-week paycheck on April 15. If a stoppage lasts through the month, they would not receive any pay on May 1, when the next paycheck is due.
The Defense Department would continue to provide essential services such as medical treatment, emergency dental care, dining services, and child care. Military retirees would continue to receive benefits.
Congress will decide whether to make a retroactive payment for the estimated 800,000 government workers who would be required to take a leave during a shutdown. Congress has authorized such payments in the past, and the White House says it would support reimbursing employees.
Johnson said she heard about a possible shutdown from her husband Wednesday.
"He's concerned because he knows I'm trying to stay on top of everything," she said. "It also affects him because he has to access that account."
Outside the John F. Kennedy Federal Building in Boston yesterday, Debbie Osborne, 54, an administrative officer at the US Department of Health and Human Services, said she felt what was happening in Washington is deeply unfair.
"I feel the federal employees are being used as piece of a puzzle for the politicians," said Osborne, of Winthrop. "It's not like I can afford a paycheck loss."
Ann Awiszus, 44, of Medford, said she and colleagues feel like scapegoats. If an agreement is not reached, she said, she would have to spend less, eat at home more, and live more frugally. But the program analyst at the US Department of Labor said she is concerned about the message being sent to the world.
"It doesn't send a pretty picture," she said. "At this point, I think everyone needs to come together and work things out."
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Dave Abel can be reached at firstname.lastname@example.com.
By Ann Sussman, Planetizen
March 14, 2011
(Acton, MA )- Historic Bay State towns now have more motor vehicles in residence than actual residents. The Commonwealth's Department of Revenue which tracks these statistics, and has them online, shows vehicles dominate over people in Concord, home of Emerson and Thoreau, and many surrounding towns that provided Minutemen for the earliest skirmishes in the Revolutionary War including Acton, Bedford, Boxborough, Stow and Carlisle.
Even in Lexington, site of the first battle in April 1775, and closer to Boston within the inner ring road Rt 128, there are 31,000 people and some 30,000 vehicles or about 0.97 vehicles per person. Generally, the further from Boston a town is the more cars, SUVs, trucks and motorbikes. The trend peaks in places like upscale Carlisle, twenty miles out, which prides itself on 2-acre zoning and has 4,878 citizens and 5,989 vehicles, for a ratio of 1.23.
In Townsend, more than an hour out of Boston, which the Boston Globe last month rated as most "statistically typical town" for its middle-aged, mid-income population, the numbers at 1.06, which appears typical for a mid-state municipality. It's the same in suburban Acton and Boxborough.
The data appear to track with more drivers driving more. Though not aware of the milestone, "it's not a surprise," says Bob Bliss, a spokesman for the Department of Revenue. "People need vehicles. If you're living in the suburbs you need vehicles to get around. What sort of regional transit is there?" The Revenue statistics come from the Registry Department, he said, and include all vehicles that require registration, motorcycles, trucks, commercial vehicles, which by law pay an excise tax to the town where they're garaged or park at night.
"It's just a hoot!," says Ruth Lauer, former Concord Selectwoman, who works in the Town Manager office, learning Concord has slightly more vehicles than people (ratio at 1.01). "Generally a third of our population is school age and not driving, just think of that!"
Lauer notes that Concord's population at around 17,000 is stable, even declining in recent years. Even though Concord has two transit stops on a commuter rail line into Boston, "It's our way of life that's changed," she concludes. Even if a resident can take the train for work, they will likely use 2 cars per household for all their other errands. According to the regional planning office, MAPC, Concord households on average do have 2.0 passenger cars per household; the figure expands to 2.3 cars per household in towns like Ashburnham, outside Boston's outer ring road, rte 495.
The irony of all the driving in an area that is home to America's earliest environmentalists, including Emerson and Thoreau, is not lost on Michael Frederick, Director of the Thoreau Society, a non-profit that promotes the 19th-century thinker's legacy. "Thoreau is not against technology," Frederick explains, adding the writer would however question who's in the drivers seat. "We can't say cars are absolutely negative, it's just how much control do we have over them?"
"Thoreau believed in asking deliberate questions and making deliberate choices,and these questions are as pertinent today as ever," he said. Thoreau would probably appreciate 'the Catch-22' of more parents driving kids everywhere, he said. With all the other cars on the road, adults perceive it as safer than letting youngsters walk or bike, which leads to more parents driving more kids and "an irony Thoreau would have worked with."
As for Thoreau's mentor, Ralph Waldo Emerson, he might have encouraged him. It was Emerson who famously wrote the verse, "Things are in the saddle, And ride mankind," Frederick added.
Less ironically, regional planners explain the vehicle numbers in terms of economics and convenience. "It's free parking and effectively free roads makes mobility fairly inexpensive for a middle-class family," says Tim Reardon, planner at the regional planning council, MAPC.
Much Commonwealth traffic congestion he links to employment with the average commuter driving 25 miles per day. Reardon cautions that there are hidden costs to the car choice suburbanites make and don't take into account – until too late. "You can spend $1,000 a month on cars without realizing it," he said. Indeed, failure to factor in the cost of vehicle ownership accounts for half of the suburban foreclosures in Massachusetts, he says.
Per capita vehicle ownership drops dramatically in Boston and Cambridge by almost half, where there is greater residential density, more transit options, jobs closer at hand and parking costs go up. However, even in the cities, new research suggests an uptick in car ownership in urban neighborhoods as they gentrify, which paradoxically happens with access to new mass transit stops, says Stephanie Pollack of Northeastern's Dukakis Center for Urban and Regional Policy. Her research looked at a dozen neighborhoods throughout the country that gained new transit stations between 1990 and 2000. She found real estate values rose and brought in wealthier residents who preferred cars.
"In America, car ownership goes up with neighborhood wealth," Pollack said.
In Concord, Ruth Lauer sees the car habit more simply. "The trains are for somebody else," she said.
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America's Youth Labour Issues – Entrenched Unemployment and Labour Underutilization
By Glen Asher, The Oye Times
April 1, 2011
The recent uprisings in the Middle East nations, most particularly Egypt, were often a result of poor economic conditions for younger members of their respective societies. In my posting on Egypt back in February, I noted the extremely high unemployment rate among highly educated male and female Egyptians and how this had created a feeling of hopelessness and frustration among the country's young adults since they are unable to progress in their life journey.
The Center for Labor Market Studies at Northeastern University prepared a paper for the Children's Defense Fund in late 2010 entitled "Deteriorating Employment Rates and Incomes Threaten the Futures of Young Workers and Young Families; Black Young People and Young Families Fare the Worst". In this paper, the authors, Andrew Sum and Ishwar Khatiwada, examined the weak labour market for young adults between the ages of 16 and 29 and how the situation has worsened over the past decade. The researchers divided the young adults into three ages groups, 16 to 19, 20 to 24 and 25 to 29 years of age. For the purposes of this posting, I will concentrate on the statistics for each of the three demographic groups and summarize the issue of labour underutilization among young adults.
Let's start with the 16 to 19 year olds who are mainly high school students, high school dropouts or in their early college years. Sum and Khatiwada noted that overall teen employment rates for those aged 16 to 19 years of age declined from 45.5 percent in the year 2000 to 27 percent in 2010 with teen males seeing a drop of 19.6 percentage points and females seeing a drop of 17.4 percentage points. They also observed that the highest teen unemployment rates were found among African-American, Asian and Hispanic teens, those that dropped out of high school or were high school graduates and those who came from low income families.
Here's a chart showing the overall employment data for the 16 to 19 year old cohort broken down into gender, ethnic group, educational level and household income:
Over the 10 year period, high school dropouts saw their employment rate drop from 50.4 percent to 29.6 percent, a drop of 20.8 percentage points. The drop was 19.9 percentage points for high school graduates and only 12 percentage points for college students. The worst employment level was found among high school students; 34.4 percent of high school students were employed in 2000; this dropped to 16.4 percent in 2010.
Overall, white teens saw the greatest decline in employment over the 10 year timeframe from 52 percent in 2000 to 32.2 percent in 2010. While that is a large drop, white teens still have roughly twice the employment rate of Asians (17.4 percent) and African-Americans (15.8 percent).
Among African-American families with annual incomes between $20,000 and $40,000, only 13.6 percent of teens were employed; the level of employment drops to 12.7 percent when income falls below $20,000. The authors note that this is of particular concern since more than half of all African-American families have household incomes below the $40,000 level. In comparison, 30.1 percent of teenagers in white families with incomes between $20,000 and $40,000 annually are employed and 28.9 percent of teenagers in families with incomes less than $20,000 annually are employed.
What is rather sad about this situation is that, quite often, employment at this young age provides income for future post-secondary education and forms the basis for career direction later in life. It also provides experience that allows teenagers to successfully transition to responsibilities in their adult working life.
Let's move on to the 20 to 24 year olds. With this age group, we can start to divide the young adults based on their ultimate educational attainment; whether or not they have attained a university degree, whether they have attended at least some post-secondary education or whether they have a high school diploma. For the entire demographic group, over the 10 year period, the overall employment rate dropped from 77.8 percent in 2000 to 67.4 percent in 2010, a decline of 10.4 percentage points. Males saw a drop of 14.5 percentage points and females saw a drop of 6.4 percentage points. The highest unemployment rates were once again found among African-American, Asian and Hispanic young adults and those with less education.
Here is a chart showing the overall results of the statistics for the 20 to 24 year old demographic:
It's rather shocking to see that high school graduates have seen their employment rate drop from 77.5 percent in 2000 to 62.8 percent in 2010. While it is not surprising, for the same age group, employment rises to 84.6 percent in 2010 for those with a university degree with a drop of only 4.1 percentage points over the 10 year period. The authors of the study do note that, while those who have graduated from university have a higher level of employment, a growing number of them are "mal-employed", that is, they are working in a field that is either not related to the field of study associated with their degree or they have been forced to take a job that does not require a degree of any sort. The rising number of mal-employed young adults is strongly related to poor employment prospects in a very unstable labour market.
Lastly, we have the 25 to 29 year olds, the demographic where many young adults are considering establishing or have already established their own family unit. Once again, the age group is divisible based on educational attainment. For the entire demographic, over the 10 year period, the overall employment rate dropped from 81.2 percent to 73 percent, a decline of 8.2 percentage points. Males saw a drop of 10.9 percentage points and females saw a drop of 5.9 percentage points. The highest unemployment rates were once again found among Asian, African-American and Hispanic young adults and those with less education as has been the case for the younger demographic groups.
Here is a chart showing the overall results of the statistics for the 25 to 29 year old demographic:
The African-American young adults saw both the greatest decline in employment, dropping by 14.4 percentage points over the 10 year time frame and the lowest overall employment rate of 62.9 percent. White young adults with a degree have the highest level of employment at 83.3 percent in 2010, they still experienced a drop of 4.9 percentage points over the 10 year period. Once again, high school graduates experience the highest drop in employment at 11.6 percentage points and have an employment rate of only 67.7 percent, well below that of the university graduates.
Like the rest of American workers, young adults also suffer from underemployment. The underemployed are working part-time (less than 35 hours per week) but wish to work full-time but cannot for economic reasons (jobs are not available). The authors of the study added the total number of real unemployed, those who are not actively looking for work but wish to work and the underemployed to calculate the labour underutilization rate. In the year 2000, the underutilization rate was 14.1 percent, this rose to 16.5 percent in 2007 and to a stratospheric 27.7 percent in 2010. The authors state that the total pool of underutilized teens and young adults rose from 6.8 million in 2007 to 11.3 million in 2010. Once again, the percentage of underutilized young adults varied with ethnicity and gender; African-American males fared the worst with a labour underutilization rate of 43 percent. Those African-Americans that dropped out of high school had a stunning labour underutilization rate of 63.7 percent.
Here's a bar graph showing the labour underutilization rate by ethnic group:
The authors of the study note that higher levels of unemployment among young adults is leading to an overall decline in the household incomes of young families. Median real income levels of young families peaked in 1973 and since 1979, median young family income has dropped by 16.8 percent from $46,216 to $38,440. Among young African-American families, median real income has dropped by 23.7 percent to $19,913 over the 30 year period between 1979 and 2009. A drop in employment levels and a rise in labour underutilization is definitely impacting the incomes (and lifestyles) of young, American families, most particularly those of African-American descent.
It's interesting to put all of this data into perspective. As I noted at the outset of this posting, unrest in Egypt was precipitated, in part, by dissatisfaction among unemployed and underemployed young adults who felt a sense of hopelessness because they are unable to proceed with their working lives and the establishment of their own, independent families. By the same token, one cannot fault young American adults for feeling the same way about their lives, most particularly those who go on to attain post-secondary education. While we have employment data from the Bureau of Labor Statistics to mull over on a monthly basis, this study shows us that it will be a long time before the employment situation for young American adults recovers to reasonable and comfortable levels and that sometimes the U-3 unemployment data tells us very little about the real world.
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Foreclosures drop as lenders increase caution
By Thomas Grillo, Boston Herald
March 31, 2011
Under pressure to review documents before seizing homes, lenders dramatically reduced the number of Bay State foreclosures last month, according to the Warren Group.
"Banks are proceeding slowly to foreclose because they're under pressure from Washington to be more careful than they were a year ago," said Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University."
The number of people who lost their homes to foreclosure fell to 515 in February, down from 917 during the same month last year, a nearly 44 percent decline. The number of foreclosure petitions, the first step in the foreclosure process, also declined significantly, decreasing 67 percent to 694 from 2,122 in February 2010.
Bluestone said that, while there are signs the economy is recovering and people are returning to work, once the paperwork is cleared, there could be a spike in foreclosures later this year.
"I hope the decline is not an aberration," he said. "But it's possible that lenders are dotting the i's and crossing the t's, and we could see another swath of foreclosures later this year."
The Warren data found that foreclosures and petitions have slumped statewide so far this year. Year-to-date foreclosure petitions dropped by nearly 63 percent to 1,487 from 3,996 during the first two months in 2010.
Timothy Warren, CEO of the Warren Group, said while the news is good in the short term, bad news looms.
"Given the continuing high levels of unemployment and the high rates of delinquency on mortgage payments, I'm afraid we'll be dealing with foreclosure issues for many more months," he said. "Only when we see the values of homes rise again will I have confidence that we have turned the corner."
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College Grads Struggle to Find Jobs in Chosen Fields
Many are unemployed or 'Mal-employed'
By Mara Lee, The Hartford Courant
March 23, 2011
Since he got his bachelor's degree last May, Kirk Devezin II has worked a little more than six months, and free-lanced. He has never made more than the $10.36 an hour he earned as a barista at Starbucks while he was a student at Eastern Connecticut State University.
He's interviewed for one job related to his communications major – as a content developer for TicketNetwork – and one career-track job as a manager-in-training at Enterprise Rent-A-Car.
"I apply to jobs constantly, constantly, constantly," he said. "Am I supposed to just join the military because that's the only option that's left? It's just more and more frustrating every day."
Lately, all the interviews have been for barista and cook jobs, and one at a carwash – where he's competing for jobs with people who didn't go to college at all, or who didn't graduate.
When he applied for jobs two weeks ago at Dunkin' Donuts and a coffeeshop, he left his college degree off the application, sensing the employers don't want to hire him because he's overqualified. "They don't think I will stay," he said.
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Is the wait over?
Antsy homebuyers may push sellers off the fence
By Martin Luttrell, The Worcester Telegram
March 13, 2011
Cindi and Tom Noyes have been looking to downsize and move to a warmer climate, but balked at putting their home up for sale a year ago.
Now, the Millbury couple has decided the stars have aligned enough to put their Colonial on the market and are optimistic they will get their asking price of $379,900.
"We looked last year and the market was not that great," Ms. Noyes said. "Things are looking better now. I'm not certain that it's an ideal time, but it has some advantages over last year. Unemployment is down."
While real estate brokers have touted low prices and low interest rates over the last year, economists and some in the housing industry have pointed to employment uncertainty as a factor in the housing market's slow recovery.
While Ms. Noyes said it may not yet be an ideal market, real estate professionals and some economists say there are optimistic signs as the region heads into the spring home buying season, traditionally the busiest time of the year for house hunting.
"There is a reason to believe sales will pick up and prices will stabilize," said Barry Bluestone, director of the Dukakis Center for Urban and Regional Policy at Northeastern University in Boston.
"I think potential sellers who are hoping prices will go up will realize they will go up, but it will take several years to get where they want. They will come to the realization that waiting longer is not worthwhile."
The past year has seen a sporadic increase in sales volume, while prices in some communities continue to edge downward or remain flat. Some so-called fence-sitters have tried to time the market with the intent of buying when prices reach their lowest. Some Realtors point out that there is no sure way to time the market, noting that interest rates, still near record lows, are likely to rise this year, adding to the cost of a mortgage.
Buyers seem to be more energized as spring approaches, according to some Central Massachusetts Realtors. Having interest rates in the 4 percent range for a 30-year fixed-rate mortgage is helping.
"Even the naysayers in my office are positive about this year," said David Stead, central region vice president of the Massachusetts Association of Realtors. "We're all encouraged by more buyer activity than previous markets. Whether that's turning into contracts, we don't know yet.
"Inventory levels are pretty high, so there's a lot to look at. Interest rates are low, and there's confidence. In general, they see that their companies are bringing back people, and they feel better about their economic situation. If they were holding off for years, now they're more willing to take a chance."
Shashi Kant and his wife, Anna Vertii, both researchers at the University of Massachusetts Medical School in Worcester, had considered buying their first home for more than a year before recently making a move on a property. The couple, with a 9-month-old child, expect to close soon on a $200,000 condominium in Grafton.
Mr. Kant said he has seen interest rates edge up from last year. Realizing that higher rates could offset the savings from low prices, they looked at several properties before making an offer on the condo.
"If the economy is headed in a good direction, there will be a gain in the housing market," he said. "It is a buyers' market. Prices are not that high."
The couple perused more than 100 properties online, then visited a dozen or so and found most to be fairly priced, he said.
"I found some that looked nice from the outside, but need work," Mr. Kant said. One looked nice at first, but it would need $10,000 to fix, he said. "It's not only the money, but time. With a 9-month-old child, there is not time for making the home perfect."
Having a so-called turnkey house, into which the buyers can move with little or no work, is important, said Mr. Stead.
"I tell my sellers it's important to have a turnkey house," he said. "Make it ready to move in, and not have to do anything."
He said many bank-owned and short-sale properties come as is, with repairs or renovations needed, but having a move-in-ready home can help it stand out.
For those who get a reduced price on a distressed property, the Federal Housing Administration has made it easier to obtain a so-called 203k loan to repair such properties, said Rochelle Jonswold at Keller Williams Realty North Central in Leominster.
"It's almost a quasi-construction loan," she said. "The lender holds the strings on the money until repairs are done. Some distressed properties used to be out of reach for buyers without cash."
Ms. Jonswold said builders have scaled back and are putting up new homes on orders, rather than building on speculation and hoping to sell. Some are buying distressed properties and rehabbing them to flip for a profit because a buyer will generally pay $20 to $50 less per square foot for a rehabbed property than new construction.
Whether it is a homeowner or contractor flipping a property, pricing is the key to get buyers to look, she said.
"They need to really hone the pencil and get close to the selling price," she said. "Sellers are no longer being unrealistic, and they're getting offers close to their asking price, and sometimes over the asking price.
"If it's priced too high they won't get bids, and if it stays on the market too long, people will wonder what's wrong with it."
Uncertainty over employment is not so much an obstacle for buyers as the spring season starts, said Steven Levine, a Realtor at RE/MAX Prestige in Shrewsbury.
"I think that the jobs that were at risk are gone now, and the folks that are left are pretty confident that the company needs them," he said in an e-mail.
He said buyers that have realistic expectations are doing fine right now. There are some buyers with unrealistic expectations, but they will have to modify those expectations in order to complete a transaction. He predicted that prices would stay relatively flat in the short term and that interest rates are not likely to rise quickly.
"Rates are near all-time lows," he said. "I don't believe the Fed is in the mood to raise them until they see some serious strengthening in the economy overall."
A rise in interest rates could provide a sense of urgency to fence-sitters, added Mr. Stead.
Continued turmoil in oil-producing regions of the world could have an impact on interest rates, said Mr. Bluestone of the Dukakis Center.
"If oil prices continue to go up, it almost surely means the Fed will raise interest rates to tamp down inflation," he said. "That's another reason to buy a home, before the interest rates go up.
"… We're not looking for record sales," Mr. Bluestone said, "but if you ask if we're expecting an increase from what we've seen, the answer is yes."
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Martin Luttrell can be reached at email@example.com.
Downturn cost state fewer jobs than thought
Revised figures suggest recovery may be weaker
By Megan Woolhouse, The Boston Globe
March 4, 2011
The recent recession was milder in Massachusetts than first thought, as the unemployment rate peaked at a much lower level and the state shed fewer jobs than reported previously, according to revised data released yesterday by the state Executive Office of Labor and Workforce Development.
The annual revisions were reported along with monthly employment figures, which showed the state's jobless rate holding steady at 8.3 percent and employers adding 5,600 jobs in January. The US Labor Department revises state data each year as more information becomes available from employers and statistical agencies.
The state's unemployment rate peaked in the recent recession at 8.8 percent in October 2009, instead of 9.5 percent in January 2010, according to revised data. The state also shed 24,000 fewer jobs during the downturn that stretched from the spring of 2008 to the summer of 2009. The state lost 143,000 jobs, or 4 percent of employment, compared with the initially reported 167,000, or 5 percent.
At the same time, the revisions showed that recovery in Massachusetts has been significantly weaker than thought, and more in line with the slow national rebound. Over the past year, the state added just 28,000 jobs, compared with initial estimates of about 45,000, according to the revisions.
"History has changed quite a bit. It now looks as if the recession was not as severe, it looks like we lost a lot fewer jobs during the recession," said Northeastern University economics professor Alan Clayton-Matthews. "Over the year, our job growth in Massachusetts was roughly the same as it was nationwide, not stronger as it had been characterized."
January marked the fourth consecutive month of employment gains for Massachusetts, another sign that the state's job market continues to improve. Michael D. Goodman, an economic analyst and professor at the University of Massachusetts Dartmouth, said the nearly 6,000 jobs added in January were encouraging, particularly in the face of rising food and gas prices.
"We are growing; we appear to be adding jobs," Goodman said. "We're still below the number of jobs we had when we went into the recession, but there are areas of the economy where jobs were created."
Also encouraging for the state is an improving national economy, which analysts say will help lift growth in Massachusetts. The national unemployment rate fell sharply in January, to 9 percent from 9.4 percent. Yesterday, the Labor Department said claims for unemployment benefits dropped to 368,000 in the week ended Feb. 26 to the lowest level in nearly three years.
The Labor Department reports national employment and unemployment figures for February today.
In Massachusetts, professional, scientific and business services sectors led job gains in January. The sector, which includes a variety of technology, research and technical firms added 6,700 jobs. Another technology-related sector, information, added 1,000 jobs in January.
Education and health services, the state's largest employment sector, added 400 jobs in that month, and 10,600 over the year. Financial services gained 300 jobs in January.
Construction added 500 jobs in January. Over the year, however, construction employment is still down 2,300 jobs.
Leisure and hospitality, which includes restaurants and hotels, lost 600 jobs in January. Manufacturing lost 1,900, but has gained 900 over the past year.
This mix of job losses and gains shows that recovery remains uneven, giving people vastly different outlooks depending on the industries in which they work, Goodman said. High-tech workers may find abundant job opportunities or a seeming "feast," Goodman said, while construction workers face a "famine."
"It's the reason why you can have what is undeniably an economic recovery," he said, "even though large portions of the population are not seeing it, feeling it, or believing it."
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Megan Woolhouse can be reached at firstname.lastname@example.com.
Strengths and weaknesses of nation's jobless rate
NECN: This Week in Business with Paul Guzzi
March 6, 2011
Barry Bluestone, Dean of the School of Public Policy and Urban Affairs at Northeastern University takes a closer look at the nation's jobless rate– both the strengths and weaknesses. Bluestone says manufacturing is leading the country out of the recession and he makes some predictions about the spring and summer housing market.
State jobless rate holds steady at 8.3 percent
The Boston Herald
March 3, 2011
The Massachusetts unemployment rate didn't budge in January, remaining at 8.3 percent compared to the revised December jobless rate.
"The unemployment rate holding steady is good news," said Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University. "It's evidence that jobs are on the rise and people are gaining greater confidence in the economy's recovery and are coming back into the labor market."
Employers added 5,600 jobs to their payrolls, with the biggest gains in the professional, scientific and business services sector, the state Executive Office of Labor and Workforce Development announced today.
Job gains also were posted in trade, transportation, utilities, information, construction, education, health services and financial activities.
The state lost jobs in the manufacturing, government, leisure and hospitality sectors.
Massachusetts' jobless rate ranks below the national rate of 9 percent and half a percentage point lower than the revised 8.8 percent rate in January 2010.
The Patrick administration noted in its report that the state's unemployment rate remains down since peaking at 8.8 percent in October 2009.
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US, Mass. economic recoveries in 'rebound phase,' panel says
Lifts in housing, spending, jobs are among key factors
By Todd Wallack, The Boston Globe
March 2, 2011
The US and Massachusetts economies are continuing their slow and steady march to recovery, a panel of executives and analysts said yesterday.
The panel, appearing at a breakfast program sponsored by Sovereign Bank and the Greater Boston Chamber of Commerce, cited improving housing and commercial real estate; increased business spending; and private sector job growth.
"We are moving into a rebound phase," said Greg Pinto, chief investment officer for Baystate Wealth Management, an investment adviser in Washington. "We are now cautiously optimistic."
Barry Bluestone, an economist at Northeastern University, said the Massachusetts economy has slowed in recent months, following a burst of activity and job growth in the first half of 2010. Growth in the second half was slowed by cuts in government spending, offsetting private sector job gains with losses in public sector employment.
"We are looking at slight improvement, rather than a more rapid improvement," said Bluestone, dean of NU's School of Public Policy and Urban Affairs.
Bluestone also said the state's housing market appears to have hit bottom but could rebound if the possibility of rising mortgage rates prompts buyers to make deals now.
Steven Andrews, a senior vice president at Sovereign Bank, said the commercial real estate market appears to be improving, as well.
Both office vacancy rates and rents have been stable, according to data from Reis, a research firm that tracks the commercial real estate market. And, Andrews said, the value of commercial real estate is rising.
Peter Smyth, chief executive of Greater Media Inc., which owns more than a dozen radio stations in Boston and other markets, said he's also seeing signs the economy is improving and businesses are spending more. But he is not expecting explosive growth.
"We are starting to see confidence come back," Smyth said.
An array of economic data – from unemployment to consumer confidence surveys – has indicated the US economy is slowly recovering, but remains significantly worse than it was before the recession began in December 2007.
The US unemployment rate fell to 9 percent in January, from 9.4 percent in December. But job growth has been sluggish, raising concern that unemployment could remain relatively high for some time to come.
In Massachusetts, the unemployment rate was 8.2 percent in December. The state is scheduled to release January figures tomorrow.
To view the original article online, click here.
Todd Wallack can be reached at email@example.com.
Encore Careers: One Solution to the Coming Labor Shortage
By Barry Bluestone and Mark Melnick
Communities and Banking | Federal Reserve Bank of Boston
Spring 2011
With nearly 10 percent of the American labor force unemployed as of this writing and another 7 percent so discouraged by their prospects that they either have dropped out of the workforce or have settled for part-time jobs, the most urgent economic challenge is how to generate enough jobs to put America back to work.1 So it may come as a surprise that within less than a decade, the United States may face the opposite problem — not enough workers to fill expected job openings.
That is likely to occur as the baby-boom generation reaches traditional retirement age. U.S. Census-projected population growth between 2008 and 2018 suggests that the nation will undergo a dramatic shift. The vast majority of population growth is projected to take place in the 55 and older age group, one that historically has had labor force participation rates well below those of younger workers. If the shift in the age distribution to older Americans results in a substantial reduction in overall labor force participation — the proportion of an age cohort working or looking for work — long-term economic output could suffer.
Download: Encore careers article | Communities and Banking – Spring 2011
Peirce: a middle way to resolve labor battle
By Neal Peirce, The Richmond-Times Dispatch
February 23, 2011
Is there a clear "right" or "wrong" in the titanic struggle, symbolized by Wisconsin and erupting in other states, to curb government employee unions?
On the side of Republican Gov. Scott Walker and his allies, there's the reality of the deepest deficits that state governments have ever experienced. Arguably, it's any public official's right (perhaps duty) to look far and wide for savings.
Plus, governors should represent the broad public that pays the taxes to finance government wages and benefits. That public has been hit by a cruel recession. Citizens ask: Why should government workers enjoy more job security, be able to bargain for better pay than me?
Not just Republican governors but Democrats in such states as California, Connecticut, New York and Massachusetts are arguing that current levels of public compensation are unsustainable.
Health care and pension contributions are another factor: Typically, government workers put in a substantially smaller share of their pay for health coverage and into retirement funds than private-sector workers.
The public can logically lament: My health benefits have diminished rapidly, my defined-pension benefits are gone, my 401(k) savings are decimated. Why should my "employees" – government workers – enjoy more security than I do?
On top of which there's an inherent conflict of interest: Government employee unions can engage in elections, sometimes sway enough votes to determine who they'll face across the bargaining table.
An early predictor of today's major challenge to public-sector unions was Barry Bluestone, dean of Northeastern University's School of Public Policy and Urban Affairs. Bluestone is a friend of labor – as a college student he worked on a production line at a Ford plant, and his father was a key lieutenant of Walter Reuther, founder of the United Auto Workers.
But Bluestone warned, starting in 2009, that private-sector workers, faced with stagnant wages and threat of job losses, would insist on a leaner, more productive public-sector work force. Wages for public employees, he notes, aren't necessarily higher than those for private-sector workers. But governments' health-care costs for their workers are "much higher," and union-backed work rules and job classifications often do undermine efficiency and effectiveness.
But it's also fair to ask: Are Governor Walker and his allies simply trying to curb costs and increase employee accountability? Or are they also driven strongly by a political agenda?
For a litmus test, check Walker's exact proposal. He would limit collective bargaining for most state and local government workers to wages only, revoking their right to negotiate health care, working hours and vacations. And he'd require workers to contribute more to their pensions.
So far, so good, one could argue. But Walker goes further. He'd restrict wage increases to the consumer price index. His bill would limit contract agreements to one year. It would force unions to take annual votes of their members to stay accredited. Union dues would no longer be deducted from paychecks.
And perhaps most questionable of all, the Walker bill applies the new rules to all public employees in Wisconsin except the police and fire unions – unions that supported his election campaign. Fire and police are known nationally for driving some of the highest wage and benefit packages of the entire public sector, and they're generally conservative in their politics.
The opposite is true of the unions closest to the Democrats – AFSCME (the American Federation of State, County and Municipal Employees), the National Education Association and the American Federation of Teachers. By some estimates, their net contributions to Democrats in last year's elections were $200 million.
Bottom line: It's naive to think the campaign to curb the unions' power isn't working hand in hand with strong partisanship. And it comes just a year after the Supreme Court's stunning 5-4 decision removing practically all restrictions on the rights of corporations and unions to contribute to political campaigns.
Talk about judicial activism! With their deep pockets, corporations, typically heavily supportive of Republicans, gain immense added political clout. The clear losers: Democrats and their progressive union allies – often the staunchest supporters not just of public workers but of progressive federal and state legislation to give a hand to America's poor and disadvantaged populations and offset some of today's wild shift of incomes away from the poor and toward the richest Americans.
Bluestone recommends a "grand new bargain." Unions would give significant ground on work rules, to reducing their health-plan costs, agreeing to merit pay, school reform and a major focus on superior work performance. They'd support pension reform and advocate for regional merger of services to save public monies. And in return, they'd get "greater job security and public respect."
Too rational an idea in the midst of today's mass rallies and bitter confrontations? Most likely. But the direction we should head in? Yes.
To view the original article online, click here.
Neal Peirce can be reached at email@example.com.
This time, there was action – and an offer
By Erin Allworth, The Boston Globe
February 27, 2011
The first two times Debbie Fredette tried to sell the two-family in Haverhill, back in 2009, only one or two potential buyers showed interest, and she pulled it off the market. She recently decided to try again, hoping that a lower asking price, a slightly better economy, and a fresh coat of paint would attract an offer.
It did. After putting her home back on the market in late November, Fredette's phone rang steadily with inquiries from real estate agents wanting to bring clients by for a look. With seven showings last month alone, Fredette recently accepted an offer.
"As soon as the [Christmas] trees came down, I was getting calls left and right," the 47-year-old office manager said. "It just gives other people hope."
The increased interest in Fredette's home – and its sale – is another example that the housing market is slowly healing, helping sellers and real estate agents to muster some optimism as they head into the crucial spring housing market.
Buyers, who were few and far between two years ago, may not be rushing to make a deal. But more people appear to be looking, and at least thinking about a purchase.
Sellers, too, seem to be sensing that the chances for a sale are improving, and more are putting their properties on the market. Nearly 23,600 homes were up for sale in Massachusetts last month, a 4 percent increase from a year ago, according to the Massachusetts Association of Realtors.
Karl Case, an economics professor emeritus at Wellesley College and one of the nation's leading housing experts, said the market is very much a "mixed bag" for several reasons. Prices are low, but high unemployment rates discourage many potential buyers from making the commitment. But, he said, an improving economy should at least get buyers shopping around.
"It's certainly the best time in five years to buy," said Case, creator of the widely followed S&P/Case-Shiller index, which tracks national and metropolitan home prices. "Interest rates are really low, prices have come down a long way." Real estate agents, however, caution sellers against jumping into the market without carefully pricing and preparing homes for a very competitive market. Buyers are so selective today that homeowners need to paint, make repairs, update kitchens and bathrooms, and then list the property at realistic prices.
"These are not the days to throw a property on the market and say, "Oh, let's try this price and see what happens,' " said real estate agent Judy Moore, who sells homes in the Lexington area.
When Fredette first put her house on the market two years ago, she figured $349,000 was a fair price for a two- bedroom apartment downstairs and an upstairs unit with three-plus bedrooms, where she raised her two sons and still lives.
"We didn't get a lot of action on it at all," she said. She dropped the price to $309,000,but still had no takers.
This time, she listed the house at $299,000 and made some improvements, including a new coat of paint, to her rental unit. Fredette said she needed to sell the home because it's too much for her, a single mother, to handle financially and physically, especially since she has elderly parents to take care of in New Hampshire.
If there are more sellers like Fredette – those who are willing to cut prices – it could lead to increased sales this spring, economists said.
Last month, sales rose as the median price in the state fell, according to the Massachusetts Association of Realtors.
"It might finally be that people are saying, 'OK, I am going to drop my price and move on with my life,' " said Barry Bluestone, an economist at Northeastern University.
Fredette said she had some reservations about whether she should have waited before putting her home back up for sale. Now she's happy she did. The buyers offered $285,000 – a deal Fredette said she can definitely live with.
"I'm still walking out . . . with a little money," she said.
To view the original article online, click here.
Many are willing to wait out sellers
By Brittany Danielson, The Boston Globe
February 27, 2011
WALTHAM – On a recent sunny, but cold Sunday, Cheryl and Brian Gillespie stood outside a tidy ranch in the Cedarwood neighborhood of this city. They commented on the sound of the traffic coming off Interstate 95. Inside, they pointed out hollow-core doors that needed replacing. They noted gaps and discoloration in the hardwood floors. And then they walked away.
The Gillespies, empty nesters hoping to downsize, have spent the past year searching for a new home, looking at an average of 5 to 10 properties a week. They are ready buyers, with good credit, a sizeable down payment, and preapproval for a mortgage. But as open houses follow private showings, which follow open houses, they say they aren't ready to compromise: They will look until they find the right home at the right price.
"We have a lot of advantages as home buyers," said Brian Gillespie. Added Cheryl: "Maybe that's what makes us more picky."
With the housing market heading into the crucial spring season, the Gillespies' attitude suggests any improvement is likely to come slowly. Buyers continue to show they are willing to wait out sellers to gain the amenities and prices they want. And with median prices slipping recently, and mortgage rates holding low and steady, buyers like the Gillespies feel little urgency to make a deal.
The couple's long search also suggests another sign of a slow comeback for the market. They have been disappointed by the scarcity of move-in-ready homes, an indication that many potential sellers are still unwilling to settle for lower prices.
In order for the housing market to begin a solid, sustainable recovery, said Barry Bluestone, an economist at Northeastern University, sellers will have to accept the reality that it will likely take several years for prices to return to prerecession levels. At the same time, buyers will need to feel that they must act quickly to lock in low prices and rates.
When that happens, perhaps in six months or so, said Bluestone, "We could have a market with more homes to buy, and more home sales."
The Gillespies began thinking about moving from their three-bedroom home in North Reading when the last of their three children moved out in September. In addition to finding a smaller place they also wanted to cut their commuting time.
Brian, 52, is a software engineer who works in Needham, a commute from North Reading that he describes as "simply lousy." Cheryl, 48, works as a financial administrator at the Massachusetts Institute of Technology in Cambridge. They narrowed their search to Waltham, which would mean less time in the car for both.
The Gillespies are hoping to find a two-bedroom home, far enough away from noisy main roads, but conveniently located for commuting. A garage, and an updated kitchen and bath are must-haves. Their price range: mid-300's to mid-400's.
Since they began their search last year, the Gillespies have spent nearly every Sunday – and many weeknights – looking at homes. Attending open houses has become a Sunday ritual. Cheryl Gillespie updates her list of properties daily, often doing drive-bys during the week to get a preview of the home and neighborhood. When open house listings come out just before the weekend, she maps the route they will take on Sunday.
They are considering making an offer on a Waltham home, but are still weighing, location, layout, and potential resale value, while comparing it with other recent sales in the area.
The Gillespies acknowledge that now is a good time to buy. But they haven't put their North Reading home up for sale yet, and don't feel any need to pick up their pace.
They are looking forward to spring, when they hope more homes will come on the market. And they're still convinced that the right house, and the right price, will come along. Until then, they plan to just keep looking.
"I think we're at the age," said Cheryl Gillespie, "where we just want what we want."
To view the original article online, click here.
In Mass., Budget Standoff Between Unions And Gov't. Not Likely
By Bob Oakes, WBUR
February 22, 2011
You can hear a recording Barry Bluestone on this portion of Morning Edition here.
The budget standoff moves into a second week in Wisconsin, where protesters continue to gather at the state house Tuesday.
Unionized public employees, teachers and other state workers have been demonstrating against the governor's so-called "budget repair" bill, which would increase their health care and pension contributions and also curb their collective bargaining rights.
Organized labor in Massachusetts are showing its solidarity Tuesday with rallies in Boston and Springfield.
"Here in Massachusetts we have a strong support for labor unions and for our public sector bargaining rights, however our great concern is that as other unions are faced with these kinds of measures, it could come back here to Massachusetts," said Paul Toner, president of the Massachusetts Teachers Association.
Toner calls it a basic principle of democracy to permit workers to organize and negotiate wages and benefits.
But could Massachusetts face a similar standoff?
It's not likely, according to labor expert Barry Bluestone, who joined Morning Edition Tuesday to consider that question. Bluestone is the dean of the School of Public Policy & Urban Affairs at Northeastern University.
"Here we have a legislature, we have a governor, we have mayors who are generally pro-union, but they want to be able to work with their unions to deal with the fiscal crisis that we have in the state and we have in most of our cities and towns," Bluestone said.
"No doubt there will be battles, negotiations over how we're going to cut costs in the public sector, cities and towns. And this will be over health care, and how much public union members will have to pay for it; it will be around pension reform," he said. "What I would hope would happen here is that we can find a new starting point for labor relations in the public sector."
To view the original article online, click here.
By Alexander Soule, Westfair Online
February 11, 2011
If Connecticut unions sank back into decline in 2010, it was not long into 2011 before they received uplifting news – if the kind of news business owners did not want to get from Gov. Dannel M. Malloy who made a point of reaching out to them as one of his first acts as governor.
In Malloy's appointment of Carpenters Union Local 2010 leader Glenn Marshall as commissioner of the Connecticut Department of Labor, many in Fairfield County privately saw the move as a concession to unions for their support in the recent elections – and as an important ally as Malloy negotiates with state employee unions over pay and benefits in an effort to cut the state budget.
Those unions will be battling to hang onto those benefits as small and mid-size companies throughout the state assume a greater voice in how the state runs its affairs.
"I would suggest that small businesses and minority businesses in many respects have replaced unions as a very progressive force in the U.S. economy and the political scheme," said Fred McKinney, president of the Hamden-based Greater New England Minority Supplier Business Council, speaking at a Hartford gathering of the Partnership for Strong Communities. "If you look at the history of unions in this country, they just didn't pop out of nowhere, they popped out of the situation where workers were struggling … If you look right now at our economy, those issues are most manifest if you look at the minority business community."
Numbers are dwindling
Union membership in Connecticut shrank last year to 16.7 percent of all those employed, according to estimates last month by the U.S. Department of Labor, down from 17.3 percent a year earlier.
While that was the slowest decline of any of Connecticut's neighboring states, it also reversed two straight years of gains as measured by percentage of the work force. Union membership hit its high point of the decade in 2008 in Connecticut, when DOL estimated 275,000 people belonged to a union, a figure that would drop by 17,000 people just two years later.
Membership in New York fell a full percentage point to 24.2 percent of the work force, maintaining its status as the most heavily unionized state in the nation ahead of Alaska.
New Jersey trailed only Michigan for the sharpest drop in the nation at 2.2 percent. Massachusetts was only slightly behind that with a 2.1 percent decline.
North Carolina has the lowest union membership in the nation at just 3.2 percent of the work force there.
'A balanced approach'
Nationally, the number of workers belonging to unions declined by 612,000 to 14.7 million. That represents more than a 50 percent decline over the past few decades, according to Prof. Barry Bluestone, a labor expert at Northeast University in Boston who spoke alongside McKinney at the Partnership for Strong Communities.
"With the union movement's membership so low, private unions have lost much of their power to protect their own members," Bluestone said. "More importantly – at least to me – (unions have lost their) power to be an important force for progressive change in the country, in a period of time when there's a lot of reactionary forces."
Malloy said Marshall brings a balanced approach to the job and that he wants a department that is not opposed to growth, but underlined he expects increased vigilance over employer abuses.
"I want a labor-friendly labor department, and I want a management-friendly labor department – I want people to work together," Malloy said. "I'm trying to send a message that this is a very balanced, even approach.
"Having said that, I want to be very clear – I think that we need to step up enforcement at this agency," Malloy added. "We have not devoted, in my opinion, sufficient resources to enforcement to ensure … that employers are playing by the rules. So yeah, I'm trying to send a balanced message – that's exactly what I am trying to do."
To view the original article online, click here.
Op-Ed: Is Connecticut's Economic Roof About to Collapse?
By Senator Toni Boucher, Westport Patch
February 12, 2011
This opinion piece was submitted by state Sen. Toni Boucher, R-26. She represents Westport, Bethel, New Canaan, Redding, Ridgefield, Weston and Wilton.
Record snow and ice has pummeled Connecticut families and businesses this winter and forecasters say the end is not in sight. As the precipitation continues to fall it's soaking into the already snow packed roofs causing collapses all around the state.
Experts say the sponge-like roofs are the ones most at risk and the only way to alleviate the pressure is to shovel. Connecticut policy makers need to apply that tactic to our fiscal flat roof before it succumbs to the pressure of high debt, high unemployment and high taxes.
The mounting stress on our state's operating budget didn't happen overnight. But if we don't address the crisis now it will become very difficult if not impossible to dig out. Recently, Moody's Investor Service announced it was going to use a new reporting method. No longer will Moody's separate soft debt pension obligations from bonded debt. Instead, the investment house will show a state's total obligation; pension liabilities and debt. Taking into account this new method, Connecticut went to the top of a dubious list of states with the highest debt burden. Our state's bonded debt is $19 billion and we haven't consistently paid enough to pension obligations over the years, leaving our fiscal flat roof with the stress of $72 billion in unfunded liability according to the State Office of Fiscal Analysis.
It may not be clear if Moody's will lower the state's ratings from good to bad, but Fitch Ratings Service did in 2010. At the time Fitch analysts wrote, "The state relies on borrowing to address its ongoing fiscal challenges in the context of already high liabilities and large projected structural gaps." And the Connecticut Mirror noted in February 2010, "When it comes to long term obligations, Connecticut has one of the worst balance sheets in the nation."
We are one of seven states estimated to run out of money to pay public pensions by 2020. The others are Illinois, Indiana, New Jersey, Hawaii, Louisiana and Oklahoma according to Joshua Rauh of the Kellogg School of Management at North Western University.
So how do we begin to shovel? We need a bipartisan team of workers who have the strength to consider closing pension funds to new hires, cap pensions and COLAs for existing workers, raise the retirement age from 55 to 65 years, require employees to contribute more to their pensions and move the state work force from a defined benefit to defined contribution plan.
Gov. Dannel Malloy has said several times there will have to be "shared sacrifice" and "universal sacrifice" while I agree, our towns and cities have been stretched already. We need to have serious talks with our public sector unions. 64 percent of our state employees are in a union. That is the second highest rate in the nation. The mantra of the past that a union's size and power should shield it from economic storms is no more.
Barry Bluestone, Dean of Northeastern University's School of Public Policy and urban affairs says, "As taxpayers absorb how well unionized government workers are living versus the rest of the workforce, unions could see more difficult times ahead." Unless, Bluestone suggests, "unions make a better case to their consumers – taxpayers – that they are becoming part of the solution, not staying part of the problem."
This past week Pfizer announced it was taking 1,100 highly paid workers out of Connecticut. Last year, the Chief Financial Officer of United Technologies Corporation, our states largest employer, told a room full of business leaders he would invest "anywhere but Connecticut." These added stresses to our fiscal stability as a state can not be ignored. The mounting debt, loss of jobs, and our state's poor attitude toward business all add to the cracking, popping and groans of a collapsing roof. We in Hartford need to start shoveling and fast.
To view the original article online, click here.
A city defined
Hard-hit areas like Detroit could enjoy real recovery if emphasis shifted to an export economy
By Renee Loth, The Boston Globe
February 12, 2011
AMID THE animated rodents, smushed test-babies, snack-food perversions, and crude humor of Sunday's Super Bowl ads was a powerful, two-minute homage to Detroit, America's most abject city. Over a pulsating soundtrack of Eminem's "Lose Yourself," viewers were treated to panning shots of some of Detroit's lovingly restored landmarks from the days when the auto industry made it the richest city in the United States. Today it is the poorest, with a 36 percent poverty rate.
Far from avoiding its grim, rust belt image, the ad – ostensibly to introduce a new Chrysler luxury sedan – celebrated the city's guts-and-grit industrial base, its smokestacks, its hard times. "It's the hottest fires that make the hardest steel," the narrator intoned.
It was a goosebump moment for sure. But it will take more than an appeal to regional pride to save Detroit, home to 80,000 abandoned buildings and an unemployment rate of 29 percent. It will take a national urban policy the likes of which the United States hasn't seen for 40 years.
Detroit is only the starkest symptom of decades of wholesale disinvestment in the nation's older urban centers. The same conditions obtain on a smaller scale from Trenton to Buffalo to Lawrence. "If you don't have a platform of national policy you're really sailing against the wind," said Bruce Katz, vice president and director of the Metropolitan Policy program at the Brookings Institution.
But Katz would broaden the lens to include a new economic plan for the whole nation. For too long, he says, America's economic policy has focused on consumption, home ownership, and the financial industry. What if the emphasis – and the subsidies – were shifted to support an export economy, with a strategy that links manufacturing to the new products invented in the nation's universities and idea labs? Not only the cities would benefit.
Barry Bluestone, dean of public policy and urban affairs at Northeastern University, grew up in Detroit. He believes that compact cities, with their smaller eco-footprint, offer a particular advantage to a greener future. "If we had an urban policy that was a smart-growth policy, we might see some of these cities resurrected," he said. As it is, many depressed cities are no longer dense, but blighted with vast tracts of foreclosed housing or vacant land. They need to be radically re-zoned around a smaller core.
Other prerequisites for comeback cities:
- A deeply committed business and political elite. Pittsburgh, hit earlier than many cities by de-industrialization, has retooled and diversified, thanks to smart political leadership and major philanthropic investment from the Heinz family.
- The foresight to recognize that demographics is destiny. As Bluestone notes, something like 8,000 Americans are turning 65 every day. Cities can be attractive to retiring baby boomers looking for culture, convenience, and community. "We converted the entire US economy around kids in the early boom years," said Bluestone, pointing to the rise of suburbs, the "family car," even Disneyland. Now is a good time for a re-conversion.
- Immigration reform. Every American city has benefitted from the energy and hard work of striving newcomers. The current hostility and suspicion greeting even legal immigrants will not help the United States become, as Katz puts it, "the nation of choice for high-skilled workers." Right now, that's more likely to be Canada.
- Investment. Many older cities have "good bones," including cultural institutions, public transit, parks, and waterfronts. But a crime rate like Detroit's or Camden's is enough to fend off the most avid urban pioneer. Unfortunately, President Obama is telegraphing that his budget will cut Community Service Block Grants, targeted to urban areas, by 50 percent.
Rather than concentrating help for cities in "policy ghettoes" that are too easily dismissed or cut, a more expansive economic retooling like the one Katz envisions may be the more pragmatic approach.
Government tweaking can only go so far; what really makes cities thrive are the people. The urban activist Jane Jacobs had it right when she wrote about "the exuberant diversity in a city's streets," the many small, casual encounters that provide delightful friction, "eyes on the street," and social glue. People are still drawn to each other. Bleak as the present may seem, Detroit and other depressed cities already contain the seeds of their revival.
To view the original article online, click here.
Why is the jobless rate staying so high, and what can be done about it?
By Chris Farrell, Yahoo! News
February 9, 2011
The job numbers are bleak.
Some 13.9 million workers remain unemployed 21 months after the end of the recession, according to the latest estimates from the Bureau of Labor Statistics. Of those, 6.2 million people have been out-of-work for 6 months or more, and 8.4 million toil at part-time jobs. And few economic forecasters believe the nation's unemployment rate – currently at 9 percent – will drop much below that level in 2011.
Just how broken is the great American jobs machine?
American companies have returned to record profitability, and, as President Obama pointed out in a speech to the U.S. Chamber of Commerce on Monday, they are sitting on $2 trillion in cash on their balance sheets.
Yet many remain extremely skittish about adding workers to the payroll. The economy added only 36,000 jobs in January, well off the 300,000-plus monthly pace that would be needed to absorb the unemployed and new workers entering the workforce. For instance, if the economy adds 321,000 jobs a month – the average monthly rate for the best year of the 1990s – the economy will reach its pre-recession employment level by May 2016, according to calculations by Michael Greenstone and Adam Looney of the Brookings Institution.
So why aren't American companies doing more hiring, and what, if anything, can Washington do about it?
In his speech to the chamber, the president urged the assembled business leaders to work closely with his administration to strengthen American competitiveness, and he argued that they had a responsibility to do more to help create jobs at home.
"But as we work with you to make America a better place to do business, I'm hoping that all of you are thinking what you can do for America," the president said. "Ask yourselves what you can do to hire more American workers, what you can do to support the American economy and invest in this nation."
But is it lack of responsibility or other factors that are getting in the way of stronger job growth?
With poll after poll showing that Americans' top concern is jobs and the economy, Washington is awash in debate over what the best policies are to revive job growth. Since his State of the Union address, the president has been pressing the case for targeted investments in education, research and infrastructure in a bid to foster the innovation the U.S. needs to create jobs and remain competitive.
But GOP leaders scoff at those plans as a waste of taxpayer dollars and a misguided attempt by the government to pick private sector winners. From Speaker of the House John Boehner on down, Republicans argue that the best thing Uncle Sam can do is lower taxes, cut the deficit and get out of the way of companies trying to build thriving businesses.
The political divide between the administration and Republicans is widely known. Far less understood are the reasons for the crisis in the job market, and exactly why the picture has turned so bleak.
Yes, the past three years have taken an enormous toll. Many of the job losses were concentrated in three industries hammered during the 2007 to 2009 recession – construction, manufacturing, and retailing. Demand remains sluggish, and business managers are cautious about expanding operations too quickly.
But that's just one reason for the dismal performance. The American economy has been faltering at creating jobs for the past decade, since well before the recession. Take private sector job growth, a key measure of the labor market's health. The private sector added jobs at a rate of only 0.6 percent during the boom years of the 2000s. That's a shadow of the 1.8 percent annual rate of private job growth in the '90s and the 2.0 percent yearly pace of the '80s, according to the Economic Policy Institute.
So what are the main culprits for sluggish job growth other than the recent recession?
Globalization and technology: At the top of most lists is the powerful interplay between globalization and technological innovation. Intense international competition for markets and profits has driven corporate America to focus intensely on boosting productivity-in other words, doing more with fewer workers.
Nowhere is that clearer than in traditional smokestack America. About 20 percent of private workers were employed in manufacturing, mining and public utilities in 2007. (That's down from about 40 percent in 1970.) Now, the share of employment has fallen to about 13 percent. Yet companies are so productive that the U.S. remains the world's largest producer of manufactured goods.
It isn't only traditional smokestack jobs that have been lost, either. Many service and information workers became an expensive anachronism as technological advances offered new opportunities for slashing costs and improving economies of scale. Think about how many bank tellers and secretaries have been replaced by ATMs and voice mail – and that's only a start.
Throughout the economy, many administrative, bookkeeping, call center, back office, and similar jobs have been lost to computers and outsourced to India and other emerging markets. A world filled with smart computers, all linked via the Internet, wireless and other high-speed communication networks, has eliminated whole job categories among the white collar crowd. "We are still underestimating the power of the information technology revolution," says Bruce Yandle, economist at the Mercatus Center at George Mason University. "We're substituting technology for labor."
Education: There's one other factor economists highlight: The education system has failed many young adults, especially in the K-12 years in inner-city and rural America. . Most new jobs require some sort of college education these days. The modern workplace is a hostile environment for anyone with only a high school diploma, let alone a high school dropout. In 1980, college graduates earned roughly 40% more than their peers who held only a high school degree; today, that "wage premium" has grown to 84 percent.
Business may have the "Help Wanted" sign out, but the workers applying don't have the right credentials. The troubling nexus between a lack of educational achievement and a high unemployment rate is especially concentrated among men. "To the degree that there is a structural problem, it's concentrated at the bottom third of the male labor force," says Stephen Rose, Research Professor at the Georgetown University Center on Education and the Workforce.
Of course, America's education problem has been building over time. The growth in high school graduation rates has slowed since the 1970s. It now appears that America's four-year high school graduation rate hovers around 69 percent, according to the Alliance for Excellent Education. Some minority groups do much worse: a mere 56 percent for Hispanics and 54 percent for African Americans. "There is certainly some structural unemployment in the economy," says Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University. "But we can't explain a 9 percent unemployment rate with structure. "
Given those problems, what more can the government do to spur new job creation? The Obama Administration is pushing hard for more infrastructure projects, which typically draw support across party lines. (The AFL-CIO and the Chamber of Commerce put out a joint press release on Jan. 26 praising the president's call for infrastructure investment.) But that traditional response may not hold when Tea Party conservatives are rebelling against fiscal spending and business-as-usual on Capitol Hill.
Considering the current state of politics in Washington today, any job creation policies ultimately seem to rest on one of the following four pillars:
Pillar 1: Economic growth – Robust economic growth creates jobs. The slow pace of growth as the Great Recession has ended is the single most important factor behind today's high unemployment rate. Strong growth also would encourage businesses to invest the nearly $2 trillion in savings they have on their books; that, in turn would lead to more hiring, which will hike demand, and so on in a virtuous cycle. But the economy hasn't reached that tipping point yet. "There isn't enough oomph in the economy to get people back to work fast," says Northeastern's Bluestone.
Pillar 2: Tax policy – The federal, state, and local government policy for prodding business to hire is to avoid tax hikes, and to cut taxes where possible. That principle was at the core of the package of compromises Obama reached with congressional Republicans during December's lame duck session. The deal, among other things, extended the Bush era tax cuts and reduced the payroll tax. From September 2010 to the end of 2011, businesses can also fully write off the cost of new equipment, a move designed to get them to speed up investing. The administration also would like to permanently eliminate capital gains taxes on some kind of small business investments held for more than 5 years.
Pillar 3: Education – Job growth in the future will be in the parts of the economy that require at least some college education, such as health care. Even manufacturing jobs require higher degrees. For instance, in 1973 only 12 percent of workers in manufacturing had any college experience. That figure has swelled to more than 36 percent, according to data collected by the Georgetown University Center on Education and the Workforce. Similarly, some three decades ago two-thirds of workers in fishing, farming, and mining were high-school dropouts. Now at least a third has some college education. The sense is too few school-age kids are being prepared for the new world of work. Right now, most states and local governments are reducing, not hiking spending. "That will change when the recovery gets stronger," Rose says.
No. 4: Clusters – Think Silicon Valley. Clusters represent a region's leading innovative businesses supported by a network of producers, suppliers, investors, universities and related business. Colorado has a 1,500 company clean-tech cluster. The Twin Cities is home to the medical device industry cluster. Research shows that strong clusters tend to generate jobs. Perhaps more important, experience shows that clusters tend to attract bipartisan government support at the local level, says Lee Munnich, director of the State and Local Policy Program at the Humphrey Institute of Public Affairs. Ideology is less important on the local level when it comes to backing leading industries.
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Labor unions face an image crisis
By Emily Rooney, WGBH
February 8, 2011
Barry Bluestone interviewed by Emily Rooney about public attitudes regarding labor unions.
In U.S. job market, young fight for full-time work
By Kristina Cooke, Reuters
February 8, 2011
(Reuters) – Shanee Greenidge of Boston has been searching for full-time work since she dropped out of high school in 2009 and took a string of part-time jobs to help her mother pay bills.
"I'm looking for any type of full-time job. I don't care what it is, I really need something," said Greenidge, 20.
Her situation is typical of millions of young Americans caught up in the aftermath of the country's deepest economic crisis since the Great Depression.
Greenidge has held a number of part-time jobs in the past two years, including work as a landscaper, but nothing to put her on a permanent career path.
Even for part-time retail jobs, she said, she is competing with people with college degrees or years of experience.
"There's a lot of competition. It sometimes feels like I don't stand a chance," she said.
The number of Americans working part-time because they cannot find a full-time job or because their hours were cut more than doubled from around 4 million in 2007 to more than 9 million in 2009.
The number is edging lower, but as of January 2011, 8.4 million were still working part-time because of the weak economy, according to U.S. payrolls data issued on Friday.
The U.S. unemployment rate has fallen to 9 percent, but if involuntary part-time workers and people who are not actively looking for work are counted, it stands at 16.1 percent, according to government data.
Andrew Sum, an economics professor at Northeastern University in Boston, said past recessions suggest it will take several years to make a significant dent in the number of underemployed Americans.
"It takes really strong three or four years of growth until you get a big push down in this number," he said. "There are a large number of employers who are not sure about future demand. So they want to keep the cost down."
But the cost of being underemployed is "huge," both for those desperate for more work hours — who tend to be young adults, less-educated and blue-collar workers — and the broader economy, Sum said.
Most part-time employees work half the hours of full-time employees and often do not have benefits such as health insurance and pensions, Sum said. That puts a strain on already stretched public services.
Underemployed workers tend to get less training at work and earn less in the future than full-time colleagues, he said.
These lower earnings hold back their spending on goods and services, which drives the U.S. economy. Part-time workers on low incomes are also more likely to need social services such as food stamps, even as their lower wages and expenditures reduce their tax contributions, adding to U.S. fiscal strains.
Neil Sullivan, executive director at the Boston Private Industry Council, said the difficulty young people have getting a firm foothold in the job market is especially worrying.
"Disconnected youth are the ones that do the most harm to themselves and the community," Sullivan said. "You can find them on the street corners all around urban America and there are few prospects for them apart from part-time retail."
Melissa Rodrigues, 25, who recently graduated with a bachelor degree in sports sciences, works part-time looking after children at an after-school club while she looks for a permanent job. Many peers who graduated with her, she said, are waitressing or going back to school.
"I've applied to a lot of places, but they want experience. They want two years, for everything," she said.
Even those with more experience can find it tough to regain their footing in the labor market.
Beth Tarbell, 46, was laid off from her job writing procedures and safety manuals for the restaurant industry in Austin, Texas, last spring and since then has been working part-time, off and on.
"I'm getting a bit nervous now," she said. "I know people who are sleeping on other people's couches and I am hoping I don't become one of them," she said.
"I've had a former boss tell me, 'I wish we could afford to bring you on full-time but we can't.'"
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Economist: 2011 Is Transition Year To Stronger Economy
By Brandon Butler, Worcester Business Journal
February 4, 2011
2011 will be the year that the Massachusetts economy transitions back to healthy, but not overly robust growth levels, and 2012 will see even stronger growth, predicts Northeastern University economist Alan Clayton-Matthews.
Clayton-Matthews presented his economic forecast at the Clark University graduate center in Southborough to a meeting of the which is a statewide nonprofit business advocacy group.
"We had a terrible dot-com recession in 2001 to 2003, and we were just beginning to get to a nice robust growth path when another recession hit," Clayton-Matthews said. "It appears we're just beginning to get back to that robust growth path and it looks like we're on our way to that. But it hasn't been a smooth transition."
After rapid growth in early 2010, it slowed at the end of the year. This year, the Massachusetts economy will grow at a steady rate of about 3 percent, Clayton-Matthews predicted. That will just about mirror national economic growth, but the national economy may grow even faster.
Recently the state's economy has been outpaced by national economic gains, but Clayton-Matthews said he predicts that is merely a "pause" in the state's trajectory.
2012 will see even more robust growth, he said, which will then level off in 2013 and 2014.
The recession from about May 2008 to August 2009 was not as severe in Massachusetts compared to the rest of the nation, as is evidenced by the state's unemployment rate not dropping as severely as it did nationwide, Clayton-Matthews said.
Plus the recession nationwide, at 15 months, was neither as long nor as severe as recession of the late 1980s into the early 1990s, which lasted for 31 months.
Coming out of the recession, as consumer demand continues to increase, businesses will continue to hire. And because businesses have already increased productivity at high rates, for businesses to increase output, Clayton-Matthews expects them to hire.
The technology market specifically should be primed for growth in the future, Clayton-Matthews said. That sector has experienced a "V" shaped recession with technology products seeing demand levels similar to that of before the recession.
As for the housing market, Massachusetts home prices generally fared better in the recession compared to nation as a whole, but they have begun to level off recently.
Meanwhile, construction permits for new housing are a third of what they were before the recession.
"Those numbers will not come back until the sales figures do," he said.
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Professional jobs harder to get, college grads find
By Mike Kilen, Des Moines Register
February 6, 2011
Rose Mayo graduated with honors in public relations from Bradley, a private university. One might catch her at a West Des Moines mall, relating with customers looking for cute sweaters at Charlotte Russe. Or using her minor in French to relate with the public as a YMCA lifeguard. Or communicating with her mom about feeding the dogs because she lives at home again.
But at least she's not her older brother Cliff. While Rose's six-month search for a job that matches her six-figure education is exhausting, Cliff has been at it 18 months. The Iowa State University political science graduate is a waiter.
College graduates now face long odds in finding work related to their degrees, and they are filling retail and service jobs in a new reality that some call gigonomics – working several "gigs" just to pay off enormous student loans.
They could start a support group just at the malls to compare misery.
Last April, the 19.5 percent unemployment rate for Americans ages 16 to 24 was a record high. And December's 18.1 rate still ranks as the worst since the early 1980s when the recovery was quicker. In Iowa, the 12.8 percent unemployment rate for 16- to 24-year-olds in 2009 was up from 8 percent just two years before. Last year's Iowa figures won't be released until May.
But even as the state's economic indicators improve, graduates with high loan debts take any job available.
Whitney Free Bakula, 25, is using her communications degree to talk to customers looking for pajamas at Aerie in West Des Moines or with moms needing onesies at Babies R Us in Clive. That's only half of her four jobs; she works at the Des Moines Art Center and does freelance marketing.
You might have your online order filled at the Sears Call Center by Melissa Hille, a licensed attorney trying to pay off her $130,000 Drake Law School debt at $11.50 an hour.
All ages have been equally hit hard in the last three years, but those in their 20s are always worse off, says Heidi Shierholtz, labor economist with the Economic Policy Institute. They are competing against workers with much more experience, she said, and if they do secure a job in their field they often can be the first laid off.
One in four college-educated adults work in jobs that are not related to their degrees, and the rate increases to 40 percent for those ages 25 and younger. Of those, 26 percent are working retail jobs or as waiters and bartenders, according to research by Andrew Sum at the Center for Labor Market Studies at Northeastern University.
Sum's research also found that if you don't get a college-related job, earnings are only slightly higher ($520/week) than those with a high school diploma ($450/week).
"It radically reduces the rate of return on your college education investment," Sum said.
Perhaps not surprisingly, Bakula is asking herself: "Should have I even gone to college?"
This is how a few young adults in Des Moines face the day: Keep a change of clothes handy, depending on the jobs scheduled that day; answer frequent calls from lenders wanting a student loan payment; fire off a few online applications; in free time, dream up an online business or volunteer for organizations in their field.
"It's a juggling act," said Bakula, an Illinois native and 2008 graduate of Wartburg College in Waverly. "You start thinking, why did this have to happen to me? I'm just now coming to terms with it."
She owes $32,000 in student loans, and that's with scholarships and help from parents. She makes $8.25 an hour at her main job at Babies R Us, selling toys and diapers. "Not exactly my area of expertise."
Bakula took an advertising job at Yellowbook in Cedar Rapids out of college but was laid off after a year. She briefly moved back home with her parents.
"I wasn't doing enough to satisfy them," she said.
She then moved to central Iowa to live with her older sister in Waukee and found part-time jobs, while applying for others in her field. She eventually moved out and got married.
Bakula started a freelance marketing business, but it's sandwiched among her three jobs.
"A lot of people my age look at jobs with the idea that it's not their life. This is how you earn money to do what you want to do with your life," Bakula said. "But this whole process has given me appreciation for what a job really means. Now my goal is finding a job that means more than just income."
Her generation was raised on the idea that a college education sets them apart to land a job, as it did for past generations. When they find out that's no sure thing today, it can be disheartening, said William Liu, a University of Iowa professor of counseling psychology.
"They start looking for jobs, not necessarily careers," he said. "What might set in is depression, lots of anxiety and shuffling of their identity."
Christine Whelan heard so many difficult stories from students that the University of Pittsburgh sociology professor wrote "Generation WTF," a February release that turns the derogatory exclamation into advice.
"The tendency is to say these are self-absorbed brats who are whining about bad times, but this is a very new thing. They are heading into some tough realities," she said. "But what is heartening is how idealistic they are. Students tell me they are not going to make a million (dollars), but maybe they can make a difference in the world. Maybe they can help people. If that is true, some good may come of this."
This is how young adults look for jobs: Hunched over a computer.
Rose Mayo applies for jobs daily but often companies request no phone calls or personal e-mails, simply a "reply at info@ …"
She had one interview at a public relations agency and faced applicants with more experience. She applied at jobs that required only a general equivalency degree and was deemed overqualified. She applied for nonprofits and faced 300 other applicants.
With most job openings that can be applied for online, she said, businesses are flooded by jobless people who might not even have interest or qualifications, but they need work so they take a shot.
"It only takes 30 seconds, why not?" Mayo said. "Today anybody who takes a photograph is a photographer. Anybody who has a computer is a job applicant."
Her phone messages have gone unanswered. So she has started to leave a log of her calls.
"One of the great fallacies of this generation: I sent an e-mail, something must happen," said Whelan.
In her book, Whelan suggests old-school strategies, such as trying to meet in person, smiling, giving compliments, saying thank you – "those social graces that this generation is still learning in addition to their tech skills."
Rose's brother Cliff Mayo, 25, did plenty of smiling as a waiter at T.G.I. Fridays in West Des Moines but got so frustrated in his 18-month search for a job related to his political science degree that he took off for Washington, D.C., when he found an internship last summer.
That has ended and now he's waiting tables at a D.C. restaurant, where the tips are decent but not enough to pay back his $45,000 student loans and make rent.
"To be honest, mom is sick of paying my rent," he said.
College graduates in Iowa have the second-highest debt in the nation – an average of $28,200, according to the 2009 report Project on Student Debt – and the state Board of Regents has proposed a 5 percent tuition hike at Iowa's three state-run universities next year.
At least Cliff doesn't have his sister Rose's $100,000 in loans. Their experiences may have led a younger sister to seek out community college.
"I made enough to raise my three children, not enough to save for their college education," said mom Cindy Mayo, who works at a bank in Des Moines. "No way did I think they would not get hired shortly after college. I thought they would make a decent living.
"One thing I've learned is you can't tell them how to live. They have to find their own way."
This is what they face some days: The person in the next cubicle at the Sears Call Center learns that Melissa Hille is a 27-year-old law school graduate who passed the Iowa bar and asks, "What are you doing here?"
Trying to make rent, car and student loan payments while making about $25,000 a year.
"This age group is the most likely not to have health insurance and have the lowest wages of all. And those wages are going down," said David Osterberg, executive director of the Iowa Policy Project.
Even before the recession, his organization's research showed that hourly median wages for male workers ages 25 to 34 in Iowa had dropped 8.2 percent from 2001 to 2007.
It's more pertinent to ask Hille is what's keeping her?
Her legal speciality is in government, lobbying and tracking bills, and those jobs have been cut, she said. To move out of state would require taking another state's bar exam with its varied laws. To apply outside her speciality would involve learning a new area of law.
So she applied for paralegal jobs, well below her qualifications. At one job interview with a local company, Hille was interrupted six times by this question: "You do realize this is a paralegal job?" She didn't get hired.
There are small signs of hope.
The National Association of Colleges and Employees reports that employers anticipate hiring 13.5 percent more new college graduates in 2011 than they hired from the class of 2010. In 2009, the association reported that employers planned to hire 21.9 percent fewer college grads than in 2008.
That fits what Kathy Wieland sees at Iowa State University. The director of business career services says that 90 percent of May graduates in the business college were employed in their fields, up from 84 percent the year before.
"The corridor from Kansas City to Minneapolis made it through pretty well," she said.
Speaking of hope, the public relations Babies R Us clerk said she is excited about a recent application for a communications job at McFarland Clinic in Ames.
But just days after the job was posted in January, Whitney Bakula already had 58 rivals.
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Mike Kilen can be reached at email@example.com.
Manufacturing spurt spurs hiring
By Christopher S. Rugaber and Derek Kravitz, The Boston Globe
February 2, 2011
WASHINGTON – The best month for US factories in nearly seven years is brightening the outlook for job growth.
Companies are exporting more construction and mining equipment, and Americans are buying more cars, appliances, and computers.
The Institute for Supply Management, a private trade group, said yesterday that its index of manufacturing activity rose last month to 60.8. It was the highest reading since May 2004 and the 18th straight month the sector has grown. Any reading above 50 indicates expansion.
The strong data on manufacturing activity were a major reason the Dow Jones industrial average close above 12,000 for the first time since June 2008. Investors overlooked a separate report that showed builders spent less on projects in December and that the construction industry had hit a decade low.
Construction typically helps drive economic recoveries after a recession. But this time around, factories are more likely to crank out jobs.
Manufacturers added 136,000 jobs in 2010, the first annual net gain since 1997. And the trade group's employment index last month rose to its highest level since 1973.
Still, the sector lost almost 2.2 million jobs in 2008 and 2009. And manufacturers have managed to boost output in recent years by making their operations more efficient and getting more work out of the employees they already have.
Brian Bethune, an economist at IHS Global Insight, said he expects manufacturers will likely add about 10,000 to 15,000 jobs a month for the first few months this year. One reason hiring expectations are rising is that new orders, export orders, and order backlogs all rose in January.
That suggests US factories will continue to increase output in the coming months.
"These companies have been running lean and mean, and now they've got an orders backlog," Bethune said.
Consumers are spending on autos and appliances, while businesses have invested in machinery and computers.
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Faculty to study future of health-care workforce
By News@Northeastern
February 3, 2011
Leaders of two Northeastern University schools are teaming up to study the American health-care professional workforce in partnership with Washington's prestigious Bipartisan Policy Center.
Carole Kenner, dean of the School of Nursing, and Barry Bluestone, dean of the School of Public Policy and Urban Affairs, are studying the future demand for health care and the labor supply required to fill it, while cognizant of the need to rein in what Bluestone called the ongoing "explosion in health-care costs."
In addition, Kenner and Bluestone will investigate the changes that will be needed in the education and training of the health-care professional labor force in order to offer better health outcomes at a more reasonable cost.
The Bipartisan Policy Center (BPC) was founded by former U.S. Sens. Howard Baker, Tom Daschle, Robert Dole and George Mitchell to develop and promote solutions that can attract public support from both Democrats and Republicans. Over the course of the next two years, the center's Health Project will help states develop bipartisan solutions to meet their ongoing budgetary, demographic and health reform challenges.
The BPC invited leaders from select universities to work on health-care professional workforce issues, one of the Health Project's key areas of focus. The Health Project's Workforce Initiative, chaired by Dr. Kavita Patel, former director of policy for the White House Office of Public Engagement and Intergovernmental Affairs, will tackle some of the most challenging issues about how to structure, educate, retain, license and regulate a health-care workforce able to deliver efficient, patient-centered, high- quality care.
Kenner said she was asked to join the BPC task force based on academic work at her previous institution, the University of Illinois Champaign-Urbana. Kenner has long focused on ways to revamp health-care education to meet the anticipated demands of the U.S. population.
After being contacted by the bipartisan organization, Kenner reached out to Bluestone. "We needed Barry's expertise from an economic standpoint," she said. "He has a great background" on key issues, including demographic and geographic differences in employment opportunities and obstacles.
"I was excited to join the team," he said, citing Northeastern's "strong interdisciplinary approach" to finding solutions to global challenges.
The task force will review the literature on health-care professional workforce issues, host roundtables in state forums and produce policy briefs and a white paper on the future of the health-care delivery system. The work will be important to the discussion "whether or not President Obama's health-care reform is repealed," Kenner noted.
Bluestone is developing, with the staff of Northeastern's Dukakis Center for Urban and Regional Policy, a model to project the demand for care, "taking into account the aging of the American population, increased racial and ethnic diversity and the cost of care in the various regions of the country."
The model will begin by assuming no change in the way health care is delivered or in the workforce providing it. Bluestone suspects that under these assumptions, the future cost of health care will be unsustainable – very likely requiring 20 to 25 percent of the nation's gross domestic product.
This simulation model will then be used to test what the cost impact would likely be of changing the "what, who and how of health-care delivery, as well as the impact of programs to reduce health-care demand by, for instance, promoting healthier lifestyles."
The Workforce Initiative will address questions such as whether the field needs additional medical doctors or nurse practitioners, or both; what technological changes are imminent and what skills will be needed; what savings could be achieved from using electronic medical records; and whether the behavior of the U.S. population around issues such as nutrition can be modified to stave off widespread health problems such as diabetes and obesity.
Along with those questions, Kenner said, they will be eyeing health-care education for adaptation, at the secondary and post-secondary level. "Changes in education models have, or potentially have, serious policy angles," she noted.
With many months of research ahead in cities across the country, the deans intend to bring several Northeastern colleagues into the mix quickly, said Bluestone.
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States and unions struggle over public labor's future
By Mark Pazniokas, The Connecticut Mirror
February 4, 2011
Gov. Dannel P. Malloy's call for labor concessions puts him on a growing list of Democratic governors and mayors who are demanding a permanent, new relationship with the organized labor allies who helped elect them.
Jerry Brown in California, Andrew Cuomo in New York, Deval Patrick in Massachusetts and Malloy in Connecticut are making the case that present levels of public-sector compensation no longer can be sustained.
It's a trend that Barry Bluestone, a Northeastern University economist and longtime friend of labor, says has brought public employees to a watershed moment in politics and labor relations.
"This is not the right, this is progressive liberals on the left," Bluestone said of Malloy and the other governors. "I think that's starting to have an effect on many of these unions of saying, 'Well, we've to figure out a new way of doing our business.' "
To Bluestone, that new way of doing business must mean re-examining benefits and shedding most work-place rules and job classifications that hamper governors and mayors from cutting costs.
He is an unlikely advocate for the proposition that unions should surrender hard-bargained work rules and benefits to avoid a public backlash and the abandonment by political allies.
Bluestone, 66, is the son of Irving Bluestone, a key lieutenant to Walter Reuther, the founder of the United Auto Workers, whose contracts set the pace for broad swaths of the workforce, helping to grow the middle class.
He still sees unions as an important force for social and economic justice.
But Bluestone, who worked in a Ford parts plant as a college student in Michigan, said the decline of the UAW from 1.5 million members in the early 1960s to fewer than 465,000 today is a cautionary lesson for public-sector unions.
In July 2009, he wrote a commentary for the Boston Globe that posed a provocative question, "A future for public unions?"
Bluestone reported that between 2000 and 2008, the price of state and local public services increased by 41 percent nationally compared with 27 percent in private services.
Faced with their own stagnant wages and the threat of job losses, private-sector workers have become more insistent on a leaner, more productive public-sector workforce, Bluestone said.
"Union leaders may think that by working diligently to elect friendly public officials, they can fend off the day of reckoning," he wrote in The Globe. "But that day is fast approaching."
Bluestone said he was moved to write the piece after seeing Democratic labor allies such as Boston Mayor Thomas Menino break with unions over issues like experimental charter schools, which tend to be non-union.
Then the economic crisis hit, exacerbating the pressure on state and local governments that had been building over the cost of long-term obligations, such as debt, pensions and retiree health liabilities.
"I just saw all of this leading to a point where the unions really would be taking a lot of hits, not just from conservatives, but from liberals," Bluestone said. "I was basically saying, 'Guys wake up. This is coming down the pike.' "
The reaction of his friends in labor was surprisingly positive, he said.
"I had some of my friends in the labor movement who castigated me for playing into the hands of the right wing and just giving them more ammunition," Bluestone said. "In fact, that was not the general reaction."
He has become a sought-after speaker on the subject of challenges to public-sector unions. Last week, he participated in a three-day retreat attended by Massachusetts officials, including the governor, and CEOs, foundation heads and union presidents.
"There was a really lively discussion about what are some of the things the unions can do, and how can we create this new labor-management environment that will be good for teachers and other public employees, but also good for the commonwealth," Bluestone said.
On Monday, he addressed an economic conference in Hartford sponsored by the Partnership for Strong Communities.
Bluestone, who taught at Boston College while Malloy was a B.C. undergraduate, sees Malloy as the latest in a long line of progressive Democrats on a collision course with labor.
On Thursday, Malloy described the current compensation levels of state-employee as unsustainable and said that labor concessions would be part of his plan to erase a structural deficit of $3.7 billion.
Bluestone's message is neither being embraced, nor rejected by Connecticut labor leaders.
Larry Dorman, an AFSCME employee and a spokesman for the State Employees Bargaining Agent Coalition, and Connecticut AFL-CIO president John Olsen, each said that public-sector employees are not responsible for the state's fiscal crisis.
"We're in an economic crisis caused by Wall Street and corporate America. It was exacerbated by Bush tax cuts," Dorman said.
He agrees with Bluestone about the danger faced by public employee unions losing the battle for public opinion. And labor already is engaged in a high-profile fight with New Haven Mayor John Destefano, who was supported by labor the 2006 campaign for governor, over pensions.
"There is blood in the water," he said. "Of course, we are concerned."
But he is unwilling to concede that the biggest political danger to unions lays with its erstwhile Democratic allies.
"It is in the end being driven by right wing ideologues and corporate America," Dorman said. "That is the pressure point."
State employees expected to negotiate with Malloy, just as they did with Gov. M. Jodi Rell two years ago, when they gave back $600 million in benefits and allowed the state to defer a $300 million pension contribution.
Olsen said he rejected the idea that public-sector employees must give up on pensions and good health coverage, just because corporations have succeeded in taking away those benefits from their employees.
"It's sad. Because I lost my legs, I want to cut your legs off?" Olsen asked. "That's pretty much where we are. I believe everybody should have a pension, everybody should have health coverage."
As for more flexible work rules?
"You always need to sit down in good faith and bargain," Olsen said. "You're always looking at what's being put on the table."
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Hackett on Politics: Future of Connecticut is linked to people
By Ray Hackett, The Norwich Bulletin
February 3, 2011
There was an interesting forum in Hartford this week regarding the state's long-term economic outlook – but from a perspective that is not often heard: demographics.
Northeastern University professor Barry Bluestone made a strong argument that Connecticut's economic fortunes might very well be decided based more on population growth than on issues such as regulatory control, utility costs or taxes.
Simply put, we have an aging work force and a dwindling number of younger workers to replace them.
Bluestone contends that building less expensive housing is critical if we are to keep younger workers in the state – and that is critical if Connecticut wants to grow its economy. And he backed up his argument with some convincing statistics.
It's projected that the state's population will grow at a rate of just 2.7 percent for the rest of this decade, the slowest growth rate of any New England state. The only demographic group to see double-digit growth – people older than 65.
Where Connecticut stands to lose population is a key demographic group: people of working age. It's projected that those aged 18 to 25 will decrease by 9 percent; those aged 45 to 64 will decline by 3.2 percent.
The problem of young people leaving the state is not new. Connecticut leads the nation in that category: college grads fleeing the state in search of better opportunities elsewhere.
And part of that reason is not because there are no opportunities here. It's because it's simply too expensive to live here. Housing prices – that includes renting as well as buying – are out of the reach of many younger workers just starting out.
Workers are key
It's that classic chicken-or-egg problem.
There is no question the state's business climate needs improvement. But simply making it more profitable for businesses to be here won't help in the long run if there are no workers to make those companies profitable.
If we can't maintain a vibrant work force of young people for the future, how can businesses afford to remain in the state – never mind grow and offer more opportunity? Bluestone contends that improving the demographic forecast is just as important as regulatory reforms or taxes – and maybe even a bit more important.
Bottom line: There are opportunities here. But if you can't afford to live here, it's not much of an opportunity.
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Ray Hackett can be reached at firstname.lastname@example.com.
Dallas, Boston, Washington, D.C. lead U.S. in job growth
By The Morning Journal
February 3, 2011
WASHINGTON (AP) – Jobs are hard to come by in every U.S. city, but you stand a better chance of getting hired if you live in Washington, Dallas or Boston.
Those three metropolitan areas topped the rest of the nation's cities in jobs added in 2010.
And all three are home to industries that are poised to hire this year. Information technology companies, biomedical research firms and government contractors are growing industries that are likely to add to their payrolls in the coming months – and the federal government has plenty of jobs listed, too.
The unemployment rate fell in 207 of the 372 largest metro areas in December, the most to report a decline since September. It rose in 122 areas and was the same in 43, the Labor Department said yesterday.
Nationwide, the unemployment rate dropped sharply in December to 9.4 percent from 9.8 percent. About half that decline was because more unemployed workers gave up on their job searches. The government doesn't count people as unemployed when they stop looking for work. The metro data lags behind the national data by several weeks.
The largest generators of net jobs were Washington, Dallas-Fort Worth, Boston, Phoenix, Ariz., and Minneapolis-St. Paul. All five metro areas have unemployment rates below the national average.
Boston, Dallas and Washington are among the top ten areas with the most online job ads in January, according to the Conference Board's help wanted online index.
All three have benefited from growth in the information technology sector, economists said. Companies like Intel, which has a plant in the Boston region, are producing more semiconductors, and computer makers have also boosted output. Corporations are investing more in computer networking and data storage equipment.
That's helped companies like EMC Corp., which is based in the Boston area and makes data storage network equipment, and Dallas-based chipmaker Texas Instruments.
"Those sectors have bounced back much better" than struggling areas like housing or auto production, said Alan Clayton-Matthews, an economist at Northeastern University.
The Washington metro area, which includes suburbs in Maryland and Northern Virginia, has also benefited from accelerated hiring by the federal government. The area added 57,500 jobs last year, the most of any city. The region's unemployment rate fell to 5.7 percent in December – the lowest unemployment rate among major metro areas.
"The first thing I would point to is the federal government," said Sara Kline, a regional economist with Moody's Analytics. Federal employment in the region grew 3.7 percent in 2010, she said, compared to a 1 percent increase nationwide.
That doesn't include jobs created indirectly by government contractors, which are prominent in Washington's Virginia suburbs. And Maryland is also a burgeoning source of biotech and medical research jobs, anchored by the government's National Institutes of Health, a collection of research labs based in Bethesda, Md.
"It is a fairly diverse economy," Kline said, even with the predominance of government.
While job growth is expected to continue for the region in 2011, the prospect of government budget cuts could limit job growth starting in 2012.
The airline and shipping industries have given a lift the Dallas Fort-Worth area, which is a regional transport hub and home to Southwest Airlines Co. and AMR Corp., the parent company of American Airlines. Package delivery company UPS has a hub at the Dallas-Fort Worth airport. It has benefited from a rebound in business travel and shipping, said Steve Cochrane, an economist at Moody's Analytics.
The city has also profited from rising oil and gas prices, which have been a boon to the state's oil industry.
The Dallas metro area added 36,700 jobs last year, and its unemployment rate fell to 7.9 percent from 8 percent.
Like the Washington area, Boston has also benefited from growth in biotech firms like Genzyme Corp., located in nearby Cambridge. The Boston metro area added 32,600 jobs last year, the third-most of any city. Its unemployment rate plummeted to 7.1 percent in December 2010, down from 8.3 percent a year earlier.
Unlike the national report, the metro figures aren't seasonally adjusted to account for trends such as the hiring of agricultural workers for fall harvests, or the layoff of temporary retail employees after the winter holidays. That makes the data more volatile from month to month.
Fourteen areas recorded unemployment rates of at least 15 percent, 12 of them in California. Unemployment topped 10 percent in 109 areas, down from 114 the previous month. That's also below the 140 areas with 10 percent unemployment or higher a year earlier.
For all of 2010, unemployment dropped in 238 metro areas, while it rose in 115 and remained the same in 49.
El Centro, Calif. had the highest unemployment rate in December, at 28.3 percent. It was followed by Yuma, Ariz., with 23.2 percent. The two areas are adjacent with a high concentration of migrant farm workers.
Lincoln, Neb. had the lowest unemployment rate at 3.5 percent. It was followed by Bismarck, N.D. and Fargo, N.D. at 3.9 percent and 4 percent, respectively.
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When retiring means giving back
By Richard Wolf, The Marlon Star
January 30, 2011
After college, Pat Daly wanted to "save the world" by working with children, but the money wasn't there. So she went into investment banking, became a director of her firm and opened offices around the world, eventually earning in the "high six figures."
Along the way, Daly got involved in philanthropy, took a course in fundraising and began to volunteer. When her job at Credit Suisse was eliminated in 2008, she opted to pursue a second career – working with kids.
Now 57, Daly is the New York regional director for an international robotics organization that promotes science and technology education. The job offers a much smaller salary but "huge satisfaction," she says. "I have absolutely no interest in going back to corporate."
Daly is part of the growing "encore careers" movement – an effort to match older workers who can't or don't want to retire with public service jobs that benefit society. The movement, begun in the late 1990s, has spawned non-profit groups and programs from Boston to Portland, Ore., aimed at helping older workers find new work. Many of the programs are run by people who have made the transition.
At a time when 77 million Baby Boomers ages 46-65 are moving toward traditional retirement age, analysts say the movement could grow exponentially in the coming decades. A 2008 survey by MetLife Foundation and Civic Ventures, a national think tank on boomers and work, found more than 5 million Americans in encore careers. Half of those ages 44-70 expressed interest in them.
Moving from one career to a more altruistic job late in life isn't easy, however. Analysts say there aren't enough of those jobs yet, the pay is usually low and empl
oyers often favor younger applicants. Even so, several factors point to a surge in second careers, particularly of the giving-back variety:
– Many older workers can't afford to retire. In Schenectady, N.Y., Elaine Santore runs a program that has helped about 600 elderly families stay in their homes, thanks to the help of other seniors. The 143 retired workers do housekeeping and maintenance and provide transportation – and companionship.
"They're making a little extra money, just enough to tide them over," Santore says, referring to the $12-an-hour pay. "We provide them with the opportunity to do something meaningful."
– Today's job shortage may soon become a labor shortage. Unless those 55 and over stay in the work force longer, the nation could be short up to 5 million workers by 2018, says Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University.
"We're going to need all of them, plus all the immigrants," Bluestone says. He volunteers with the Boys and Girls Club in his spare time, teaching 12-year-olds in inner-city Boston the marvels of math and statistics.
– Older workers are marketable. They have more skills, experience and stability than their younger competitors. In Chicago, Chris Campbell's Executive Network Group helps downsized execs find volunteer opportunities in the non-profit world that can lead to new jobs.
"The opportunity to help other people and use my skill sets was very satisfying," says Campbell, who was paid $250,000 annually as a marketing executive before joining the non-profit in 2008. Between that job, consulting, making furniture and rehabilitating apartments, he says, "I make half as much as I used to, but I enjoy it twice as much."
– Boomers tend to be altruistic. Like Daly, many of those born between the World War II and Vietnam War years only deferred thoughts of saving the world in order to make a living. Now they want to return to their roots.
Gary Maxworthy emigrated from England in the 1960s and thought about joining the Peace Corps. Instead, he rose to become president of a food brokerage company, with a six-figure salary and a desire to "give back."
In 1994, when he was 56, he joined the VISTA program as a $7,000-a-year food bank employee. Six years later, he founded the Farm to Family program, which last year delivered more than 100,000 pounds of fresh produce to California food banks.
For all those reasons – economic, social, altruistic – society must create more opportunities for boomers, says Laura Carstensen, director of the Stanford University Center on Longevity.
"The older people are, the more interested they are in doing something that is socially meaningful," Carstensen says. Boomers "may be just the generation to make this change. Future generations will follow if we start."
Once older workers decide to make the transition, they face a maze of potential obstacles as well as opportunities.
About one in four people older than 50 moves into a new line of work, but the attraction usually is fewer hours and responsibilities, says Richard Johnson, a retirement expert at the Urban Institute.
"How many of these fulfilling, socially useful jobs are there? And are there people willing to pay you to do this type of work?" Johnson says. "I'm skeptical about the notion that a lot of people can really donate their time for the public good in their 50s and 60s."
Older workers also face the daunting prospect of convincing employers that they're still up to the job. "The person interviewing you is going to be about 30, 32, and they're going to see their mother when they see someone 50, 55 walking in the door," says Karen Shimada, executive director of Life By Design. She says older workers should take community college courses or get trained in "transferrable skills."
While older adults want to continue working, "the world hasn't caught up with what they might have to offer and how to help them offer it," says Jackie James, research director at the Sloan Center on Aging and Work at Boston College.
One way to start, experts say, is by volunteering – sometimes for a minimal stipend. Federal programs such as Senior Corps provide opportunities for hundreds of thousands of older workers and retirees.
An example is Experience Corps, run by Lester Strong, a former local television anchor in Boston, New York, Charlotte and Atlanta for 25 years, who launched a second career in non-profits. He ran a foundation for yoga and meditation in Upstate New York, then a non-profit for struggling elementary school children in Boston.
"I felt that there was more I wanted, needed to do, that there were skills and interests that I had that had not been cultivated," Strong, 62, says.
ReServe, a New York-based program that gets federal support, pays $10-an-hour stipends to adults over 55 who work at non-profits. Its workforce of about 400 people had been mostly in their 60s and 70s, but "with the change in the economy, our median age is getting younger," says communications manager Jesse Dean.
The federal government offers another option for boomers. Its workers' average age is 47, and 150,000 leave each year, says Max Stier, president of the Partnership for Public Service.
"The federal government's a one-stop shop for Baby Boomers who want to give back," he says. "From astronomer to zoologist, the federal work force has it all."
Growing numbers of non-profits also are reaching out to older workers. At the Rochester, N.Y., YMCA, the effort began with a "silver sneakers" program to encourage seniors to exercise. Then the Y recruited many of them to work, usually part-time.
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If 'demography is destiny,' Connecticut's future is grim
By Mark Pazniokas, The Connecticut Mirror
January 31, 2011
Connecticut's leaders are understandably obsessing over the state's fiscal crisis, but a prominent economist warned Monday that the bigger and more difficult challenge to its long-term economic health is anemic population growth and an aging workforce.
Barry Bluestone of Northeastern University told a Hartford audience that the state must continue smart-growth zoning policies that encourage denser, less expensive housing–a key factor in attracting a younger workforce.
While politicians often focus on taxes and a regulatory environment, a chronic labor shortage is ultimately more destructive to a region's business climate and its fiscal stability, Bluestone said.
"Demography is destiny," he told a forum organized by the Partnership for Strong Communities: "How the States Will Fight for Young Workers and Economic Growth."
Connecticut's population is projected to grow by just 2.7 percent over the rest of the decade, only 30 percent as much as the United States. Its projected growth rate is the slowest in New England and slower than all but 13 states.
The only demographic groups projected to experience double-digit growth through 2020 are retirees: 27.3 percent for those 65 to 84; and 12.7 percent for those older than 85.
Two of three working-age demographic segments are projected to shrink: 18 to 25, by 9 percent; and 45 to 64, by 3.2 percent. The 25-to-44 demographic is supposed to increase by just 3.3 percent.
"If the projections prove true, Connecticut's in trouble," Bluestone said. "Our goal should be to prove the census wrong."
The Partnership for Strong Communities promotes affordable housing, a goal it realizes will become more difficult as the state struggles with one of the worst budget deficits in the nation.
Bluestone, 66, is the dean of Northeastern's School of Public Policy & Urban Affairs. A native of Michigan, he is the son of Irving Bluestone, a key lieutenant to the legendary United Auto Workers leader, Walter Reuther.
After a long career in economics and labor politics, Bluestone said only half-jokingly he regretted not being a demographer.
"That's where the action is," he said.
He offered demographics as a cause for Japan's decade-long economic stagnation, noting that Japan's low-growth population is made worse by its historic antipathy to immigration.
Gov. Dannel P. Malloy's chief of staff, Timothy Bannon, indicated in remarks prior to Bluestone's speech, that Malloy is sympathetic to the economist's argument.
Bannon said spending cuts and tax increases are the only two approaches he hears publicly discussed as a solution to the state's projected deficit.
"The middle path is job creation," Bannon said.
To view the original article online, click here.
By Rick Green, The Hartford Courant
January 31, 2011
Barry Bluestone, Dean of Northeastern University's School of Public Policy and Urban Affairs, offered a simple brutal picture of Connecticut's future at a gathering at the Partnership for Strong Communities today.
"Demographics is destiny," Bluestone said. Connecticut is "getting old faster than almost any other state." An economist, Bluestone warned that the biggest problem facing Connecticut and New England isn't taxes, energy costs or government regulation. It's not having enough workers.
"The question will be which cities, what regions, what states, win the battle for young people."
Right now, we are losing, big time. Look at the projection for the next 30 years — the census bureau projects growth for the nation of nearly 30 percent. In Connecticut, it's only about 8 percent:
Now look at this chart, which shows what segments of our population are going to grow –'it's the population over 65, with no growth among children and a declining population of 18-24 year-olds:
Here are a few more graphs that compare our growth to New England and the rest of the country:
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Green buildling
Are cities the best place to live? Are suburbs OK? A fight grows in urban planning, with Harvard at the center
By Leon Neyfakh, The Boston Globe
January 30, 2011
A little over two months ago, some two dozen influential architects, urban planners, and academics from around the country gathered at a New Orleans cottage to spend a long weekend discussing strategy. The house belonged to 61-year-old Andres Duany, a leader in the movement known as New Urbanism, which originated in the late 1970s and has enjoyed decades as the dominant force in American city planning, urging Americans to reject suburban subdivisions in favor of denser, more diverse neighborhoods.
The purpose of the summit was to talk about an enemy. A rival faction of urban theorists had begun to publicly challenge them, and declare their approach to city-making obsolete. Calling themselves landscape urbanists, these upstarts were promoting themselves as environmentally conscious, ecologically sophisticated, and uniquely suited to bring sustainability to America's suburbs. Instead of talking about buildings, street grids, and parks, they spoke seductively about "living processes," "flows," and the importance of respecting "ecological infrastructure." Their ideas were being embraced in the architecture world as radical and new. Most disconcertingly, they were rising to power at one of the most influential architecture academies in the country: the Graduate School of Design at Harvard University.
At one point during the huddle in New Orleans, Duany projected a video onto the dining room wall of a lecture delivered by Charles Waldheim, the intensely confident, spiky-haired leader of the landscape urbanism movement. Waldheim, 47 years old, had recently been appointed chair of Harvard's landscape architecture department and was now filling it with his allies. The video, in which Waldheim, dressed in all black, spoke to students at the University of North Carolina, played for just over an hour.
"We criticized it and called out all the contradictions, and we laughed and we made fun of him," Duany recalled by phone recently. "And then when we were done, I said, "OK, but is there one kid in that room who isn't leaving a convert?' "
At the heart of the landscape urbanist agenda is the notion that the most important part of city planning is not the arrangement of buildings, but the natural landscape upon which those buildings stand. Proponents envision weaving nature and city together into a new hybrid that functions like a living ecosystem. And instead of pushing people closer together in service of achieving density, as New Urbanism advocates, landscape urbanism allows for the possibility of an environmentally friendly future that includes spacious suburbs, and doesn't demand that Americans stop driving their convenient cars. Americans have decided how they want to live, they argue, and the job of urban designers is to intelligently accommodate them while finding ways to protect the environment.
The movement has rapidly been gaining traction: Its proponents are ascending to prominent positions at architecture schools, its practitioners have won significant commissions around the world, and respected publications like ArchitectureBoston and the European journal Topos have recently devoted nearly entire issues to their ideas. MIT has launched a program called Landscape+Urbanism; Northeastern University will soon offer an undergraduate degree in urban landscape. "This whole thing is hot stuff at the moment," said Phyllis Andersen, a landscape historian at the Landscape Institute of the Boston Architectural College.
But to skeptics, Waldheim and his cohort are merely riding to fame and fortune on a skillfully promoted brand name, environmentalist rhetoric, and a lot of obscure theory. Critics have charged landscape urbanism with advocating a misguided surrender to suburban sprawl – a "green" agenda that dooms America to a future of dependence on highways and automobiles. And they are cloaking it in language so abstract that it has inspired a mocking website: a landscape urbanism jargon generator that randomly spits out phrases like "enhance permeable operations," "allocate temporal contexts," and "orchestrate sustainable metrics."
Both the landscape urbanists and the traditionalists they're trying to unseat think they know what must be done to conserve energy, limit emissions, and protect the environment from further harm, and both are certain that the other is wrong. As they joust in the pages of architecture publications and take swipes at each other from podiums, they are competing not just for commissions, but for the hearts and minds of a generation of young planning students who will soon be moving into positions of real influence themselves. At stake is the future of cities and their surroundings – what they will look like, how they will work, and what it will be like to live in them.
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Leon Neyfakh can be reached at email@example.com.
Boom Town and Bust City:A Tale of Two New Yorks
By Lizzy Ratner, The Nation
January 27, 2011
In December, as 2010 glittered to a close, life among New York City's affluent caste looked remarkably like the go-go good old days before the recession. At the opening bell of the New York Stock Exchange on December 1, Citigroup executives, apparently unfazed by their role in the financial crisis, clapped heartily as they celebrated the initial public offering of CVOL, a complex new financial product they had cooked up. At Sotheby's, collectors at the Magnificent Jewels auction snapped up more than $49 million worth of gilded baubles (including a 27.2 carat Tiffany diamond necklace that sold for more than $3.6 million), making it Sotheby's highest grossing jewelry sale ever. And at Harry Cipriani, natty-looking power-lunchers waited two deep at the bar for a table, boosting a business that only two years earlier had been troubled enough that management had considered closing off nearly half the restaurant.
"Now it's busy, as you can see," says Maggio Cipriani, the Cipriani dynasty's 21-year-old magnate in training. "We're picking up a lot."
Nearly 100 blocks north, in the heart of central Harlem, the picture is noticeably different. Things are not picking up, at least not for Pamela Brown, 51, a poised mother of three who has recently moved into the neighborhood after losing her apartment in the Bronx. Sitting at a local Starbucks, her hair pulled into an elegant twist as if she was about to head to the office, she describes how she was downsized from her administrative job at Bank of America during the great meltdown of 2008 and has struggled unsuccessfully to find work ever since. Is her age to blame, she wonders? Race? The fact that she is still a few credits shy of a college degree?
Whatever the reason, she is getting by on food stamps and welfare, her monthly income reduced to $818 for her family of three. Soap and dry cleaning are luxuries; her youngest son has left his private school. As part of the 1996 welfare "reform" requirements, she spends her days sweeping streets for the city's mandatory Work Experience Program. "[My friends] have this false sense that I must have done something wrong for this to happen to me," says Brown. "But I did everything that I thought I was supposed to do."
Such are the stories of recession and recovery wafting up from New York's sidewalks these days. On the one side are tales of prosperity and excess, of New York as the poster child for an economic comeback so robust that Manhattan is now the fastest growing local economy in the country. On the other side are privation and struggle.
These disparate realities rarely elbow their way into the same conversation, but they are very much part of the same story, perhaps the story of recession New York. In this story, African-American men lost jobs at four times the clip of their white counterparts; their unemployment rate jumped 9 points, to 17.9 percent, the largest increase of any group during the recession. At the same time, the median salary of managers and professionals leaped 9.5 percent, while nonmanagers and nonprofessionals saw their wages tumble some 4.3 percent. And according to the New York City Coalition Against Hunger, the city's fifty-seven billionaires (including its billionaire in chief, Mayor Michael Bloomberg) increased their collective net worth by $19 billion between 2009 and 2010, while the number of New Yorkers visiting food pantries ballooned by 200,000 during roughly the same period. Call it the trickle-down recovery that has yet to trickle down.
New York City is not an aberration; it's just one of the more dramatic examples of the recession's unequal grip. As labor economists Andrew Sum and Ishwar Khatiwada argued in a February 2010 paper, "A true labor market depression faced those in the bottom two deciles of the income distribution, a deep labor market recession prevailed among those in the middle of the distribution, and close to a full employment environment prevailed at the top. There was no labor market recession for America's affluent." No wonder 2009 set records for income inequality. In that year, the chasm between rich and poor measured even wider than it did in 1928, the last time so much wealth was concentrated in so few hands.
Even before the Great Recession, all was not as sunny as it seemed in New York City. For the lucky minority, the boom years of the 1990s and 2000s were glorious times. As the twin forces of financial deregulation and corporate-friendly tax policies loosened the economic floodgates, Wall Street surged, lifting all yachts if not all boats. Between 1990 and 2007, average Wall Street salaries (including bonuses) ballooned nearly 112 percent, from just over $190,000 in 1990 to more than $403,000 in 2007, according to a startling new study by the Fiscal Policy Institute. During the same period, the top 5 percent of income earners – those making more than $167,400 a year in 2007 – nearly doubled their share of the city's total income, from 30 percent to 58 percent.
But for the remaining 95 percent, life was not so charmed. As unions came under assault, the minimum wage stagnated, manufacturing jobs were shipped overseas, New York's poor and working class struggled, and its middle class wasted away. As the Fiscal Policy Institute study shows, the median hourly wage shriveled 8.6 percent between 1990 and 2007. The gap between rich and poor yawned wider – while the rich claimed ever larger chunks of the pie, the poorest 50 percent claimed less than 8 percent of the city's annual income and the once robust middle claimed just above 34 percent, earning New York the honor of being the most unequal large city in America.
"If New York City were a nation, it would rank fifteenth worst among 134 countries with respect to income concentration, in between Chile and Honduras," writes James Parrott, chief economist for the Fiscal Policy Institute, in his report "Grow Together or Pull Further Apart? Income Concentration Trends in New York."
Such was the world that existed before the recession even struck, and it bore an uncanny resemblance to the Big Apple on the eve of the Great Depression, when the gap between rich and poor was epicly wide. New Deal policies helped usher in an age of unprecedented (if still relative) equality after the Depression, but it seems unlikely that the same result will come from this meltdown. In fact, it seems to be exacerbating inequality.
The reasons for this are many and tangled. They lie in the foreclosure crisis, which fell disproportionately on minorities. They lie in the fact that the hardest-hit industries – construction, manufacturing, retail trade and administrative support services – were those that employed the poor, the working classes and struggling middle. They lie in the apparent willingness of professionals and managers to slash everyone's job but their own (Andrew Sum found no net loss in the combined number of managers and professionals employed in the country during the recession). But fundamentally, the reasons lie in policy: in a bailout that went too far and a stimulus that didn't go far enough.
"There was an over-focus on Wall Street and business, and not enough attention paid to the people that are actually integral to getting the economy going again," says C. Nicole Mason, a political scientist and executive director of New York University's Women of Color Policy Network. Sum is more blunt. "Low-income people needed the most help, and they got the least help," he said. "Nobody's bailed out the American worker."
By now, the Wall Street component of this story is well-known. Determined to prop up the imploding banking sector, the government mainlined money into Wall Street's ready veins, $193 billion through TARP alone. With scarcely a qualm, it gobbled up bad assets, restored the commercial paper market and saved the money market/mutual funds industry – to stunning effect. Banks did not merely survive; they earned record profits. The stock market swooped upward. And for a select sliver of New York's population, the most obvious signs of the recession seemed to melt away.
Once again, the statistics tell the story. According to the Fiscal Policy Institute, during the third quarter of 2009, denizens of Manhattan's tony Upper East and West Sides enjoyed a barely recessionary unemployment rate of 5.1 percent while residents of Brooklyn's East New York neighborhood suffered near-depression levels of unemployment (the official rate was 19.2 percent). More shocking: the unemployment rate for white men in the west Brooklyn neighborhoods stretching from Brooklyn Heights to Red Hook floated at 3 percent while black men in the same neighborhood suffered an unemployment rate of 46 percent.
"If you're sitting in financial services, you feel like it's stabilized, you feel like we're out of crisis mode," says Adam Zoia, founder and CEO of Glocap Search, a financial services headhunting firm. Hiring is up about 30 percent from 2009, he reports, and the amount of assets under hedge-fund management is back to its prerecession high of $1.7 trillion. "The compensation levels have largely recovered," he adds.
Unfortunately for those outside the finance sector and its satellite industries, the benefits of this comeback have largely been elusive. The American Recovery and Reinvestment Act, better known as the stimulus, certainly helped the working and middle class. The stimulus social spending – like the childcare money and the TANF Emergency Contingency Fund, which created a job subsidy program for parents receiving welfare – made palpable differences in people's lives. The stimulus both created and saved jobs in New York City – some 22,000 in the third quarter of 2010 alone – and unemployment would have risen without it.
Yet the stimulus didn't do nearly enough: it wasn't big enough, direct enough or targeted enough to help the people who needed it most. In New York, as in much of the country, those who needed it most have tended to be the young, people of color, and low-income and blue-collar workers. They are women like Luz Villanueva and Belgica Malu, who stood shivering in yet another job fair line in November, hoping to end their yearlong job search. And they are women like Nancy, a 56-year-old domestic worker from Colombia whose age and limited English and education have conspired to keep her jobless for more than two years. Nearly one in four low-income Latinos reports losing a job or having hours or income reduced, according to the Community Service Society's 2010 "Unheard Third" study, and these women certainly proved the point. Luz and Nancy can barely afford the subway.
They are also men like Chang Ahn, 62, a Korean immigrant with legs made spindly by polio, who lost his job in the classified department of the Korea Times in December 2008 – a job he'd held for twenty years – and has been unable to find work since. He tried to find another media job and even asked fellow church members about washing feet at nail salons, to no avail. He blames his disability and age – and he's probably right; in 2009 men between 55 and 64 held the record for long-term unemployment in New York City, with an average of thirty-nine weeks.
And then there is David Ward, a 24-year-old father of two, who stood outside the city's intake center for homeless families on a chilly November day, preparing to enter the homeless system for the first time. "I never expected to come here – never wanted to – I always expected to do things on my own, with a job," he says. But after failing to find work more than two years after losing his job at Rite Aid, he finds himself shoved toward an unexpected bitter reality. In this reality, young men with limited education and even more limited means can spend years trying to find a job, with no luck. In this reality, only one in four black men in New York City between 16 and 24 is employed, as a recent study by the Community Service Society reveals. And in this reality, the jobs that were created by the stimulus, many through infrastructure projects, went largely to people with more skills, education, work experience and access.
A targeted approach to job creation – in the form of affirmative action hiring, direct job creation or wage subsidies for companies that hire particular groups of workers – would have helped moderate this trend. But for the most part that didn't happen. The stimulus money was simply released, with little direction and even less accountability.
"I think the administration was very reluctant to create targeted programs," says the Women of Color Policy Network's Mason. "But you cannot just ignore [these communities] and say, 'Well, everything will work itself out.' This is the same problem with the trickle-down economics," she continues. "If I have a broken leg and you have a small cut on your finger, it doesn't make sense to put a patch on both those things. They're different remedies, and they call for different types of responses."
And there's another problem. Some of the most effective stimulus programs were either too narrow in scope or too poorly funded to make the difference they could have. The s""ummer youth employment program is one example. An enormously useful way to introduce young people into the workforce, this program provided jobs and training to more than 35,000 young New Yorkers during the summer of 2010. But it was not funded adequately enough to meet the full need, and its three-month time limit undercut its purpose. "The summer program by itself is not enough to change people's lives," says Sum. "You've got to do year-round job creation."
More distressing is the case of the TANF Emergency Contingency Fund. This program created some 240,000 jobs nationwide for low-income parents receiving welfare and was considered so effective that even some Republicans were gaga for it. So what happened? Congress let its funding lapse on September 30 – leaving people like Pamela Brown, the former Bank of America assistant, stuck cleaning streets for the welfare department. "They've never looked at my resume," she says.
Outside the precincts of New York, the story is not much cheerier. As Andrew Sum and Ishwar Khatiwada's study demonstrates, nationwide, suffering during the recession followed a straight Euclidean line from poorest to richest, with the poorest enduring catastrophic job losses, those in the middle enduring significant though less pervasive job losses and the richest enjoying scarcely a blip. Or put differently, New York is a near perfect allegory for the cruel geometry of this recession.
A glance at more recent unemployment data that Sum and Khatiwada updated for The Nation tells the story. Between January and October 2010, average unemployment rates for workers in the lowest income decile (those with a household income of $12,499 or less) hovered at 29.4 percent, a figure that surpasses the Great Depression's nationwide unemployment high of 25 percent. For those in the second-lowest income decile ($12,500 to $19,999), unemployment hovered at 20.1 percent. Among those in the third-lowest ($20,000 to $29,999), it was 14.9 percent – and on and on in an increasingly cheerful progression to those in the top two deciles ($100,000 to $149,999 and $150,000 and above), who enjoyed the impressively low unemployment rates of 4.1 and 3.4 percent respectively. "See those last two groups?" asks Sum. "We call that full employment."
Sum and Khatiwada did similar analyses for underemployment rates and underutilization rates (a figure that combines the unemployed, the underemployed and those who are not looking but still want work). In each instance the data follow the same distressing pyramid pattern. Underemployed workers in the bottom decile were working part time or at reduced hours at almost ten times the rate of those in the top decile, or 19.5 percent compared with 2 percent. Underutilized workers in the bottom decile were "underutilized" at roughly seven times the rate of those in the top income decile (and two and a half to three times the rate for their own group in the 1990s). Which is to say: while 49 percent (or one out of every two) of the poorest Americans were "underutilized" during the first ten months of 2010, only 6.8 percent of those in the top income decile shared this fate. Overall, nearly 30 million workers were "underutilized."
"This [disparity] is worse than the worst third world country I've ever seen in my life," says Sum. "And nobody wants to openly admit this because they want this little myth that we're all in this together – the jobless is everybody. No, it is not. It is overwhelmingly among low income and then low-middle income."
For Sum, the solution to this skew is at once obvious and challenging. At its most basic, it primarily requires good old-fashioned, WPA-style job creation, particularly for young people, the group hit hardest by the recession. "I would take all the stimulus money and put it directly into job creation," he says. But in an important twist on what the government did the last time around, this stimulus would be "very targeted." There would be guidelines requiring any company or agency that gets stimulus money to hire real people – not just stash the money away in their budgets, as so many did – and to hire unemployed people more specifically. Moreover, there would be incentives, in the form of wage subsidies and tax credits, to induce companies to hire low-income workers, young and adult. And there would be training and education. Call it a trickle-up recovery.
But how does any of this happen now? In the wake of Republican victories, it's hard to imagine that we're in for a change in policy anytime soon. And yet there are faint stirrings of hope: in the coalitions of the unemployed; the 99er unions; the grassroots groups that have come together to fight for job creation, unemployment insurance, TANF funding and more. They have not given up.
Pamela Brown was never an activist during her years in the banking trenches, but unemployment and welfare have made her a self-described dissident. In 2009 she joined Community Voices Heard, a grassroots group of low-income New Yorkers, and became a leader in its fight for jobs and welfare rights. "The only way we're going to change our lives collectively is to get politically engaged," she says. "It's that simple."
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