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Maintaining Diversity in America's Transit-Rich Neighborhoods: Tools for Equitable Neighborhood Change
By Stephanie Pollack, Barry Bluestone, and Chase Billingham | Federal Reserve Bank of Boston
More than 3,000 transit-rich neighborhoods (TRNs) in U.S. metropolitan areas have fixed-guideway transit stations providing rail service and hundreds more such neighborhoods could be created over the next decade if current plans for new rail transit systems and stations are realized. Americans are increasingly using transit systems and showing more interest in living in transit-rich neighborhoods. For neighborhood and equity advocates from Atlanta to Seattle and Boston to Minneapolis, however, this good news is tempered by a growing concern about gentrification and displacement. Will current neighborhood residents, many of them low income and/or people of color, benefit from planned transit stations? Or will they be displaced by wealthier and less diverse residents lured not only by transit but also by the other amenities that come with transit-induced neighborhood revitalization?
Community Developments Planners and policymakers would appear to face a Hobson's choice if transit investment and expansion inevitably lead to gentrification and displacement: either make the transit investment and accept loss of neighborhood diversity as collateral damage, or avoid transit expansion projects serving diverse, lower-income neighborhoods and leave those residents with poor public transit or none at all. This article is based on research that was designed to address this dilemma.
We wanted to understand whether gentrification and displacement are actually occurring in transit-rich neighborhoods. To the extent that undesirable patterns of neighborhood change were found, we also wanted to understand the underlying mechanisms in order to propose policy tools that could be used to shape equitable neighborhood change in both old and new TRNs. Our research found that transit investment frequently changes the surrounding neighborhood. While patterns of neighborhood change vary, the most predominant pattern saw incomes, housing values, and rents rise and vehicle ownership become more common. And in some of the newly transitrich neighborhoods, the research reveals how a new transit station can set in motion a cycle of unintended consequences in which core transit users-such as renters and low-income households-are priced out of the neighborhood in favor of higher-income, car-owning residents who are less likely to use public transit for commuting. We believe that the risk that transit investment could catalyze undesirable neighborhood change is substantial enough that it needs to be managed whenever transit investments or improvements are being planned. We therefore present a tool kit of policy tools for shaping equitable neighborhood change in TRNs, tools that are increasingly available and in use across the country.
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We Need a Manufacturing Agenda
By Joan Fitzgerald, New York Times Op-Ed
January 18, 2011
Part of a series in the New York Times focused on the questions of: "Can the U.S. Compete With China on Green Tech?" and "What are the obstacles for American companies trying to win global markets in clean energy industries?"
Last week's announcement that Evergreen Solar was closing its Massachusetts facility to produce exclusively in China seemed to be the death knell for U.S. solar manufacturing. Massachusetts has only 800 unemployed workers to show for its $58 million investment in the company. This story illustrates the costs of the failure to have a national energy policy linked to manufacturing.
To compete globally in these industries, American policy needs to support innovation that is tied to a manufacturing agenda. Evergreen is one of a long line of renewable energy firms taking advantage of an array of generous subsidies China offers to foreign companies, who must share their technology, use local suppliers, and in many cases, can sell only for export. The strategy has been quite effective – China has captured about one-fourth of world market share in the solar industry and half of the wind-power industry.
Though it may violate the World Trade Organization's rules, China has a coherent industrial policy to capture global leadership. The Obama administration has filed a case against China with the W.T.O., but in the meantime, China's domestic market will keep its renewable energy industry going.
By enacting a national requirement that large utilities produce 3 percent of their power from renewable sources by 2010 and 8 percent by 2020 and spending $221 billion of its $586 billion 2009 stimulus package on renewable energy and other clean technologies, China will continue to dominate both industries. And the five-year plan that starts this year will include even higher standards and subsidies to support clean energy development.
Except for installation and maintenance, all green energy can be outsourced. The good news is that the renewable energy technology evolves rapidly and the U.S. is still better at innovation.
To compete globally in these industries, American policy needs to support innovation that is tied to a manufacturing agenda. The recently approved provisions that require the Pentagon to buy only solar panels made in the U.S. are a step in the right direction. But they have to be accompanied by considerably more investment in research – as much as $5 billion a year.
The U.S. also needs national standards to create more demand for renewable energy, and to require that producers of this energy be based in the U.S. This may violate archaic norms of "free trade" but the reality is that virtually all of our competitors use state policy to create innovation and capture manufacturing advantage. If we disdain these strategies out of some idealized notion of free trade, we leave our future dependent on the whims of other nations' strategic industrial policies.
Joan Fitzgerald is a professor and the director of the Law, Policy and Society Program at Northeastern University. She is the author of "Emerald Cities: Urban Sustainability and Economic Development."
Source: New York Times
Related Links:
- http://www.nytimes.com/roomfordebate/2011/01/18/can-the-us-compete-with-china-on-green-tech
- http://www.boston.com/business/articles/2011/01/19/evergreen_will_repay_3m_of_its_state_aid/
- http://www.policyschool.neu.edu/education/graduate/spring2010/documents/DomesticManufacturingandIndustrialPolicy.ppt
Joan Fitzgerald can be reached at firstname.lastname@example.com.
Report: Mass. Economy Slowed in 2010's Final Quarter
By WBUR Newsroom
January 28, 2011
BOSTON – A new report finds that Massachusetts' economy slowed "significantly" in the final quarter of last year.
The report by the Federal Reserve Bank of Boston and the University of Massachusetts says the economy grew just 1.8 percent in the fourth quarter of 2010.
Economist Alan Clayton-Matthews, of Northeastern University, says that's likely just a brief slowdown after a stretch of stronger growth.
"It's as if it were catching its breath to again move ahead forward at a faster pace," he said. "And the leading index suggests that growth in the first half of this year will be at a 3 percent rate."
He says the earlier stronger growth was a result of a sharp rebound in the technology sector.
"That growth couldn't be sustained," Clayton-Matthews said. "One reason is because technology markets have now reached where they were before the recession and output is even above pre-recession levels in many markets."
Last quarter was the first time in more than a year that the national economy grew faster than the state economy.
To view the original article online, click here.
Massachusetts Magnet
Bay State Outdoes Connecticut as Job Magnet in Recovery
By Mara Lee, Harford Courant
January 24, 2011
For a good bit of the last year, Boston was adding jobs faster than any metro area in the nation other than Dallas and Washington, D.C.
That's right, the biggest city in our normally slow-growing region, in a state nicknamed "Taxachusetts," had stronger growth than almost all those Sun Belt cities that Northeasterners envy.
Alan Clayton-Matthews, a Northeastern University economist who makes forecasts for the New England Economic Partnership, called the trend "spectacular job growth." If someone had told him in 2009 that Massachusetts would add more than 38,000 jobs through November 2010, he said, "I would've been highly skeptical."
Boston's hiring pace is drawing workers from around the world. Among those moving to the region was Connecticut resident Mike Bigda, who lives in Framingham during the week and returns to his home in Manchester on weekends.
Bigda, 55, laid off by Travelers in Hartford, landed a job in October as a vice president for Delphi Technology, a Massachusetts firm that produces software and related services for the insurance industry.
"I was looking actively in Hartford, at the insurance companies," he said. "With my background, I would've thought I would be an ideal fit with an insurance company."
Technology firms, of course, have long been a staple of the region's economy, and that sector drove the so-called Massachusetts Miracle recovery in the 1980s – the last time the Boston area outpaced the United States in economic growth.
Greater Boston's other major drivers – health care and education – also help to explain the why Massachusetts was a job magnet in 2010. Still, the state's success in 2010 was a surprise to many experts, not just to Clayton-Matthews.
Massachusetts firms hired more than twice as fast as Connecticut employers in 2010. "In effect, Connecticut is barely recovering compared to Massachusetts," said Andres Carbacho-Burgos, the economist at Moody's Analytics who follows Connecticut's economy.
From January to November, Massachusetts employers added 38,300 jobs, an increase of 1.2 percent, and unemployment dropped to 8.2 percent from 9.5 percent. That was the state's best job growth in more than 10 years.
In Connecticut during those 11 months, the jobs increase was less than one-half of 1 percent, and the jobless rate was the same in November as when the year began: 9 percent. The stagnation mirrors the nation's poor job creation.
And it's not just jobs, although that's the most important measure.
–Starting in 2009, Massachusetts reversed its long trend of losing population to other states.
–The Boston office market is healthier than the nation's, and far better than Hartford's.
–Payroll withholding tax collection was up by more than 7 percent in the first half of 2010 according to a report for the Kitty & Michael Dukakis Center for Urban & Regional Policy at Northeastern – a sign that the new jobs are good ones.
Virtuous Cycle
Medical devices are one industry driving growth in eastern Massachusetts. Covidien, a surgical equipment maker whose U.S. headquarters is in Mansfield, Mass., near the I-95/I-495 intersection south of Boston, moved 300 jobs out of Norwalk as it closed that office last year.
Workers in Norwalk knew their office would close, but expected to stay in Connecticut.
"We thought for sure we were going to shut down and all go to North Haven," where Covidien has a large plant, said Shaun Hilmar, 36, who worked in customer logistics for the company for nine years until last May.
Instead, he learned that about 85 percent of the Norwalk work would move to Mansfield. All the Connecticut workers were offered the chance to re-interview for their jobs, but Hilmar didn't follow his $44,000-a-year job because he had just bought a townhouse with his girlfriend, who earns more money.
He hasn't been able to find another job since, and is trying to become a real estate agent and hopes to land a part-time package-handling job. "It's probably going to be a combination of things. I'm resigned to that," he said.
While federal stimulus funding that pumped up scientific research surely helped with hiring at universities in Massachusetts, as did the thousands of students sitting out the poor job market in grad schools, it's a mystery why software company hiring was so much stronger in greater Boston than in California's Silicon Valley last year.
Novartis, a pharmaceutical company, hired 433 people in Cambridge, Mass., in 2010, and while some of that was replacing people who left, the company announced this month that it would double the size of its office and lab complex in 2011, hiring more than 200 people. It already has about 2,100 employees there.
Forrester Research added 200 jobs in 2010 to its Boston staff of 900, and plans to add at least another 175 more this year.
Boston-area colleges grant the highest number of bachelor's degrees each year of any metro area in the country. About 375,000 students attend college and graduate schools in greater Boston. The result: Each year, the city gains more recent college graduates than it loses.
Boston-area graduates who grew up in Maine, Connecticut, Georgia, New York, India, China, Scotland and other places find jobs in Massachusetts at companies like Novartis, Microsoft, Google, Cisco Systems, Forrester Research or Shire Pharmaceuticals, or at a home-grown company like Akamai Technologies, founded by MIT professors. Part of the reason, the Dukakis Center report said, is that Boston-area colleges have strong ties to the tech community.
"This is sort of a self-reinforcing trend, areas that have a lot of college graduates also tend to attract migrating college graduates," said Clayton-Matthews, the Northeastern University economist. "For young professionals, Boston is kind of a fun city to be in. Does Connecticut have a city like that?"
Connecticut, in fact, does not have a city with the kind of nightlife, professional sports, boutique shopping and sidewalks full of pedestrians that Boston and Cambridge have, though New Haven and Greenwich both have one or two of those elements. While Hartford-area high school graduates have been landing in Boston after college for decades, the differing rates of recovery makes that even more likely now.
"There's a chicken and the egg problem with the jobs," said Clayton-Matthews. "A highly educated workforce attracts jobs, but you have to have jobs to attract a highly educated workforce."
Will hundreds of laid-off insurance professionals move there too, depleting Hartford's talent base?
Carbacho-Burgos says that as long as Connecticut's job growth accelerates in the next two years – and he expects that it will – "its migration losses will be fairly minimal. It's only if recession or slow growth persists that you're going to see a drain of jobs over the border."
Commuter Marriage
Mike Bigda was hired as a vice president at Delphi Technology – with a $55,000 raise – in October. In September 2009, Bigda had been one of 60 people laid off in his area at Travelers. He had been there five years, and managed 25 people.
The new job in downtown Boston is a return to the executive suite, where he had been at a previous job at a Connecticut tech firm serving insurance companies. He was laid off from that job in 2003, after 16 years.
"I was looking for really anything in a leadership function for insurance companies or technology companies," he said of his 2009 job hunt. "I immediately opened my search countrywide, because I didn't want to take a chance, knowing the economy was depressed, limiting my scope geographically. If it was a really good opportunity, I would move."
In a year of searching, he was on the short list for a vice president's position at a Connecticut technology company, but it decided to leave it vacant until 2011. Two insurance companies interviewed him. One job wasn't filled, and one they filled internally.
A former co-worker is now at Delphi, an insurance software company with about 50 employees in Boston, 50 in Shanghai and 50 in New Jersey, so when Bigda saw the vice president's job, he leaped at it.
His wife continues to live in Manchester, along with their grown son, and Bigda stays in a $1,049-a-month Framingham apartment during the week. She had gotten a promotion, and wanted to keep working in Hartford for now. He doesn't like being separated from his wife during the week, though she does sometimes come up Wednesday night.
"Do I miss her? Yes I do, to be perfectly honest with you," Bigda said. "We could move in three years and still have a relocation package. A lot of that will depend, if her job's going well, and she really likes it, we'll see how this living apart goes."
But Bigda, whose children both live in the Hartford area, said, "There's reasons to be in Connecticut…That would probably have been preferred."
To view the original article online, click here.
Mara Lee can be reached at firstname.lastname@example.com
Underemployed and overeducated
and maybe the nation's best hope
By Megan Woolhouse, The Boston Globe
January 23, 2011
From the US Chamber of Commerce to the halls of academia, the warnings have been abundant: A shortage of skilled workers with college degrees will create a workforce crisis by the year 2018.
The projected shortage is rooted in demographics – retiring baby boomers and slowing population growth – and will leave employers short-staffed and the United States at a competitive disadvantage.
But a recent paper by Andrew Sum, director of the Center for Labor Market Studies at Northeastern University, and Paul Harrington, who recently left Northeastern for Drexel University in Philadelphia, calls those predictions overblown.
The researchers said studies forecasting labor shortages ignore a large and growing number of college graduates who work in low-skill, low-paying occupations. These are the legions of overeducated waiters and waitresses, retail clerks, and receptionists who hold college degrees, a problem known as "malemployment."
If this hidden college-educated workforce is considered, then looming shortages in occupations requiring college degrees appear less dire, Sum and Harrington argue.
Sum said about 25 percent of all employed, college-educated adults in the nation work in jobs that don't require a college degree. That number increases to nearly 40 percent for recent college graduates, many of whom are struggling to repay loans.
"We have to be honest about this problem, otherwise we're setting people up for failure," Sum said. "We would like colleges and universities and employers to work together to find a way to reduce the problem."
Harrington and Sum's analysis of Labor Department data found nearly 16 percent of young college graduates (age 25 and under) were working in retail jobs from January to October of last year. Nearly 10 percent worked as waiters, waitresses, and bartenders, and 6 percent took jobs as secretaries or office assistants.
Harrington and Sum's paper, published by the New England Board of Higher Education, criticized a widely publicized study last year by the Center on Education and the Workforce at Georgetown University. That study predicted the nation will need 22 million college graduates to meet employer demand by 2018, but at current graduation rates, colleges and universities will produce only 19 million.
The study's author, professor Anthony P. Carnevale, said evidence of the demand for college graduates is apparent from the steady rise in wages for degree holders. The $3 million study, paid for by Georgetown and charitable foundations, found overall wages for college graduates were 74 percent higher than those of high school graduates in 2008. The wage advantage was just 30 percent in 1979.
This wage analysis, Carnevale said, captures college grads working in occupations that don't require degrees and supports his forecast of a looming shortage.
During economic downturns, Carnevale said, he frequently hears that college graduates are forced to "tend bar or mop floors." His study, he said, considered a "college job" any position that gives substantial earnings returns to a college degree, regardless of occupation.
For example, the work done by a nuclear technician does not typically require a degree, but about half of the people in those positions have either an associate's or bachelor's degree and typically earn about twice as much as the person who does not.
"I don't know how he's getting these numbers," Carnevale said of Sum's calculation. "He shows that lots and lots of people have college degrees and low wages, and he refuses to send his data so we can check it."
Other research bolsters the notion of a shortage. The National Association of Manufacturers surveyed 779 industrial companies last year and found 32 percent already reported "moderate to serious" skills shortages, including in occupations that required college degrees. Sixty-three percent of life science companies and 45 percent of energy firms cited similar shortages.
Other Northeastern researchers, Barry Bluestone and Mark Melnik, also predicted labor shortages in their 2010 study, "After the Recovery: Help Needed."
Bluestone said both problems – a shortage of skilled workers and overeducated workers in low-paying jobs – coexist as the economy moves from a manufacturing-based to a skills-based economy. That transition creates a mismatch between employers' needs and workers' educations. Bluestone added there is always a population of workers who hold a college degree but for a variety of reasons – from the wrong skills to an inability to relocate for a job – work in lower-skill jobs.
Part of the problem is that colleges are not graduating students with degrees in demand by employers, Sum and Carnevale said. Both researchers said colleges need to do a better job guiding students into better-paying fields that need educated workers, or shortages will continue.
Sum described malemployment as an "enormous" problem that needs more attention from education leaders, who could offer students better direction, and the federal government, which could offer stimulus programs to help employ young graduates.
For now, he said, many college students are staying in school longer because it is so hard to find a job. And the problem is especially destructive in minority communities where college graduation rates are low. When people in these communities see college students go through the effort and expense of earning a degree, but then end up with a lackluster job, it undermines aspirations, Sum said.
"You get a degree and do a job someone could have gotten with a 10th-grade education?" Sum said. "I can't think of a worse situation. The kids feel deceived, and what message does it send?"
To view the original article online, click here.
Megan Woolhouse can be reached at email@example.com
How to encourage working longer with a carrot, not a stick
By Prism Monkey
January 12, 2011
When President Obama delivers his State of the Union address on January 25th, all indications are that he'll embrace many of the deficit reduction recommendations put forward last month by the co-chairs 'of his National Commission on Fiscal Responsibility & Reform.
A key section of the wide-ranging report offers recommendations to bolster the long-term fiscal health of Social Security – despite the fact that that Social Security has no direct impact on the federal deficit. Among the commission's controversial recommendations is an increase in the age when workers can receive full Social Security benefits – the so-called normal retirement age (NRA).
The NRA increase would be phased in very gradually – to 68 in 2050 and 69 in 2075. But the higher retirement age would come on top of an increase in the NRA already being implemented under the Social Security reforms of 1983. Under that set of reforms, the NRA is rising from 65 to 67 in 2027.
Supporters of a higher NRA note that the nation's rising longevity has reduced the relevance of 65 as a symbol of old age. Indeed, the labor force appears destined to get very gray in the next couple decades. Nearly 75 percent of 55- to 64-year-olds will be working in 2018, according to economist Barry Bluestone, a far higher rate than the 65 percent who were working in 2008. Likewise, Bluestone thinks 30 percent of Americans age 65-74 could be working in 2018, much higher than the current rate of 25 percent.
Certainly, there's nothing sacrosanct about 65, the NRA that was adopted when Social Security was created in 1935. But the trend toward working longer doesn't justify cutting Social Security benefits.
The program's benefits already are modest – the average benefit paid is just over $14,000. And another increase in the NRA will impose a lifetime benefit cut for everyone, no matter the retirement age.
What's more, working longer presents challenges that older workers are ill-equipped to face, says Marc Freedman, CEO of Civic Ventures, the non-profit devoted to encouraging older adults to blaze new career trails.
Freedman advocates continued participation in the labor force by older people who need and want to keep working. "I think what we need to do is focus on those who voluntarily are going to work longer – not necessarily those who don't want to, but have to," he says. "Rather than try raise the retirement age or coerce someone who doesn't want to work longer, let's help those who are already determined to go in that direction get from aspiration to action."
Freedman urges creation of public policies and programs that can help with these critical life transitions. "Right now, the only transition we do a decent job on is the one young people make from adolescent to adulthood. At this later juncture, it is a do-it-yourself process – you're on your own.
"People are hungry for help with this. What we need are new pathways for people in their 50s, 60s and 70s. Let's meet them halfway with additional education, internships or service projects. Let's make it easier for this group to do what they want to do – and what we need them to do as a society."
Expect to hear more from Freedman on how to make these transitions easier when his new book is published in the Spring. Called The Big Shift (PublicAffairs, April 2011), it argues that we need to recognize and develop a new stage of life between midlife and true old age. Freedman goes on to describe how this can best be done and the benefits that can be reaped.
Here are some of Freedman's key ideas on the subject:
Education: Our higher education system offers undergraduate training for 18-to-25 year olds and lifelong learning for those who are over 70 and truly retired. "A school for the second half of life has not been developed yet," Freedman says. "It would be tailored for those who have another phase of their working lives yet to come."
Freedman sees community colleges as the best candidates to offer this new encore career pathways, since they already offer career training, can offer affordable classes and are well-connected to local labor markets and employers.
Financing transitions: Freedman wants to re-think the way that retirement assets are used by splitting savings into two buckets – one for lifetime security and the other invested to produce income that can help pay for a mid-life career transition. Some people already are using 529 education accounts and Roth IRAs for this purpose, but Civic Ventures has been advocating creation of a new type of savings vehicle to support midlife education called an an Individual Purpose Account (IPA). IPAs could incorporate valuable features such as tax credits, employer matches and loan options.
Volunteering as a pathway: The Serve America Act of 2009 funded a dramatic expansion of public service programs, and it envisioned a national service "encore fellowships" to help people transition to public service in the non-profit sector, but the fellowships haven't yet been funded. Some corporations are adding encore career programs, and some community colleges are starting programs. Freedman still hopes the fellowship program will be funded and expanded.
Does the push for encore careers make practical sense in a period of high unemployment and scarce jobs? Freedman argues that the new lifestage he envisions is a a long-term structural change in the shape of our lives, and it will include upturns and downturns in the economy.
"It's not a zero-sum game of competition between the old and young for jobs," argues Freedman. "When we develop the new concept of this period of life and work, it's something we're doing not just for people at this juncture now, but for those who will live even longer later on."
To view the original article online, click here.
Housing sales finish strong
Bay State buyers snap up lower-priced homes in December
By Thomas Grillo, The Boston Herald
January 13, 2011
After five straight months of decreasing home sales, last year ended with a bang as buyers snapped up low-priced properties in December.
"There's growing confidence that the economy is rebounding," said Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University. "Mortgage rates and home prices appear to be on the rise, so if you're in the market for a home, why wait?"
Single-family home sales improved to 2,982 in December, up from 2,853 a year ago, a 4.5 percent increase, according to the MLS Property Information Network.
A majority of the homes sold last month were priced under $300,000. The median price for single-family dwellings fell to $285,000 in December compared to $300,000 in December 2009, a 5 percent decrease, a factor that may have moved potential buyers off the sidelines.
Despite a spike in sales in December, it was not enough to push the 2010 total sales volume higher than 2009. Last year, 35,622 single-family homes changed hands, down 2 percent from 2009 when there were 36,319 sales.
Condominium sales in December were flat and median prices were unchanged at $255,000 compared to a year ago.
A total of 14,980 condos were sold in 2010, down 2.3 percent from 15,345 in 2009. On the other hand, the median condo price increased to $269,500 in 2010 from $252,225 in 2009, a 6.8 percent jump.
Robert Murphy, an economist at Boston College, said several factors could boost home sales this year. He noted that the recent extension of the tax cuts by Congress plus the 2 percent cut in the Social Security tax will allow workers to keep more of what they earn.
"We've turned the corner on employment and consumers are feeling a little more comfortable getting their balance sheets in line," he said. "I expect the housing market to be even stronger as we get into the spring."
To view the original article online, click here.
The day of reckoning for public employees unions is here
By Steven Pearlstein, Washington Post
January 11, 2011
In July 2009, economist Barry Bluestone wrote an op-ed article for the Boston Globe warning that his state's public employees unions were on the same path to economic and political decline as the United Auto Workers was back in the mid-1980s.
Voters, he warned, would no longer accept wages and benefits for government employees that had grown more generous than their own. They would no longer pay for public services whose costs were growing half again as fast as the cost of services in the private sector.
Nor would the public tolerate continued union resistance to efforts to improve the quality and efficiency of government services. Through tax caps, outsourcing and charter schools, governments were already finding ways to circumvent public employees unions and limit their political power. Unless the unions moved quickly to strike a new "grand bargain" with government officials and taxpayers, Bluestone wrote, they would soon face an even more painful "day of reckoning."
Barry Bluestone is not just any economist. He is the son of Irving Bluestone, a legendary UAW negotiator, a reliably liberal, union-friendly scholar who has spent a career studying the declining fortunes of the American working and middle class. And since his op-ed, things have only gone from bad to worse in terms of the financial distress now faced by all levels of government. The "day of reckoning" that Bluestone forewarned has now arrived.
A recession-weary public is now well aware of New York firefighters who retire after 20 years at half pay, of California prison guards who rake in $120,000 a year and of New Jersey teachers who pay little or nothing for health insurance. A parade of actuaries and economists has stepped forward with estimates of unfunded retiree obligations for state and local governments that now top $1 trillion.
Reflecting the frustration with the lack of progress on school reform, no less a liberal than Davis Guggenheim, director of Al Gore's "An Inconvenient Truth," is now out with "Waiting for 'Superman,' " a scathing critique of teachers unions. Rahm Emanuel, running for mayor of Chicago, has vowed to cut pension benefits not just for future city workers but current ones as well. And in solidly Democratic New Jersey, Republican governor Chris Christie has become something of a folk hero for taking on his state's once-formidable public employees unions.
All the while, public employees unions and their leaders remain in a defensive crouch, refusing to accept any responsibility for looming service cuts and tax increases. Many are launching last-ditch political efforts to hold on to what they still have, but so far their appeals to working-class solidarity have largely fallen on deaf ears.
The better approach for public sector unions would be to acknowledge that the status quo is unsustainable and take up Bluestone's suggestion of a new "grand bargain."
Such a bargain inevitably begins with a freeze on current wages in exchange for future increases when the economy improves. Going forward, unions might propose tying overall compensation to the rhythms of the business cycle, making up in good times what is lost in bad.
Rather than continuing to fight reform of work rules and protecting underperformers, unions could trade those away for across-the-board bonuses for service improvements and a guarantee that employees get a sizable share of any productivity gains.
To preserve health benefits for retirees, active workers will need to accept greater cost sharing on their health insurance policies, which will not only reduce the cost to government in the short run but slow the growth in premiums for everyone over the long haul.
And on pensions, the unions ought to get real about the dismal state of their defined-benefit plans and use their assets to finance a new arrangement. Start with enrolling government workers in Social Security. Supplement that with a defined-contribution plan that could be taken to a new job, would give workers some flexibility in how their pension money was invested and would automatically be converted into a fixed-benefit annuity upon retirement.
Such an arrangement would give governments the budget certainty they need to meet pension obligations without the financial risk of market fluctuations. It would also put an end to the extensive gaming of the system in the final years of a public employee's career during which made-up disabilities and excessive overtime are sometimes used to inflate monthly pension checks.
Given the political and economic realities, these kinds of wage and benefit changes are inevitable. Not coincidentally, they are also pretty much where things stand in the private sector. Rather than resist at every turn and have the conditions dictated under duress by someone else, public employees unions would do better to accept unpleasant realities, embrace the future and hammer out more favorable terms while they still have some leverage.
As Bluestone would point out, there are hundreds of thousands of former autoworkers who would probably be a lot better off today if only their once-mighty union had been willing to look forward rather than backward and focus on what could be rather than what once was. The question now is whether public employees and their unions will learn from those mistakes, or whether they are determined to repeat them.
To view the original article online, click here.
Bringing a College Student Village to Boston
A proposal by a state university president for a student village might bring new interest to the idea here in Boston
By Boston Herald
January 7, 2011
According to the Sentinel & Enterprise newspaper, Fitchburg State University President Robert Antonucci is proposing the idea of a "224-acre Student Housing Overlay District in the urban renewal district" in downtown Fitchburg.
Through regulations passed by the city's planning board, the district would become more-appealing to developers looking to build housing. While the apartments would be privately owned, and therefore, not rented solely and specifically to college students, its location (and presumed pricing) is hoped to encourage them to move there instead of into other neighborhoods.
A similar idea has been proposed for here in Boston, most-recently by Northeastern University professor Barry Bluestone, who imagines a "graduated student village" of substantial size, made up of thousands of 20-somethings from area colleges.
Because these students are enrolled in graduate school, the idea is that they are more-focused on their schoolwork and less on causing trouble, so the village would be welcomed into any community.
The student village wouldn't have to be built inside city limits but would need to be close to public transportation and in a relatively dense area where there is easy access to restaurants, supermarkets, and retail shops.
The Fitchburg plan is for a space as large as 224 acres. Boston could certainly fill such a space, the trouble is, where to find it. Your thought might immediately turn to the Seaport District but, on second thought, you'd realize that's a non-starter, for various reasons. Not only would there be an outcry from residents in South Boston, the Seaport District is too close to downtown and too valuable a space to give it away to developers looking for relatively-moderate rents. (Plus, the land there is already owned by a couple of guys who have very serious plans in place to build a mini-city.)
Further out, there's plenty of space.
One big problem is: what if you build it and nobody comes?
Another problem is: what if you build it and everyone wants to live there? Can you keep it segregated so that only students can live there? The opposite is true, you can make apartments available to non-students only, but I don't know the legality of it all.
It's an interesting idea. I'd rather see something big and grand than small and meek (like putting a student tower in Downtown Crossing).
The need exists – how do we fill it?
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After a grim year, employers are once again optimistic about hiring
By Megan Woolhouse, The Boston Globe
January 9, 2011
A year ago, talk of a jobless recovery dominated discussion as Massachusetts and the nation slowly climbed out of a deep recession. Economists are painting a brighter picture for 2011, anticipating solid job growth in the last six months of this year and predicting an economic recovery that actually feels like one.
Already, there are signs of improvement. Nationally, first-time claims for unemployment benefits have fallen to two-year lows in recent weeks while advertised job openings have reached their highest level since August 2008, according to the Labor Department. US employers have added jobs in each of the past three months, while the national unemployment rate last month fell to 9.4 percent from 9.8 percent in November.
In Massachusetts, job vacancies are up, and businesses are optimistic about hiring over the next several months, according to the business confidence survey of Associated Industries of Massachusetts, the state's largest employers group. Staffing firms point to another sign that employment is likely to expand in the state: Companies are hiring more recruiters.
"It's getting better slowly," said Alan Clayton-Matthews, a Northeastern University economics professor, "but the end of 2011 will look a lot better than the end of last year."
Clayton-Matthews and other economists caution that it will take years for unemployment to return to prerecession levels. When the downturn began three years ago, Massachusetts employers slashed jobs by the tens of thousands and the state unemployment rate rose rapidly, more than doubling before peaking in January 2010 at 9.5 percent, a 33-year-high.
Last year, the picture improved, though not on a grand scale. Through the first 11 months of 2010, the state added about 38,000 jobs, and unemployment fell to 8.2 percent. First-time claims for jobless benefits in November declined 16 percent from a year ago.
Nariman Behravesh, chief economist at IHS Global Insight in Lexington, forecasts that unemployment in Massachusetts will fall to as low as 7.8 percent this year. Employers confident in an improved outlook will hire, and business tax incentives recently enacted by Congress will encourage growth. Consumer spending will also rebound, he said. "It's interesting," said Behravesh. "Just in a matter of a few weeks, not only has all the talk about a double-dip [recession] disappeared, but things are starting to look much more upbeat."
After slashing costs and payrolls over the past few years, businesses may be reaching the point at which they must hire to meet increasing demand and continue to grow, economists said. Additionally, the diminished value of the dollar in other countries should lower the costs of US goods and services, and further increase demand for them — and for new workers. Many Massachusetts firms sell products overseas.
"The tinder is there to be receptive to the spark," Clayton-Matthews said. "Businesses have a lot of cash on hand. They have a lot of money to expand operations once they're confident the economy is going to come back."
Several Massachusetts sectors added jobs over the last year, and hiring in them is expected to continue. Education services, which include colleges and universities, for example, increased employment 7.2 percent between November 2009 and November 2010, the most recent data available. Professional, scientific, and technical services, which include a variety of technology and research firms, increased more than 2 percent during the same period. Health care jobs increase about 1 percent.
Scott Ragusa, president of contract businesses at Winter, Wyman Cos., a Waltham staffing firm, said the number of job openings at companies with which his firm does business has doubled from the end of 2009 with demand especially strong for workers with technological expertise and computer language skills. The number of job seekers Winter, Wyman placed in permanent jobs rose 22 percent.
"We're much busier this season than last season," Ragusa said. "And as January picks up, we expect a growing demand."
Elaine Varelas, a regular contributor to the Globe and managing partner at Keystone Associates, a firm that offers career assistance to laid-off workers, also sounded upbeat about hiring in the coming year.
Layoffs have been steadily slowing since 2008, she said, and that trend will likely continue because smart executives know they cannot simply cut their way to prosperity.
"You need to invest your way out of a recession," she said.
Megan Woolhouse can be reached at email@example.com
Boston's Next Housing Frontier: Graduate Student Residences
By Susan Diesenhouse, Dukakis Center
January 5, 2011
Recession? What recession? When it comes to Boston apartment rents, one would hardly notice the economic downturn. Rents are near peak levels because competition for apartments is unusually intense. Families that have lost homes to foreclosure have jumped into the rental market adding to demand. Young families that might under other circumstances have left rental housing to move up to ownership are holding back because they cannot meet new tighter credit regulations or fear a decline in residential values.
But there's another, more enduring reason for the hot rental market that has little to do with the overall economy: Boston's huge contingent of 336,000 college students. In their ranks, graduate students are the fastest growing cohort and the vast majority of them live off-campus in city neighborhoods. When a few pool their resources, they run up rents beyond what many working families can afford. If four grad students each pays $600 month, a landlord can reap $2400 month for a place that might otherwise rent for $1,700 or less.
Of course, this is problematic but it's important to recognize the economic, social and cultural benefits these students bring to the region. As such, it would not be wise to try to limit their growth. Instead, perhaps a new model for housing grad students would be a way to moderate the rise in apartment rents. At the Dukakis Center for Urban and Regional Policy, Dean Barry Bluestone is floating the idea of encouraging privately developed, transit oriented, multi-university graduate student villages. In the past, most schools built their own residence halls for undergrads on campus, leaving grad students to find housing elsewhere. But perhaps there's another way.
First some background.
Greater Boston's 76 accredited colleges and universities contribute mightily to the region's prosperity. They provide a highly skilled workforce and support research labs that have spawned hundreds of innovative companies employing thousands of local residents. Some universities have established world acclaimed medical centers that attract elite healthcare professionals, medical businesses and patients from every corner of the globe.
In the past few years, the number of students at Boston's institutions of higher learning has grown rapidly, as it has nationwide. The Pew Research Center reports an increase of 144,000 students in the U.S. from 2007 through 2008, the strongest growth in 40 years.
In Greater Boston, post secondary enrollment was basically constant from 1984 to 2000, hovering around 285,000. But from fall 2001 through fall 2009, the student population grew rapidly from 290,000 to 336,000. Undergraduate enrollment increased sharply from 2005 through 2009 by 20,550 students, with 14,000 of them showing up in just the past two years. Half of these are community college students. In contrast, graduate student enrollment has risen steadily since the 1980's when they were about 22% of the overall student population; today they are about 30%. Now, the region has 234,000 undergraduate and 102,000 graduate students.
The greatest growth has been among graduate students at private colleges and universities. They account for about 90% of all graduate students in Greater Boston and a huge proportion of them compete for housing in the region's rental market. About 94,000, over 92 percent, live off-campus compared to just 47 percent of undergrads. A large proportion of these graduate students come from out of the state and need a place to live. With little housing for them on campuses, their choice is obvious.
Since it's likely that Greater Boston's student population will continue to grow, rents will almost certainly continue to climb regardless of economic conditions. The National Center for Education Statistics predicts that from fall 2007 through fall 2018, total enrollment in degree granting institutions, both public and private, will continue to rise. Undergraduate ranks will increase by 12 percent, graduate students by nearly 20 percent. In the Boston region, that would mean by 2018, 26,000 more undergrads and 19,000 more graduate students.
The leaves Boston with a clear choice: welcome higher apartment rents or entertain new ideas for housing students, especially grad students.
Bluestone envisions densely developed student villages built expressly for grad students by private developers that target a multi-university population. One possible site might be the former Filene's downtown on Washington Street. It's available since the city just revoked a developer's permits to build a commercial mixed use complex. With access to the red, green and orange MBTA lines, it could serve Northeastern University, Boston University, Boston College, the New England Conservatory, Emerson and Suffolk. It would also serve as an anchor for the revitalization of Downtown Crossing.
If a private developer financed and built the complex it would remain on city tax rolls. If a group of schools aggressively marketed the "village", they could ensure close to 100% occupancy, 12 months a year since grad students usually stay in town for the summer. The units – small studios, one, two and three bedrooms – might also offer accommodations for married students with children. Apartments could have different sizes and levels of finishes. Then, rents would range from low for "starving intellectuals" to upscale for the more affluent.
There could be commercial space on the lower floors: a Trader Joe's or Whole Foods, a dry cleaner, drug store, maybe a sports bar. Underground parking might provide one space for every few units but also have a large Zip car facility with everything from minis to vans. The participating schools might also offer regular programming of seminars, lectures and film festivals open not only to graduate residents but others as well.
The combination of a convenient location, attractive apartments, a large menu of amenities, neighbors from various schools and other "village-like" features might make the complex a top choice among graduate students moving to Boston. An option could exist for those who have completed their graduate degrees to remain in their village apartments for three to five years, with the hope that they would put down roots in the city and choose to stay here and contribute to the economic and social vitality of the region for years to come.
It would also be appealing to commercial real estate developers, said Robert Gilbane, chairman and CEO of Providence-based Gilbane Development Co. which is building on or near 60 U.S. college campuses from 30 offices in the U.S. and Asia.
In Boston, the demand for such housing is huge and Dean Bluestone's concept is strong, he said. Furthermore, it's a great time to for construction with costs down nearly 20% and interest rates low, Gilbane said.
One hurdle is securing a well priced site near public transit. But that could be overcome if a university provided a reasonable ground lease, he said.
In the eyes of property owners, grad students are good tenants, said Michael Peter, CEO of Campus Advantage, a student housing management and consulting firm. They pay on time. They're so busy they don't have time to move often and so have a return rate of about 65% compared to 30% for undergrads. It's also a concept that could be replicated nationally, in cities like Philadelphia and Chicago where students and public transit abound.
"Not to explore the idea of a multi-university graduate student village would be a disservice to the schools, students and community," Peter said. "If it's built, students would flock to it."
Mass. sharing the wealth
Bonuses, economy drive up tax revenue by $822M
By Jay Fitzgerald, Boston Herald
January 5, 2011
The state's tax receipts jumped by 10.1 percent in 2010, thanks to a stronger economy and bigger bonuses dished out to wealthier workers.
This $882 million increase in state tax revenue won't be nearly enough to plug an estimated $2 billion budget gap facing state government in the next fiscal year. But it's a sign that the economy is on a slow rebound.
"This is really good news," said Alan Clayton-Matthews, a Northeastern University economist. "Tax (revenues) are a good indicator of current economic conditions."
End-of-the-year data released yesterday by the Department of Revenue confirms other evidence of a slowly recovering economy, such as the fall of the state's jobless rate from 9.5 percent in 2009 to 8.2 percent towards the end of 2010.
According to the DOR, income-tax receipts increased by $531 million to $5.2 billion, or by 11.2 percent, from December 2009 through December 2010.
An encouraging sign is the $194 million increase in tax revenue from estimated end-of-year bonuses and capital gains – both usually associated with more well-off residents.
State sales-tax revenue increased by a smaller amount, or by about 3.5 percent, if the recent sales-tax increase isn't counted. With the sales-tax hike included, sales-tax receipts jumped 11.5 percent last year to $2.49 billion.
December's sales-tax receipts, which reflect holiday-season spending, showed an impressive 5.9 percent gain of $26 million, compared with the same month in 2009.
"These are signs of an economic recovery that continues to grow," state Revenue Commissioner Navjeet Bal said.
While the tax figures indicate a strengthening economy, the improvements aren't enough to close the state's looming budget deficit.
Michael Widmer, president of the Massachusetts Taxpayers Foundation, said the state is facing a big deficit because it's losing the one-time federal stimulus funds it received during past fiscal year.
"It won't be enough," Widmer said, noting that high tax receipts have already been calculated into future budget projections.
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'Lots of optimism' in state's housing market
By Thomas Grillo, Boston Herald
January 5, 2011
The number of Massachusetts homes put under agreement rose by more than 5 percent in December – the biggest hike in seven months and a sign that the housing market could be rebounding.
"There's an awful lot of optimism out there," said local economist Karl Case, co-creator of the widely followed Case-Shiller home-price indexes. "The stock market is up, and everyone is talking about the recovery being better than we thought."
The Massachusetts Association of Realtors said yesterday that brokers placed 2,888 Bay State houses under agreement last month, up from 2,743 homes in December 2009.
A house goes "under agreement" when a buyer and seller have a signed a purchase-and-sale agreement but have not yet closed their deal. Such pending sales provide hints as to where the market is heading.
Gary Rogers, a Waltham Realtor and MAR past president, said a recent rise in mortgage rates pushed many house hunters into signing purchase-and-sale contracts.
"The hike of interest rates by about 1 percentage point this fall finally caught people's attention," he said. "(It) drove people off of the sidelines. It was a motivator."
But Northeastern University economist Barry Bluestone doesn't think the December numbers are a fluke.
He said 2010 closed with lots more optimism among consumers and the business community.
"There seems to be a growing feeling that we are past the bottom, the dark clouds are starting to lift and we will see economic growth in the months ahead," Bluestone said. "And with that, home sales rise."
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Wages rise for all, but a gap widens
Although state has one of the best-paid workforces in the US, education still makes a big difference
By Erin Allworth, The Boston Globe
January 1, 2011
Thanks to its colleges and universities, Massachusetts has one of the best-educated, best-paid workforces in the nation, but a new study shows the gap between the haves and have-nots has widened – especially during the recent recession.
The report, scheduled to be issued tomorrow by the Massachusetts Budget and Policy Center, highlights the benefits and challenges of the Commonwealth's economy: Forty-three percent of the state's workers have a college degree – a higher percentage than any other state – helping pay and earnings grow more quickly here over the past three decades than in the nation as a whole.
But those gains have mostly benefited better-educated workers, insulating them during the economic downturn. Those with less schooling were left to grapple with slower-growing salaries and higher rates of unemployment.
"Not everybody in the state is college-educated, or even high school-educated," said Noah Berger, president of the center, a nonpartisan think tank commonly known as MassBudget. "You need to expand the sphere of prosperity so that people born in any neighborhood or income level have access to the quality education that it takes to get a good job with good wages."
According to the MassBudget study, Massachusetts's median annual income, adjusted for cost of living, rose 24.7 percent, from $47,605 in 1979 to $59,373 in 2009 – more than twice as much as the rest of the nation.
Median hourly wages in Massachusetts increased at a faster rate than in any other state, growing 40.25 percent from $14.21 in 1979 to $19.93 in 2009. The median hourly wage for those with a bachelor's degree rose 32.4 percent; for those with a master's degree it rose 39.9 percent. But pay for Massachusetts workers with a high school diploma or less rose just 9.6 percent.
Just a year apart in age, Yvena Robert and Alice Phinizy, stand at either ends of the spectrum.
Phinizy, a 29-year-old Watertown resident, credits her college degrees, including a master's in business administration, with helping her land increasing wages at successive jobs. Since 2004, her yearly salary has grown from $48,000 a year to $55,000 – more than her husband, who does not have a master's, she said.
"I don't have to worry every day. I can pay my bills," said Phinizy, who works for a nonprofit that builds affordable housing.
But she is still somewhat troubled by the economy.
"I wouldn't think of moving around right now," she said. "It's pretty daunting. I'll stay where I am for now and weather the storm."
Robert, 28, struggled to get out of a low-paying retail job since family responsibilities and the need to work forced the Cambridge resident to quit classes at Bunker Hill Community College several years ago.
She later lost her job and spent nearly two years unemployed. She used that time to go to YMCA Training Inc., a local career center, to learn computer programs and improve her math and to attend public speaking classes.
With the new skills, she earned a job working in patient services at Boston Medical Center. The new position pays her $2 an hour more than when she worked in retail and offers a schedule that might allow her to go back to school.
"Education is very important," Robert said. "If you don't have it, it's like you're at a dead end."
Barry Bluestone, dean of Northeastern University's School of Public Policy and Urban Affairs, said the gains in the state's economy are heartening but have been "very unequally distributed," leaving workers in middle- and lower-skill jobs at a double disadvantage due to the state's high cost of living.
And Andrew Sum, director of Northeastern's Center for Labor Market Studies, questioned how well the MassBudget study reflects the current economic picture. While the report notes that Massachusetts lost only 113,000 jobs during the recession, Sum said the state will end the decade with about 200,000 fewer jobs than it started with – one of the worst records for job creation in the country.
"With all this human capital, why did we do so badly?" Sum asked. Part of the answer, he said, is that Massachusetts is dependent on too few industries, and they cater disproportionately to highly skilled workers – undermining the working class.
"I think we need to try to resurrect manufacturing here," he said. "We have got to go back and rebuild the economy in many sectors."
The state needs to focus more energy on developing its pool of workers with only some college education, or a high school diploma and professional certification, said Ben Forman, research director at MassINC, a Boston public policy research firm.
"There are still a lot of unanswered questions about our economic future and the fate of the Massachusetts middle class," he said. "How is our education system doing at preparing people at lower skill levels through the community college system? . . . I don't think we are."
State secretary of education Paul Reville said his department is "painfully conscious" of the challenges.
"Even when we lead the country on certain indicators," he said, "we have a mantra in this office: that doing well isn't good enough, and that we've got to close certain kinds of achievement and attainment gaps that this report makes apparent."
Erin Ailworth can be reached at email@example.com
Housing prices tumble in Boston area
Slow economy, end of buyers' credit cited; little growth expected
By Jenifer B. McKim, The Boston Globe
December 29, 2010
Boston area housing values dropped 1.2 percent in October compared with the month before, adding to a modest midyear slide in sales prices caused by the sluggish economy and aftereffects of the expired federal home buyers' tax credit.
The most recent market results of the Standard & Poor's Case-Shiller Home Price Indices further show that the Boston area housing market continues to bounce along a bottom, according to industry analysts, with minor fluctuations that are expected to continue next year. Values are down 0.2 percent compared with a year ago, according to the index.
"I do not expect to see sharp increases or decreases in prices over the next six months," said Barry Bluestone, dean in the School of Public Policy and Urban Affairs at Northeastern University. "We are going to stay where we are."
The Boston housing market peaked in September of 2005 — earlier than the rest of the country — and dropped 20 percent in value before showing sparks again in March 2009. The local market is now 15 percent below that 2005 price highs, according to the Case-Shiller index.
In contrast, home prices in 20 major cities tracked by the index fell more dramatically since 2006 — by about 33 percent — and have come back up only about 3 percent since last year's lows. The October numbers for other parts of the country are sobering and are prompting some analysts to fear another housing slump.
Six metro areas — including Atlanta, Charlotte, Miami, and Portland, Ore. — recorded their lowest home values since the downturn began, according to S&P.
"The double-dip is almost here," said David M. Blitzer, chair of the Index Committee at Standard & Poor's. "There is no good news in October's report."
Blitzer, however, added that Massachusetts could be out front on the way to recovery. Boston may be a "sign of the future for some of these cities," said Blitzer, "as long we don't suddenly discover there is another hole" in the bottom.
Mark Zandi, chief economist for the Pennsylvania-based research company Moody's Analytics, said the Boston area likely will hold its values while the rest of the country experiences more price declines over the next six months. Zandi attributes this, in part, to the foreclosure crisis hitting other parts of the nation harder than the Boston area.
"We are in the last legs of the housing crash," he said. "By this time next year I expect prices will start rising in a consistent way."
Meanwhile, local real estate agents are hoping for a robust spring. Sales volume in November dropped for the fifth consecutive month, largely because many buyers had purchased properties earlier in the year in order to qualify for the federal home buyers' tax credit, which gave eligible home buyers as much as $8,000 off their taxes.
"We have a lot of buyers who are in the wings waiting for the right property," said Laurie Cadigan, incoming president of the Massachusetts Association of Realtors.
Jenifer B. McKim can be reached at firstname.lastname@example.com
Budget chief: Mass. to cut spending by up to $1.5B
By Steve LeBlanc, Associated Press
December 14, 2010
BOSTON — Massachusetts will have to cut spending by up to $1.5 billion in the coming fiscal year to compensate for lagging tax collections and exploding costs in safety-net programs, the state's budget chief said Tuesday.
Administration and Finance Secretary Jay Gonzalez noted that the state has already collected $500 million more in taxes during its current fiscal year.
But in the budget year beginning July 1, it faces a triple whammy: tax collections below where they were before the recession, a loss of $1.5 billion in federal stimulus money, and increasing costs for the government insurance and other safety-net programs.
Leading the way is MassHealth, the state's insurance program for the financially challenged.
Since Massachusetts enacted its universal health care law in 2006, it has boosted its insurance rate to 98 percent of all its residents. But 75 percent of the newly insured are getting coverage through government-subsidized programs, while only 25 percent got it through employers or on their own.
Gonzalez said "changes will have to be made to many of these programs, and the way the state administers them."
The secretary also said the financial challenges don't simply offer an opportunity for change, "they demand it."
He made his remarks as he kicked off the annual hearing in which House and Senate leaders agree on a projected, or so-called consensus, revenue figure for the coming fiscal year. That figure serves as the basis for the budget documents first offered by Gov. Deval Patrick, then House Speaker Robert DeLeo and, finally, Senate President Therese Murray.
The governor will start the budget debate when he files his bill next week, and it usually concludes just before the fiscal year ends on June 30.
The president of the pro-business Massachusetts Taxpayers Foundation said the budget shortfall could reach $2 billion, without the previous cushions of federal stimulus money or the state's rainy day fund.
"The 2012 budget will require yet another round of cuts in local aid, human services, higher education and almost all other state programs," foundation President Michael Widmer said in a statement.
Among those testifying at the hearing, attended by members of the House and Senate Ways and Means Committees, was Department of Revenue Commissioner Navjeet Bal, Northeastern University economist Alan Clayton-Matthews and David Tuerck of the Beacon Hill Institute.
Budget leaders forecast more pain
Economy growing, but not enough to cover $2b gap
By Michael Levenson, The Boston Globe
December 14, 2010
For months, Governor Deval Patrick has repeatedly sidestepped questions about how he intends to close a massive budget hole next year, saying that rising tax collections suggest that the gap is shrinking.
But his generalities and wait-and-see approach will give way to stark assessments today when administration officials, economists, and state lawmakers gather at the State House to begin confronting the budget for the fiscal year that begins in July.
Those specialists and lawmakers say that, despite some signs of life in the economy, the state continues to face an estimated $2 billion shortfall for the upcoming year, a chasm that will necessitate yet another round of painful cuts in services.
They say that even though the state has collected about $500 million more in taxes than was expected so far this year, that gain is being completely absorbed by increasing demand for health insurance for the poor, homeless shelters, and public defenders. In addition, about $1.5 billion in federal stimulus money that the state used to avert deeper cuts this year is gone, leaving the state with few options to paper over its problems.
"It's a $2 billion gap, and the difference between that and the past is, that's a real gap," said Steven C. Panagiotakos, the Senate's outgoing budget chief. "So that $2 billion is going to really mean huge cuts in services and in employees. Let's face it: It's government services across the board."
Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, said the state is headed in the right direction for the first time in about two or three years, but is not growing fast enough to dig itself out of its budget problems next year.
Widmer said that he is predicting that the state will collect about $1 billion more in revenues next year than it did this year, but will still be short $2 billion, because the federal funds have dried up, demand for services continues to rise, and those services are increasingly expensive to provide.
"There's no way the economy can grow enough to cover that hole," Widmer said, adding that it will "require another round of significant budget cuts."
Alan Clayton-Matthews, an economist at Northeastern University said he and a colleague at Harvard, James H. Stock, have forecasted that revenues will grow by 3.9 percent next year, compared with about 4 percent this year.
"We're getting back to almost normal revenue growth, but we're in a huge fiscal hole and revenues aren't growing fast enough" to eliminate next year's shortfall, he said.
Christian E. Weller, an economist at the University of Massachusetts Boston, predicts that the state's 8.1 percent unemployment rate will hold steady or dip slightly next year, but will still be high.
That sluggishness in employment suggests continuing problems for state finances, which need strong job growth and greater consumer spending to recover fully from the recession.
"My overarching point is that the economy is stuck in a slow-growth pattern," said Weller, who is also a senior fellow at the left-leaning Center for American Progress. "There is some pain ahead."
Patrick, pressed by his rivals in the heat of his reelection campaign and in recent weeks, has declined to offer his own estimate of the gap, saying he needed to wait until today's economic hearing to offer his own view.
He and state lawmakers have offered no details of how they intend to close next year's gap, although they have said they have no plans to raise taxes.
"The good news is that state tax revenues are outperforming estimates, the economy continues to create jobs, and we are recovering faster and stronger than the nation as a whole," Patrick's budget chief, Jay Gonzalez, said in a statement yesterday.
"It will take time, however, to build our way back to where we were before the recession, and we will be losing $1.5 billion in federal stimulus funds next fiscal year," Gonzalez said.
Advocates for the poor and disabled are deeply worried about the looming cuts. Yesterday, they pleaded with state human services officials to spare programs for the deaf, blind, and physically impaired.
"I'm frightened; I'm honestly frightened," Diane Squires, who is deaf and advocates for the hearing-impaired, said at a State House forum, according to State House News Service. "I'm one of those people that will be affected."
The state expects to have about $550 million in reserves, but lawmakers and budget watchdogs have warned against spending that money to help balance next year's budget. They say it should be saved for unforeseen, emergency expenses.
House Speaker Robert A. DeLeo, who estimates next year's gap is about $1.5 billion, said yesterday that he sees no easy fixes. "Primarily," he said, "I would see further cuts to the budget."
Michael Levenson can be reached at firstname.lastname@example.com
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Jobs panel may go on road to get data
Leaders defend delay in start of commission work
By Kyle Cheney, The Boston Globe
December 11, 2010
The lawmakers in charge of a long-stalled state commission tasked with devising job creation and maintenance strategies say they are considering travel around the state to assess the strengths and weaknesses of each region. They also defend the panel's delayed start.
"Moving around or going to various regions may provide us with more information, more opportunities to hear from people," said Representative John W. Scibak, cochairman of the jobs commission, who added that he would like to "hear from people who are actually involved in [job creation] on a day-to-day basis."
Scibak said he understood an outcry earlier in the week, when State House News Service first reported that the panel, initially due to release its recommendations in June 2009, had not yet met. It has been nearly two years since the Legislature and Governor Deval Patrick approved the commission's creation.
"Job creation is important," said Scibak, a South Hadley Democrat. "I believe there's been some things that we've tried to do to address it. What I'm hoping is that this commission will come up with some strong and helpful recommendations. It's not going to be a review or study that collects dust on a shelf.
"If the criticism that's been directed this week gets more people focused on this issue and energizes participants, as well as other people across the Commonwealth, that should be a positive thing," he said.
Scibak also said that panel members who criticized the lack of action had not raised the issue until State House News Service reported it. After the story ran Tuesday, commission members in the administration received a letter notifying them that they should expect their first meeting in January.
Senator Karen Spilka, Democrat of Ashland and the Senate cochairwoman of the commission, said she plans to solicit ideas from other commission members before deciding how the panel proceeds.
"I would certainly suggest that we go and do a listening tour," she said, comparing it hearings around the state to those that the Committee on Economic Development and Emerging Technologies, which she cochairs, conducted two years ago.
Spilka said the commission had not met because lawmakers opted to take action, rather than study job creation measures.
"We really felt action over a study was what was called for," she said.
Spilka listed measures lawmakers took to spur job creation this session, including consolidating economic development agencies, creating a fund to provide capital to small businesses, increasing the small claims court threshold, and permitting small businesses to form cooperatives to buy health insurance.
"We couldn't wait," she said. "Now that that has been implemented — it's in the process of being implemented — we will look at some of the things that come around."
Patrick approved a resolution creating the commission in January 2009. Members appointed by the governor include: Tim Sullivan of the AFL-CIO, Aaron Tanaka of the Boston Workers' Alliance, Alan Clayton-Matthews of Northeastern University, and Eileen McAnneny of Associated Industries of Massachusetts.
Senate President Therese Murray and House Speaker Robert A. DeLeo appointed Spilka and Scibak as co-chairs.
Senate minority leader Richard R. Tisei and House minority leader Bradley H. Jones Jr. appointed Senator Bruce E. Tarr, Republican of Gloucester, and Representative Paul K. Frost, Republican of Auburn.
All nine Cabinet secretaries were appointed to the panel and permitted to designate officials to appear on the commission in their place.
Still Making It in Massachusetts
WCVB TV Channel 5, Chronicle
November 23, 2010
It's the fourth largest employer in the Commonwealth, paying wages 25 percent higher than the average and still growing. We're talking about – surprise – the manufacturing sector in Massachusetts.
Tonight, we'll find out how companies pioneering in nanotechnology and wind power are creating the jobs of the future, and how firms in legacy trades like textiles and footwear are still upholding a proud tradition of making it in Massachusetts.
View article at www.thebostonchannel.com
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What's UP with the Massachusetts Economy
By Susan Diesenhouse
November 15, 2010
To those who are still unemployed or working part-time hours when they would prefer a full-time job, it may not be much comfort to learn that Massachusetts is recovering from the national recession with more vibrancy than it has experienced in decades. In terms of the production of goods and services, job growth, wages, and even in-migration, the state is outperforming the nation as a whole and surpassing its own performance following the two prior economic downturns.
In the recessions that began in 1990 and 2001, Massachusetts trailed badly behind the rest of the country. By January, 1993, 30 months after the 1990 recession started, the U.S. Economic Activity Index was up 2.7 percent but the same measure for the state was down by 2.3 percent. By September 2003, 30 months after the start of the 2001 recession, US Economic Activity Index was up 1.0 percent while the state index was down 2.5 percent.
Now, for the first time in recent downturns, Massachusetts is doing much better than the nation as a whole. Since January, it has gained 38,300 jobs, the ninth fastest rate of job growth in the U.S., said Eric Nakajima, a senior adviser to the state Executive Office of Housing and Development who believes the state recovery began back in January. Since December of last year, state employment has grown 1.2 percent compared to just 0.5 percent for the U.S. Furthermore, the bounce is broad based. Every major industry in the state is seeing job gains, from construction and manufacturing to professional and business services. While the U.S. Economic Activity Index was down 4.5 percent in June, 30 months after the most recent recession started, the state index was down just 1.6 percent. Moreover since the end of last year, the state's output of goods and services has climbed at an annualized rate of 6.1 percent during the first quarter and 5.4 percent during Q2 compared to 3.7 percent and 1.7 percent respectively for the U.S.
We asked leading economists and those who head business firms if they agree that the state is doing well, if so why, and whether this deletethis sustainable. This is what we learned.
"Massachusetts' economic performance places it once again among the top tier of states," said Alan Clayton-Matthews, an associate professor of public policy at Northeastern University.
Not only are state payrolls growing at more than double the national rate, state withholding tax revenues ? an indicator of wages and salaries are strongly outpacing other regions. Those revenues grew at an annualized rate of 7.8 percent in the first quarter and 6.4 percent in Q2 compared with the U.S. record over the same time of 0.2 percent and 1.0 percent, respectively.
"We've been growing substantially faster than the country as a whole," Prof. Clayton-Matthews said. The state has not been hit as hard as the nation on the jobs front, as well. During the recent recession, total job loss in the state was 5.0 percent compared to 6.1 in the nation overall. Massachusetts' September 8.4 percent unemployment rate was 1.2 points lower than the nation's 9.6 percent. The underemployment rate, a measure of people working part time or those who have been job hunting for a year but not in the prior four weeks, fell to 11.8 percent for Massachusetts compared to 17.1 percent nationwide.
Unfortunately, it may be difficult to continue to do as well in upcoming months. The national economy is slowing and federal stimulus is coming to an end. As such, economic activity in Massachusetts may be dragged down by sluggish sales to other parts of the country and abroad. Still, the Commonwealth will deletestill outperform its peers, according to Prof. Clayton-Matthews.
One reason for this new kind of Massachusetts "exceptionalism" is the success of its export-intensive technology products: pharmaceuticals, software, information technology, defense products, and medical devices. These continue to be in heavy demand as businesses replenish inventories or upgrade equipment to improve productivity. Furthermore, the state has a track record of encouraging collaboration between technology companies and universities. As just two examples, the $1 billion Life Sciences Initiative and a similar information technology collaborative bring together industry, academia, and state government to promote Massachusetts' competitiveness. These initiatives have raised the state's profile among businesses and helped it organize to take advantage of positive economic trends as they emerge, Nakajima suggested.
The state also has the good fortune of having a concentration in industries recovering fastest from the recession including computers and business consulting while not being heavily invested in those that have suffered the most this time around, said Gus Faucher, Director of Macroeconomics for economy.com. Unlike other parts of the country, residential construction is a smaller sector here in Massachusetts and this sector has been clobbered in the southwest and in states like Florida. Our large sectors like education and health services have held up relatively well, Faucher added.
More good news for the state is that it has gained, rather than lost, population since the recession started, says Lynn Browne, an executive vice president at the Federal Reserve Bank of Boston. "People aren't moving away because the rest of the country is doing as bad or worse than Massachusetts," she said. "The story is that unlike the two prior recessions when the state did much worse than the rest of the country, now it's doing slightly better and that's a huge change." The positive net migration has added to a workforce that has long stood out for its high productivity. The Commonwealth exports educational services, imports students and produces good scholars of its own. That advantage is likely to continue.
"Massachusetts has the talent and a foundation of good companies that attract other businesses to invest here," said Alan Macdonald, executive director of the Massachusetts Business Roundtable. The state has lost corporate headquarters but still attracts major firms to expand here including Google, Microsoft, Novartis, Sanofi-Aventis, Cisco and IBM. That, in turn, boosts smaller local companies that are their vendors. Also, he added, "Executives like to live here."
Certainly, the state faces challenges. Chief among them is the high cost of living due in large part to expensive housing. Reining in these costs requires a continuation of policies that spur affordable housing production like Chapter 40B. That state law calls upon communities where less than 10 percent of the housing stock is deemed affordable by state standards to allow developers to override local rules to build multifamily housing if 25 percent of the units are marketed as affordable. Reducing our energy costs and dealing with health care costs could add to Massachusetts' competitiveness. Barry Bluestone, director of the Dukakis Center, added that "Economic activity is also spurred by infrastructure that makes commuting easy for residents and businesses, a regulatory environment that encourages business to relocate and expand here, and a high quality of life that attracts and retains households. That means good public education, a clean environment, low crime, well-maintained parks, recreational opportunities, and cultural activities. State growth may slow as the national economy loses steam in coming months but over the long term, Prof. Clayton-Matthews said. "Massachusetts will do fine."
Deficit-cutting plans raise concerns
Interview by Alison King, New England Cable News
November 12, 2010
When it comes to the nation's deficit, many Americans have a hard time wrapping their mind around 1.3 trillion dollars — that is: The amount that's being paid out this year that exceeds what's coming in.
On November 2nd, voters made it clear at the polls — they want Washington to start reining in that spiraling debt. The question is, are American's willing to accept the recommendations to make that happen.
These just released proposals come from President Obama's bi-partisan commission on reducing the deficit lead by former Republican Senate leader Alan Simpson and President Clinton Chief of Staff – Democrat Erskine Bowles.
Erskine Bowles/deficit reduction commission: "If we don't bring these deficits down and eventually get to balance, you know we are headed for disaster."
They have put forward an ambitious package of spending cuts and tax increases, which would result in four-trillion dollars worth of deficit reduction through 2020. It includes cuts to Social Security, Medicare and the Pentagon budget.
Other recommendations include the elimination of the child tax credit, the mortgage interest deduction and the earned income tax credit
The commission has also proposed a 15-cent/per gallon increase in the federal gas tax.
Barry Bluestone: "This bi-partisan panel is going to get clobbered by the left, the right and maybe even the center. But I actually think they've done us some good here."
Barry Bluestone is an economist at Northeastern University who says if we keep doing things as usual — we will soon get to the point where we are spending a trillion dollars a year — simply to pay interest on the national debt.
But early reviews are not promising.
From Nancy Pelosi: "Simply unacceptable." referring to cuts in Social Security and Medicare.
Many Republicans are equally emphatic when it comes to one trillion dollars in tax increases.
Bluestone: "This is an interesting framework, it's the beginning of a conversation and a dialogue and I hope people will take it that way but right now, dead on arrival."
Realtors meet in Worcester to probe problems
By Martin Luttrell, Worcester Telegram and Gazette
October 21, 2010
WORCESTER — The languishing economy will not see robust growth until the housing market is healthy, and the key to that is retaining the state's Chapter 40B affordable housing law, housing experts said yesterday.
The four- member panel discussion, titled "The State of Housing in Massachusetts," was part of the Massachusetts Association of Realtors Conference and Tradeshow held at the DCU Center.
"We are on the verge of coming out of this recession," said panelist Barry Bluestone, director of the Dukakis Center for Urban and Regional Policy at Northeastern University in Boston. "You represent the most important piece of the American economy.
"When investment in housing rises, the economy grows rapidly."
In addition to fueling the economy, a supply of affordable housing will be critical in attracting and retaining a young, talented work force in the state, he said.
Panelist Kevin Sears, 2010 president of MAR, said that more homes have been on the market and prices have crept up over the last several months, while the median time on the market has dropped 10 percent. The downside is that sales volume is down, and will likely stay down for some time, now that the homebuyer tax credit is no longer available.
Mr. Sears, along with Mr. Bluestone, spoke in opposition to Question 2 on the Nov. 2 ballot, saying it would repeal the Comprehensive Permit Act, otherwise known as Chapter 40B, which has helped lead to the development of nearly 58,000 housing units for senior citizens and families with middle-class incomes and below.
They were joined in their opposition to Question 2 by Gregory Bialecki, secretary of housing and economic development, and Kevin Kiley, executive vice president of the Massachusetts Bankers Association, who rounded out the panel. Moderator David Wluka, past president of MAR, also opposes passage of Question 2.
In 1969, Massachusetts enacted Chapter 40B as a means of encouraging communities to build more affordable housing. Advocates for repealing Chapter 40B argue that the law has not worked and has been abused, with some developers inflating their costs so as to exceed the profit margins permitted under the law.
Another obstacle to a thriving housing market and broader economy is the high number of foreclosures on distressed properties, and the length of time those properties are kept off the market, said Mr. Kiley. An average foreclosure takes about 300 days, he said.
"That doesn't serve the market or the banks," he said. "The quicker we can move through the foreclosures and create stability, the better."
Mr. Bialecki said part of the solution will be for major lenders to hire enough people to work with distressed borrowers and come to an informed decision. Bank of America, which had planned to hold off on foreclosing while verifying its documentation on loans, said earlier this week that it would go forward with more than 100,000 foreclosures in 23 states.
But in the meantime, the lending giant has quadrupled its default servicing staff, to around 20,000, Mr. Bialecki said.
He said that verifying the paperwork is important, but a more pressing issue is how to handle distressed properties whose value has significantly decreased. In cases where borrowers owe much more than their properties are now worth, and will have trouble paying modified loans, a foreclosure might be the best solution to get the properties back on the market, he said.
To view the original article online, click here.
Signs of Trouble
Stubborn economic woes, rising housing market's recovery
By D.C. Denison, Globe Staff
October 12, 2010
Greater Boston's housing market might be facing a period of more instability, according to a study to be released today by New England's largest community foundation.
The Boston Foundation report says the region's housing market could get battered from two directions, with continuing economic woes depressing house prices and driving up foreclosures, and Boston's burgeoning student population pushing up rents.
Barry Bluestone, director of the Kitty and Michael Dukakis Center for Urban and Regional Policy at Northeastern University and lead author of the report, said the Boston housing market was showing signs of emerging from the recession during the last half of 2009 and the first half of 2010; however, that progress could be threatened by a continuing weakness in the overall national economy.
Bluestone cited "disconcerting developments" nationwide, including the gross domestic product numbers, which fell sharply in the second quarter, and the growing ranks of the unemployed nationwide — both trends that threaten the troubled housing market.
Through July of this year, new home sales in the United States were running 8 percent below the same period last year, and 33 percent below 2008 levels. But with the end of the federal first-time home buyer tax credit in July, home sales nationally dropped 27 percent, double the consensus forecast. Foreclosures and bank repossessions nationwide have been running at record levels in 2010.
Bluestone said there are "too many disconcerting statistics that point to a continued weakness in the overall economy and the housing market."
Both Greater Boston and Massachusetts appear to be doing better than the nation as a whole on a range of economic indicators. For example, as of August, when the US unemployment rate was 9.6 percent, it was at 8.8 percent in Massachusetts. But, Bluestone said, "We are not an island unto ourselves. If the national economy continues to suffer, we will suffer its tailwinds."
Despite the sluggish economy, "anemic" new housing construction and a steady rise in student population have combined to drive rental prices "near their all-time high," according to the Boston Foundation report. Normally, low vacancy rates and high rental prices occur in a strong economy; to have both in a weak economy is unusual, Bluestone said.
The rising cost of rental housing in Greater Boston is one of the major themes of the Boston Foundation study, its eighth annual Housing Report Card.
Bluestone said a number of factors are driving rents higher in the area. Many people who were evicted from foreclosed homes are now renting, and as credit remains tight, people are finding it harder to qualify for mortgages and make the transition from renting to home ownership. Finally, and most significantly, a boom in Greater Boston's student population has swelled the market for rental apartments.
"The biggest rise is in graduate students," Bluestone said, "and they are the students who are most likely to live off campus."
The Boston City Council's president, Michael P. Ross, whose district includes the Back Bay, Beacon Hill, and the Fenway, said he has noticed the widening impact of students on housing. Some Boston neighborhoods are "now being gridlocked" by student housing, he said.
"The institutions have to develop more housing on campus," he said, "and I'd like to see the private market develop more housing for students."
Bluestone also said more student housing, perhaps in villages, will be needed if Boston wants to stay ahead of the influx.
In the fall of 2009, there were 336,000 post secondary students living in Boston, with more than half living off campus, Bluestone said. That's up from 290,000 in 2001. If the trend continues, there will be 400,000 students living in Greater Boston by 2020.
"If we don't create more housing for them, they will have an even greater impact on the rental housing market," Bluestone said.
The housing market is also under pressure in suburban communities, said Laurie Cadigan, owner of the real estate firm Barrett & Co. in Concord and president-elect of the Massachusetts Association of Realtors. Cadigan said that the lack of construction has affected the availability of "workforce housing" in the communities that she serves, which include Concord, Lincoln, Carlisle, and Arlington.
"There are a lot of properties available for over $1 million," she said. "But it's much tougher to find properties in the $200,000 to $500,000 range."
Cadigan also said she's seen an increase in activity this fall as many sellers, still concerned about the economy, are "abandoning their wait-it-out strategies and setting more realistic prices."
D.C. Denison can be reached at email@example.com
The Question on 40B
Dukakis Center for Urban and Regional Policy
By Susan Diesenhouse
September 23, 2010
The outcome of Question 2 on the November ballot will determine if Massachusetts' already high residential rents escalate even more.
Frustrated by what they see as interference with local control, long time opponents of the 41-year-old state affordable housing law are asking voters to repeal it. The law, known as 40B, allows developers to bypass restrictive local rules to build market rate multifamily buildings in which 25 percent of the units are affordable in communities where less than 10 percent of the housing is deemed affordable for low and moderate income residents.
A companion law, 40R, allows expedited permitting for neighborhoods declared Smart Growth Districts while 40S channels extra state funds to cover increased school costs in those 40R districts. According to industry, academic, and advocacy groups, a repeal of 40B would likely cancel production of about 12,076 multifamily units of planned housing and halt much future multifamily development. While 40R is not up for repeal, the elimination of 40B would likely reduce the incentive for communities to create 40R smart growth districts, endangering the production of possibly another 12,032 units.
Massachusetts' strong housing market paired with the increased density 40B allows are the mechanisms that make the law work. Its repeal would curtail the supply of most new rental housing, hurting the elderly and working families of modest means including teachers, police and fire fighters. The state's high housing costs, if historical trends hold, would then turn the table, chasing away the young and talented who seek to settle here after school. That would rob Massachusetts of one of its most valuable resources: intellectual capital. Therefore, the three leading candidates for governor and a coalition of 300 individuals and groups representing hundreds of thousands of residents favor retaining 40B. (For list of coalition members, go tohttp://www.protectaffordablehousing.org/cms/home/who-we-are.)
The Repeal 40B forces, like 10-year opponent John Belskis, claim it tramples on home rule. "Developers come here from all over the country to run rough shod over our towns," he said in an interview. He also claims that developers have abused the law to make greater profits than allowed; that the units can be costly and low income residents may not have the wherewithal to maintain them as well as more affluent neighbors. Further, he claims, 40B hasn't been effective because Massachusetts housing is still expensive.
A better approach, he suggests, would be statewide inclusionary zoning in which all new development includes affordable units if the community has the infrastructure to support it. Of course, a suburb or town with 3-acre zoning or one where most houses are on private septic systems may decline to install the necessary water, road or sewer systems. It is precisely such barriers that 40B was designed to – and has – overcome.
After looking deeply at this issue, research undertaken at the Dukakis Center comes to the opposite conclusions as the Repeal 40B forces. The law has been essential for the production of multifamily housing, both market rate and affordable. There have been few developer abuses and no measurable adverse impact on host communities.
Since 1972 when 40B units started to come online, about 100,000 affordable units have been built outside Boston and Cambridge, which have the required affordable stock. Of those units, 31,863 or 31 percent are in 40B buildings. But since 1997, as public housing production subsidies declined, 40B developments have accounted for 80 percent of Massachusetts' new affordable housing. Since 2000, 53% of all new suburban apartments built have been in 40B projects, according to Simon Butler, Executive Director of the Apartment Brokerage Group at Cushman & Wakefield, Inc. Also in the past decade with 40B's help, the number of municipalities with 10% affordable units has doubled to 51, with 40 more close to meeting the goal, according to Aaron Gornstein, Executive Director of Citizens Housing and Planning Association.
Since 1997, meanwhile, multifamily zoning rules have tightened (Glazer, Rappaport Institute), leaving only 1.5 percent of Eastern Massachusetts available for such development. In effect, renters are shut out of large sections of the state, especially those with the best jobs and schools and the most land.
"Without 40B, it would be almost impossible to build new rental housing in the suburbs," said Paul Donahue, a partner at CB Richard Ellis who leads the New England multifamily investment sales practice. That would be "terrible" for the regional economy, he said, pushing up rents and making it "harder to attract new companies and workers, especially younger workers, to move to Massachusetts."
Yes, Massachusetts is among the ten most expensive states for homeowners and renters, but in that group it ranks first in the number of units available and affordable to very low income households, according to the National Low Income Housing Coalition. For low and moderate income households, meanwhile, the state has more affordable rental stock (23 percent) than the nation as a whole, (12 percent), according to Dukakis Center research. And while no other state has a law exactly like 40B, other areas have similar "builders' remedies." New Jersey, California, Rhode Island, New Hampshire and Montgomery Country, Md. have such rules, which can be controversial and have been altered over time. (Bonnie Heudorfer). Builder remedies often ignite fears that lower cost housing will attract low income and minority residents who might drag down a community's property values, median income and perhaps even increase crime. But recent research at the Dukakis Center reveals that communities with 40B developments experience the same increase in property values, the same increases in household income, and no higher crime rates than those without.
Before 2007, five cases of financial abuse were uncovered out of nearly 1,000 40B projects. Since then, new guidelines on developer profits have been put in place along with oversight by the state Department of Housing and Community Development, MassHousing and the Massachusetts Housing Partnership. Meanwhile, since nearly half of the affordable 40B units have been built by non-profits like Habitat for Humanity, developer profits are a moot point.
Clearly, 40B is only part of the affordable housing solution: 100,000 households are still on waiting lists for low cost housing. But without it, the construction of those 12,076 40B units and 12,032 40R units would be canceled and the construction jobs they would generate won't be created, Gornstein said.
A shut-off of supply would come at a time when demand for rental apartments is intensifying. Rising foreclosures have pushed some home owners into the rental market. During the economic slowdown, households that might have purchased are holding back troubled by uncertainty in the economy, property market; worry about their job security or tighter underwriting criteria. If more apartment building landlords succumb to foreclosure, meanwhile, more renters will be competing for fewer units.
Well financed landlords see bright prospects, with lower vacancies and higher rents imminent, especially if 40B is repealed. "By next year, they'll be breaking down our doors," said Harold Brown, Chairman and CEO of The Hamilton Company. One of the region's largest apartment landlords, its 5,000 unit portfolio is just 1.8 percent vacant and rents are already rising.
According to Barry Bluestone, Director of the Dukakis Center, once the economy begins to expand, more affordable housing is going to be critical to maintain the Commonwealth's prosperity. "40B is absolutely critical to the production of affordable and market rate multifamily housing. Without it, other than age restricted housing, little multifamily housing would be built in communities that offer the best access to jobs, services and land. Fraud and abuse is limited, developer oversight has been tightened and the adverse consequences feared haven't materialized. We agree with many others that 40B's repeal would hurt the Commonwealth."
Bluestone added that the bumper sticker for the referendum should be: "Repeal 40B: Help Make Your Landlord Richer."
Rentals harder to find, afford
By Megan Woolhouse, The Boston Globe
August 10, 2010
The region's rental market has tightened in recent months, with apartment vacancies falling and rents rising for the first time since the beginning of the economic crisis.
Analysts said the changes, while small, signal a market shift that is making apartments harder to find and afford when many families are struggling with lost jobs, lost homes, and pay cuts. A year ago, landlords were chasing renters with price cuts and enticements to combat high vacancy rates.
Now, tenants are competing for fewer available units, as surging foreclosures force more people into the rental market.
Meanwhile, tight credit and an uncertain housing market keep many renters from leaving apartments to become homeowners.
The result: Vacancy rates fell to 6.2 percent in Greater Boston in the second quarter of the year, the lowest level in 18 months, while average asking rents increased for the first time since 2008, rising 1.2 percent to $1,717 a month, according to Reis Inc., which tracks occupancy in buildings with 40 units or more.
"A 6 percent vacancy rate is what you'd expect in a fairly strong economy and that we have that in a weak economy is something quite extraordinary," said Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University.
"I worry about these things because all the analysis shows that we continue to see less and less affordability, relative to income."
The rental squeeze is being felt from triple-deckers in working-class neighborhoods to luxury buildings in downtown Boston, according to brokers and analysts.
Reginald Fuller is among the renters discovering that apartments are harder to find — and afford.
Forced to seek a new place after his pay was cut in half and his rent increased by $150 a month, Fuller has searched for three months to find a new apartment for his family. Now, just weeks from eviction, Fuller worries that he, his wife, Louanna Hall, his 10-year-old nephew, and his 67-year-old father-in-law will end up in a shelter.
"It makes me kind of feel like I let my family down," said Fuller, 53. "I'm about to join the ranks of the homeless, and that's a place I've never been."
Foreclosures, on track to break record levels, are a key contributor. Lenders seized 1,300 Massachusetts homes in June, twice as many as a year earlier, according to the Warren Group, a Boston company that tracks local real estate. Completed foreclosures totaled 7,431 in the first half of 2010, up 57 percent from the same period last year.
In Boston, foreclosures have reduced the supply of apartments as banks, unwilling to be landlords, evict tenants and shutter buildings.
The city does not track how many bank-owned properties are vacant, but of 49 bank-owned two- and three-family homes bought by the city since 2008, 40 were vacant at the sale, said Evelyn Friedman, director of Boston's Department of Neighborhood Development.
Bank-owned properties often remain vacant until the property is sold or rented again, reducing the available housing stock. The rising number of bank-owned properties has probably contributed to a 27 percent jump in Boston rents in the second quarter, said Friedman, who calculated the price increase based on newspaper listings.
"It's a big problem,'' she said.
Fuller and his family had lived at their Bullard Street apartment for two years when the owner lost the building to foreclosure.
A new owner bought the building from the bank and raised the rent just as Fuller, a security guard, saw his pay fall to $24,000 from $50,000 a year after overtime shifts were eliminated.
As he desperately searches for an apartment, many triple-deckers and two-family homes seized by banks in Dorchester's Geneva Avenue neighborhood stand boarded up or simply vacant.
"There's not buyers for every building," said Zoe Cronin, a lawyer at Greater Boston Legal Services who works with owners and renters with foreclosure problems. "It's really terrible, we have people entering the shelter system and buildings sitting unused. It makes me sick."
Meanwhile, brokers who rent in the mid-level and high-end markets said many large buildings are close to full, and owners no longer have to offer incentives, from gift cards to free rent, to entice people to move in.
Edward E. Zuker, the president of Chestnut Hill Realty, which owns and manages 4,000 apartments in Massachusetts and Rhode Island, said 2009 was one of the slowest years for rentals, but this year he has rented a record number of units. The occupancy rate is 98.5 percent, he said, "which we've never seen before in 40 years."
In Charlestown, Harborview, a 215-unit complex, is "north of 95 percent occupancy," said Kevin Ahearn, the president of Otis & Ahearn Real Estate in Boston. Complexes such as Fenway Triangle Trilogy on Brookline Avenue, Charles River Park near Beacon Hill, and Archstone Avenir on Canal Street near the Rose Fitzgerald Kennedy Greenway are also largely full, he said.
Ahearn speculated that more empty nesters — couples whose grown children have left home — have been moving to the city after selling suburban houses and renting before they buy again.
At the same time, said Nick Retsinas, director of Harvard's Joint Center for Housing Studies, many renters who in years past might have moved into homeownership are delaying that because they think prices could fall. Other would-be buyers simply can't get a mortgage because of tighter credit.
Stan Corston, who recently moved to Brookline from Moscow, said he and his wife planned to stay in a hotel for a few days to look for an apartment. Three weeks and many appointments with realtors later, he found an apartment after boosting his rent budget to $2,500 a month from $1,500. He agreed to take an apartment under construction at Longwood Towers in Brookline.
"I was picky at first," Corston said. "But by the third week we would have moved in any place that would let us."
Megan Woolhouse can be reached at email@example.com.
To view the original article online, click here.
Sales tax foes upbeat on prospects
By Noah Bierman, The Boston Globe
July 8, 2010
Antitax crusaders yesterday triumphantly turned in what they called a "challenge proof'' number of voter signatures in their attempt to put on the November ballot a measure halving the state's 6.25 percent sales tax.
The push to lower the tax to 3 percent has been tried before, but supporters say the recession has created a newly favorable climate for passage.
Opponents warn the measure would cut state income by $2 billion or more, gutting budgets for police, teachers, and programs protecting the poor.
The sales tax question is one of three binding issues likely to make the November ballot. Measures repealing the sales tax on alcohol and eliminating an affordable housing law also have the required petition signatures, advocates say.
The deadline for submitting required voter signatures passed yesterday.
Secretary of State William F. Galvin expects to review the signatures over the next few days, according to his spokesman. A total of 11,099 certified signatures were required yesterday for a measure to get on the ballot, and the groups also had to present 66,593 signatures on Dec. 2 of last year.
A fourth group that had been gathering signatures, which opposes wood-burning power plants, said it had the signatures to put its issue on the ballot, but decided not to turn in the last batch yesterday, after a last-minute announcement from the Patrick administration that it would restrict incentives for wood-burning power.
The sales tax question has already reverberated in the governor's race, and an energetic turnout on the issue could help Republican Charles D. Baker or independent Timothy P. Cahill. Governor Deval Patrick, a Democrat who signed an increase in the sales tax from 5 percent to 6.25 percent last year, has said he favors reducing taxes when the economy improves, but not immediately.
Both Baker and Cahill favor cutting the sales tax to 5 percent, although Baker has said he may not be able to do so early in his term. Neither candidate supports a 3 percent rate, but both said they would implement it if voters give the go-ahead.
Similar measures failed in 2002 and 2008. But a plurality of voters surveyed in May, 49 percent to 44 percent, said they supported cutting the sales tax to 3 percent, according to a Suffolk University/7 News poll.
"The mood is very different,'' said Carla Howell, chairwoman of the Alliance to Roll Back Taxes, which has led the signature gathering. "A lot of people realize that this is the only opportunity to actually do something about it.''
Howell said her group has not yet plotted its campaign strategy, but she said voters would recognize that lower taxes would encourage businesses to hire more employees.
But the election is months away, and opponents are certain to press the case that cuts in spending would devastate local and state governments' ability to provide services and damage the larger economy. Only a week ago, Patrick signed a $27.6 billion budget that reduced spending on local aid, education, and services to the poor because the economic downturn has diminished state revenues.
Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University, said the tax question, along with the measure to eliminate the state's affordable housing law, would devastate the economy if both passed.
"That combination is about the two worst things I can imagine us doing in terms of securing an economic future in the Commonwealth,'' said Bluestone, who has joined a group opposing the affordable housing repeal.
Bluestone said dropping the affordable housing regulation would further price young people out of the housing market and continue the trend toward pushing them to live and work out of state. And he said that a lower sales tax — and the resulting loss of education, police, and general government services that aid businesses — would discourage companies from locating in Massachusetts.
The affordable housing law targeted for repeal on the ballot has been in place since 1969. It lets builders bypass some zoning restrictions in communities that lack significant affordable housing if they set aside 25 percent of their units for residents who earn less than 80 percent of the community's median income.
John Belskis, 76, an Arlington retiree who is leading the repeal drive, said it has failed to significantly increase the number of affordable housing units in the state while allowing developers to reap profits by building more housing than local communities can support.
"It's a club, and it lines the pockets of the developers and bankers,'' he said.
On the alcohol ballot measure, representatives of package stores and beer and wine wholesalers who are supporting a repeal of that sales tax say that customers already pay state and federal excise taxes and that the addition of a sales tax is driving customers out of state. Before last year, alcohol was exempt from the state sales tax.
But proponents of maintaining the tax say that alcohol continues to sell well and that the money from the tax is set aside for substance abuse and prevention programs.
Noah Bierman can be reached at email@example.com.
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Boomers go back to campus
By Joanne Jacobs, Community College Spotlight
July 22, 2010
Community colleges will continue reaching out to older students when the three-year grant for the Plus 50 Initiative expires at the end of the year, reports Community College Times. Plus 50, which aims to engage the 50+ population in learning, job training and civic activities, is managed by the American Association of Community Colleges and funded by the Atlantic Philanthropies.
Many baby-boomer students are looking for job skills.
Pasco-Hernando Community College in Florida, for example, now zeroed in on providing computer skills in its Plus 50 program.
"That's where the growth is, and they need jobs now," said Debby Duncan, the college's program director.
Other colleges, such as St. Louis Community College in Missouri, Century College in Minnesota and Clark College in Washington state, are focusing on another high-growth industry: health care.
To ensure programs continue when the grant ends, college are integrating outreach to older adults into workforce development, academic advising and career counseling.
Several of the programs have also established partnerships with local organizations that they hope will help continue their efforts. The Community Colleges of Spokane (CCS) in Washington, for example, has developed close ties with AARP, which asked the college to develop an Internet-based job-preparation tool that it hopes could serve as a national model, said Sharon Niblock, a program associate at CCS.
Seven community colleges have won $25,000 seed grants to train older adults for social-purpose jobs as part of the Encore Colleges Initiative of Civic Ventures and MetLife Foundation. When the recession ends, there will be more health and education jobs than skilled workers, predicts Northeastern University labor economist Barry Bluestone.
Flexible scheduling, intensive, fast-track programming, and courses on technology and social media are expected to help baby boomers qualify for jobs in health care and education.
Middlesex Community College will train college graduates for adjunct teaching jobs in developmental English, math and clinical nursing at Massachusetts community colleges. Westchester Community College in New York also will train clinical nursing instructors.
To view the original article online, click here.
Downscale Work and the Unemployed
Interview by Bob Oakes, NPR On Point
July 12, 2010
Americans in huge numbers are out of work. Many for a long time. Now, unemployment benefits for the longest unemployed are running out.
Congress hasn't extended the support. Republicans say no extension unless the new round is paid for now.
Some Republicans and tea partiers say the unemployment benefits themselves are a bad idea. That the unemployed won't dig ditches – won't take whatever job is out there – if they're getting a government check.
With five unemployed Americans for every available job, that's a hard line.
Listen to the interview on NPR.
Sales tax foes upbeat on prospects
By Noah Bierman, The Boston Globe
July 8, 2010
Antitax crusaders yesterday triumphantly turned in what they called a "challenge proof'' number of voter signatures in their attempt to put on the November ballot a measure halving the state's 6.25 percent sales tax.
The push to lower the tax to 3 percent has been tried before, but supporters say the recession has created a newly favorable climate for passage.
Opponents warn the measure would cut state income by $2 billion or more, gutting budgets for police, teachers, and programs protecting the poor.
The sales tax question is one of three binding issues likely to make the November ballot. Measures repealing the sales tax on alcohol and eliminating an affordable housing law also have the required petition signatures, advocates say.
The deadline for submitting required voter signatures passed yesterday.
Secretary of State William F. Galvin expects to review the signatures over the next few days, according to his spokesman. A total of 11,099 certified signatures were required yesterday for a measure to get on the ballot, and the groups also had to present 66,593 signatures on Dec. 2 of last year.
A fourth group that had been gathering signatures, which opposes wood-burning power plants, said it had the signatures to put its issue on the ballot, but decided not to turn in the last batch yesterday, after a last-minute announcement from the Patrick administration that it would restrict incentives for wood-burning power.
The sales tax question has already reverberated in the governor's race, and an energetic turnout on the issue could help Republican Charles D. Baker or independent Timothy P. Cahill. Governor Deval Patrick, a Democrat who signed an increase in the sales tax from 5 percent to 6.25 percent last year, has said he favors reducing taxes when the economy improves, but not immediately.
Both Baker and Cahill favor cutting the sales tax to 5 percent, although Baker has said he may not be able to do so early in his term. Neither candidate supports a 3 percent rate, but both said they would implement it if voters give the go-ahead.
Similar measures failed in 2002 and 2008. But a plurality of voters surveyed in May, 49 percent to 44 percent, said they supported cutting the sales tax to 3 percent, according to a Suffolk University/7 News poll.
"The mood is very different,'' said Carla Howell, chairwoman of the Alliance to Roll Back Taxes, which has led the signature gathering. "A lot of people realize that this is the only opportunity to actually do something about it.''
Howell said her group has not yet plotted its campaign strategy, but she said voters would recognize that lower taxes would encourage businesses to hire more employees.
But the election is months away, and opponents are certain to press the case that cuts in spending would devastate local and state governments' ability to provide services and damage the larger economy. Only a week ago, Patrick signed a $27.6 billion budget that reduced spending on local aid, education, and services to the poor because the economic downturn has diminished state revenues.
Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University, said the tax question, along with the measure to eliminate the state's affordable housing law, would devastate the economy if both passed.
"That combination is about the two worst things I can imagine us doing in terms of securing an economic future in the Commonwealth,'' said Bluestone, who has joined a group opposing the affordable housing repeal.
Bluestone said dropping the affordable housing regulation would further price young people out of the housing market and continue the trend toward pushing them to live and work out of state. And he said that a lower sales tax — and the resulting loss of education, police, and general government services that aid businesses — would discourage companies from locating in Massachusetts.
The affordable housing law targeted for repeal on the ballot has been in place since 1969. It lets builders bypass some zoning restrictions in communities that lack significant affordable housing if they set aside 25 percent of their units for residents who earn less than 80 percent of the community's median income.
John Belskis, 76, an Arlington retiree who is leading the repeal drive, said it has failed to significantly increase the number of affordable housing units in the state while allowing developers to reap profits by building more housing than local communities can support.
"It's a club, and it lines the pockets of the developers and bankers,'' he said.
On the alcohol ballot measure, representatives of package stores and beer and wine wholesalers who are supporting a repeal of that sales tax say that customers already pay state and federal excise taxes and that the addition of a sales tax is driving customers out of state. Before last year, alcohol was exempt from the state sales tax.
But proponents of maintaining the tax say that alcohol continues to sell well and that the money from the tax is set aside for substance abuse and prevention programs.
To view the original article online, click here.
Door Closing on Tax Credit, Lawmakers may OK extension
By Martin Luttrell, Worcester Telegram
June 30, 2010
During the past several months, Anthony J. Vigliotti has seen a slight increase in the number of property transactions his employees process, but not a frantic flurry of paperwork resulting from the federal homebuyer tax credit.
Mr. Vigliotti, Register of Deeds for Worcester County, expects that to change this afternoon, with the deadline for closing real estate deals bringing a last-minute avalanche of registrations before the end of the business day.
Under the federal stimulus program, first-time homebuyers have been eligible since early last year for a tax credit with a maximum of $8,000. In November, repeat homebuyers were made eligible for a maximum $6,500 tax credit. Under the provision, those homebuyers had to sign an approved purchase and sale agreement by April 30.
The deadline for closing was slated for today, but yesterday the U.S. House of Representatives voted 409-5 to extend the closing date until Sept. 30 for homebuyers who had met the April 30 signing deadline. The provision could now be taken up by the Senate.
U.S. Rep. James P. McGovern, D-Worcester, said minutes after he voted for the stand-alone bill yesterday that extending the tax credit deadline for those who were in a contract by the end of April will help stabilize a long-suffering estate market.
"I favor the extension," he said. "We have a soft real estate market. Extending it can boost sales of homes, and it makes it more affordable. It's good for the economy, and it's good for individuals to be able to share the American dream of owning a home.
"Hopefully, the Senate will take it up."
Massachusetts Association of Realtors spokesman Eric Berman said that nearly 4,000 people who have home sales pending in the state will lose out on the tax credits if the closing deadline is not extended.
"It would be a shame for them," he said. "These are the people who followed the rules and made binding offers prior to the deadline."
Mr. Berman said some buyers have been held up in getting bank approval for short sales, or in getting independent appraisals of properties or getting legal work done in time.
Stephanie Pandiscio of Foster-Healey Real Estate in Athol and president of the North Central Massachusetts Association of Realtors, said she does not have any buyers who are panicking. She said the tax credits have helped spurred sales and brought new homes on the market.
"Hopefully, for the people who worked so hard, they'll get an extension," she said.
Barry Bluestone, dean of Northeastern University's Dukakis Center for Urban and Regional Policy, said the tax credits helped stabilize the slumping housing market and brought some buyers into the market who would otherwise not have participated.
"I've been arguing that we need something to prop up the housing market that's not expensive for the government," he said. "We need something beyond the stimulus.
"Even if it gets passed, the overall impact for last families taking the tax credit won't do much for the economy."
To view the original article online, click here.
Busy boomers
By Dawn Klingensmith, Philadelphia Inquirer
June 15, 2010
With the projected shortage of workers in the next decade as baby boomers enter retirement, new research suggests a host of entirely new occupations will emerge and that seniors who keep working could play a vital role in filling them.
Boomers who remain in or reenter the workforce might do as much as millennials to bring about change in the workplace, says John Gomperts, president of Civic Ventures, a national think tank on boomers, work and social purpose.
"Think of the implications of society relying on people who've finished their midlife careers to fill critical roles and not just be greeters at Wal-Mart," he says.
Studies released in March by Civic Ventures and MetLife Foundation suggest that workers over age 55 have the skills and motivation to bridge labor gaps in education, healthcare and the "green economy." The research identifies emerging jobs in those sectors, including chronic illness coaches, patient advocates, home-modification specialists, adjunct schoolteachers, educational content advisers, weatherization installers and energy auditors, among others.
Foreclosures springing up; Lenders look to boot more people form homes than last year, says report
By Thomas Grillo, Boston Herald
May 19, 2010
Despite signs that the Bay State housing market is recovering, lenders started many more foreclosures in April than they did a year earlier.
Foreclosure petitions, the first step in seizing a home, rose 21 percent to 2,431 last month, according to the Warren Group. While the number of petitions in April slipped 6 percent from March, the total number of petitions through April is 9,008, a 4 percent hike compared to the same period last year.
Barry Bluestone, director of the Dukakis Center for Urban & Regional Policy at Northeastern University, said the latest foreclosure numbers reflect the fact that few loans are being modified by lenders and more people are unemployed longer.
"The government programs were for people who were in temporary distress, but we're finding that many people are in permanent distress," he said. "If you're unemployed for extended periods, you can't even make a smaller mortgage payment."
Foreclosure deeds, which represent completed foreclosures, surged nearly 80 percent to 1,372 in April, compared to a year ago, according to the Warren Group report.
But the number is down slightly from the 1,391 foreclosure deeds recorded in March.
A total of 4,821 foreclosure deeds have been recorded in the first four months of the year, up 36.6 percent from 3,530 a year earlier.
Housing data mixed, but called good sign
February prices in area up from 2009, but down over Jan. 2010
By Jenifer B. McKim, The Boston Globe
April 28, 2010
That's what several housing specialists concluded after the release yesterday of new data that show home prices in February were up slightly compared with the same month in 2009 but down from more recent months.
Home prices in the Boston area were 1.8 percent above February 2009 levels but down 1 percent from January 2010. The year-over-year increase is driven by a four-month surge in home prices that began in April 2009. But prices then started retreating in August.
Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies, said the local housing market is stabilizing and overall signs are positive. "All the signs are the signs of recovery. It's clearly not as good as it is going to be a year from now."
But Barry Bluestone, dean of the school of Public Policy and Urban Affairs at Northeastern University, said the housing market is being pushed in two different directions by opposing economic forces. Low interest rates, lower housing prices, a federal tax credit that expires this month, and buyers buoyed by an improving economy are combining to bolster the market. Pushing against that, however, is a growing pile of foreclosed homes that sit on the market, depressing prices. Foreclosure deeds jumped 51.4 percent to 1,389 in March from the prior month, according to the Warren Group.
"If we didn't have so many of these foreclosures, one would expect housing prices would have stabilized a little more swiftly," said Bluestone.
Nationwide, home prices are also nudging upward, according to the Case-Shiller index. In February, housing prices for the 20 major US cities in the index increased by 0.6 percent compared to a year ago, the first year-over-year increase since December 2006, according to S&P. The Case-Shiller index is viewed by many housing specialists as the most reliable barometer of housing prices because it measures repeat sales of the same home.
Karl E. Case, cofounder of the Case-Shiller indices and a retired Wellesley College economics professor, said Boston probably will see a recovery more quickly than many areas of the country because the state did not have the same problems with overbuilding as other parts of the country. Nationwide, housing values dropped about 30 percent since 2006, according to Case-Shiller data, while in the Boston area, home prices are down about 17 percent from the peak of the market here.
"I think it is at bottom," Case said. "I think it will stay there for a while and, with luck, we have a chance for a good, solid recovery."
Boston was one of nine cities to show year-over-year housing increases, including San Francis co, San Diego, Washington, D.C., and Denver. Eleven cities showed price declines, including Las Vegas, Seattle, and Tampa.
Today, the Massachusetts Association of Realtors is expected to release data for March that will show continued pickups in both the number of houses sold and the prices paid for them.
Kevin Sears, a Springfield real estate broker and president of the state association, said prices and sales are increasing partly because 2009 numbers were very low.
To view the original article online, click here.
Doing hard time(s); Economists: Downturn's end still means high unemployment
By Jerry Kronenberg, Boston Herald
April 26, 2010
Lots of economists think the Great Recession is over – but don't try telling that to housekeeper/nanny Sandra Ramgeet.
"There's no way we're even close to being out of the recession," the South Boston single mother says. "I'm not making ends meet, and my situation is a lot better than other people's. Lots of folks have no jobs."
Economists polled recently by the Herald believe the recession technically ended last summer, but concede that the average Joe might not notice for years to come.
"When I say: 'The recession was over back in August,' people say: 'What are you, crazy?'" said Nick Perna, an economic adviser to New England's Webster Bank. "I even get that from my own relatives."
The problem: Experts define recessions as any period when the U.S. economy consistently shrinks. As soon as growth resumes, economists consider a recession over – even if conditions still stink.
"It's not that people have the wrong perception. It's just that they don't define recessions the same way economists do," said Nigel Gault of Lexington-based IHS Global Insight.
Gault thinks the Great Recession wrapped up last June, but doesn't believe the average person will realize that until about 2012.
After all, he expects the U.S. jobless rate – the indicator Gault considers most important to the typical American – to stay above 6 percent for seven more years.
"Just the fact that output is going up again doesn't do the average person any good," he said. "A recession can officially be over, but the economy can still be in massive, massive hole."
Gault believes things won't look good to most people until the unemployment rate, median home prices and other bread-and-butter economic indicators stabilize.
It's not important how much these measures improve, just that figures get better month after month, he said.
"The fact that things are heading in the right direction is what really counts," Gault said, noting that consumer confidence rebounded following the 1981-'82 recession even when U.S. unemployment still stood at 8 percent.
Northeastern University economist Alan Clayton-Matthews expects conditions to look bad to the average person for a long, long time.
The expert recently analyzed the past three recessions and found it took three years on average for the Massachusetts Consumer Confidence Index to return to normal once Bay State unemployment maxed out.
Since Clayton-Matthews believes Massachusetts joblessness only peaked in February, he thinks statewide consumer confidence – which stood at just 73 in the first quarter – won't return to a neutral 100 until 2013.
"It's all about sustained economic growth," Clayton-Matthews said. "Growth must continue for long enough that people who have jobs no longer feel a high risk of losing them – and people who don't, begin to believe they'll eventually find work."
Key index showing optimism
The Lowell Sun
April 7, 2010
BOSTON — Business confidence in Massachusetts rose for the 11th time in 13 months, as employers are slowly developing a more positive outlook on business conditions.
The Associated Industries of Massachusetts reported yesterday that its monthly Business Confidence Index was 46.8 in March, up 2.7 points from February's reading.
One economist expressed concern that while the overall index is approaching a neutral reading of 50, sub-indices surveying business conditions in the commonwealth (40.6) and nation (38.9) remained much lower.
"These indicators of general business conditions have not moved up very much in the past six months, which suggests that the rise in business confidence is primarily due to individual companies' success in stabilizing their situations," said Alan Clayton-Matthews, a Northeastern University professor and a member of AIM's Board of Economic Advisers, in a prepared statement.
AIM's Business Confidence Index has been issued monthly since July 1991. On its 100-point scale, readings above 50 indicate that employers are predominantly optimistic, while those below 50 points to a negative assessment of business conditions.
Ex-Hyatt workers find job market hard to penetrate; 7 months after layoffs, dozens of housekeepers still unemployed
By Katie Johnson Chase, The Boston Globe
April 2, 2010
Lucine Williams has applied for countless jobs since she lost her housekeeping position last summer at the Hyatt Regency Boston, where she had worked for nearly 22 years. Shaw's, CVS, Walgreens, Eddie Bauer, the MBTA, and several hotels have all been on her list.
"I even applied at McDonald's," said Williams, 42, one of the 98 Boston-area Hyatt housekeepers abruptly fired on Aug. 31 and replaced by the subcontracted cleaning company workers they had been training for months. But, she said, "Nobody calls."
Seven months after the firings and the considerable public attention that followed, more than 60 of the longtime housekeepers from the Hyatt Regency Boston, the Hyatt Regency Cambridge, and the Hyatt Harborside at Logan Airport are still unemployed, according to the local hospitality workers' union, Unite Here Local 26. Their extended health benefits officially ended Wednesday.
The plight of the Boston-area Hyatt housekeepers, many of them immigrant women, illustrates the broader struggles of workers with lower income and education levels. The rate of underemployment and unemployment among housekeepers and janitors is 25 percent — the third-highest among 60 occupations studied and far higher than the overall rate of 15.4 percent, according to Andrew Sum, director of the Center for Labor Market Studies at Northeastern University.
"At the low end of the ladder, it's not only that the unemployment rate is high, but that the number of applicants for every job is extraordinarily high," Sum said.
Scrubbing toilets and changing sheets is not glamorous work, but the Hyatt housekeepers say they took pride in being able to support their families, both here and in their native countries, and in having health care and retirement plans. Many still get choked up when they talk about losing their jobs, which paid about $15 an hour – almost double what their minimum-wage replacements are making.
The Hyatt housekeepers refused to go quietly. More than half of them have been actively speaking out against the company, appearing at events around the country and contacting Hyatt clients to ask them to boycott the three local Hyatt hotels, an effort organized by Unite Here Local 26.
The housekeepers were not members of the union, but it took on their cause, holding high-profile rallies and pickets and drawing support from local politicians, including Governor Deval Patrick, who has encouraged state officials not to attend events at the billion-dollar hotel chain. Union officials estimate the efforts have cost Hyatt Hotels Corp. $3.7 million.
Hyatt, which said "challenging economic conditions" made the firings and outsourcing necessary, declined to comment on hotel revenue – and on what has happened in the seven months since the firings. But spokeswoman Amy Patti said it was interesting the union would "boast about actions they have taken to drive dollars away from Boston and put additional jobs at risk in this difficult economy."
The company responded to the initial outcry by extending the workers' health benefits at no cost through the end of March and offering all of the housekeepers jobs with the outsourcing company, United Service Cos., at their Hyatt wages through the end of this year. Only six of the housekeepers took the hotel company up on its offer.
Of the remaining 92, about 25 have found work – as housekeepers, office cleaners, an airport concessions worker, a taxi driver, a grocery clerk. The rest are still looking.
Lucine Williams's unemployment checks are helping her pay $500 a month to rent the upstairs apartment in her mother?s house in Dorchester, where she lives with her 14-year-old son. But anything extra goes on her credit card, and she says she is "in debt past my eyeballs." Before her Hyatt health insurance ran out, she signed up for MassHealth, the Medicaid program for low-income residents, and tried to get her son one more prescription for his asthma medicine.
Being unemployed weighs heavily on Williams, who moved to Boston from Barbados in 1987. A few weeks ago, Williams went to speak to the Eastern Sociological Society, which moved its conference from the Cambridge Hyatt to the Park Plaza Hotel. When she started talking, she said, she began to cry.
"I think, 'Oh, my God, look at me, here still at this time, and I still don't have a job.' And I start crying, and I said, 'Oh, I?m sorry, but I can't hold back the tears.' "
Before Serandou Kamara lost her job at the Hyatt Harborside, she was saving up to buy a home. Now she and her husband are using that money to help pay the rent on the cramped $950-a-month Chelsea apartment where they live with their four children. They rely on Kamara's $717 bimonthly unemployment checks and her husband's $13-an-hour salary as a home health aide.
"Everything went into the garbage," said Kamara, 32, who was almost eight months pregnant when she got fired.
Kamara spent a recent morning at Child Care Choices of Boston trying to secure a voucher to pay a baby sitter so she could look for work. Afterward, she walked through Downtown Crossing to see whether any stores were hiring. At Payless, Macy's, Tello's, and the food court, the answer was the same: no.
"I want a job," said Kamara, a native of Sierra Leone who is taking a computer class and an English as a second language course at Bunker Hill Community College. "Sitting down at home, it's not good for me."
When she runs into one of the replacement workers that she trained at the bus stop, she says, "I almost go crazy."
Not long after she was fired, Anna Rendon, one of Kamara's former co-workers, bumped into a businessman who was a frequent guest at the Harborside. The two used to have conversations using each other's native tongues and when she told him what happened, he vowed to switch hotels.
"I won't ever return there," Rendon, speaking in Spanish through a translator, recalled him saying.
For the past 14 years, Rendon, 52, has had a second job cleaning offices to help put two of her three sons through college. Her husband has been receiving worker's compensation since a construction site accident three years ago. Their middle son got a scholarship to Boston College and is now studying to be an orthodontist in Rendon?s native Colombia.
Rendon still works nights cleaning offices and is enrolled in a seven-month, 30-hour-a-week English For Employment program at the YMCA International Learning Center on Huntington Avenue. She is hoping to land a bookkeeping job, like she had back home, but so far, she said, she has even been turned down for a job putting electronic equipment together.
Rendon said she and her co-workers were encouraged to treat the Harborside like their second home.
"I really respected the work," she said. "We gave them all of our strength, all of our youth."
And she would take her job back if it were to be offered.
Four of the fired housekeepers recently started working at the Boston Park Plaza Hotel, a union shop where they are allowed to wear their red "Bring Back the Hyatt 100!" buttons on their black uniforms. Wanda Rosario, Anna Wong, Rosa Lopez, and Joselin Luna – who between them had 62 years of Hyatt housekeeping experience – underwent Local 26's six-week room attendant training program before landing at the Park Plaza.
Rosario will probably be called to work only a few days a week until the busy summer season starts. But with an 84-year-old father at home, a phone that is about to be disconnected, a sister in El Salvador to support, and a husband in the Dominican Republic trying to come to the United States, Rosario counts herself among the lucky ones.
When the Park Plaza housekeeping manager introduced her and her three former Hyatt cohorts at a staff meeting, their new co-workers started clapping.
"We feel like we're adopted," Rosario said.
After the Recovery: Help Needed
The Coming Labor Shortage and How People In Encore Careers Can Help Solve It
By Barry Bluestone and Mark Melnick
Sponsored by Civic Ventures and The MetLife Foundation
The Dukakis Center recently completed a research report for Civic Ventures and the MetLife Foundation examining key job opportunities for individuals seeking an "encore career."
The key finding of the research is that not only will there be jobs for experienced workers to fill, but the nation will absolutely need older workers to step up and take them.
"With nearly 10 percent of the American labor force unemployed and another 7 percent so discouraged by their job prospects that they have either dropped out of the labor force altogether or are working at parttime jobs when they would prefer full-time employment, it may come as something of a surprise that within less than a decade, the United States may face exactly the opposite problem — not enough workers to fill expected job openings."
Key Findings:
- Shortage: By 2018, with an expected return to healthy economic growth but no change in current labor force participation rates or immigration rates, there will likely be more jobs than people to fill them.
- Cause: If the baby boom generation retires from the labor force at the same rate and age as current older workers, the baby bust generation that follows will likely be too small to fill many of the projected new jobs.
- Numbers: There could be at least 5 million potential job vacancies in the United States, nearly half of them (2.4 million) in social sector jobs in education, health care, government and nonprofit organizations.
- Cost: The loss in total output could limit the growth of needed services and cost the economy as much as $3 trillion over the five-year period beginning in 2018.
- Solution: If adults 55 and older work at rates somewhat higher than expected, the projected need for social sector workers could be fully met. Providing opportunities for older adults to work in the kinds of social sector jobs they say they want will increase the likelihood that they will work longer and help close the jobs gap.
- Top jobs: The research identifies 15 jobs that will provide the largest number of potential encore career opportunities in the coming decade. Encore careers combine personal fulfillment, social impact and continued income, enabling people to put their passion to work for the greater good. The list is dominated by seven job categories in health care (registered nurses; home health aides; personal and home care aides; nursing aides, orderlies and attendants; medical assistants; licensed practical and licensed vocational nurses; and medical and health service managers), plus three in education (teachers, teacher assistants and child care workers). Other jobs are in nonprofits and government (including business operations specialists; general and operations managers; and receptionists and information clerks), plus clergy and social and human service assistants.
Chin up: The few, the proud, the holdouts; Some fields are thinning fast, but if – like these intrepid folks – you've got drive, flexibility, and a competitive spirit, you can endure in the job you love.
By Mark Pothier, The Boston Globe
March 7, 2010
After more than 20 years in the wholesale fruit business, Tom Belluardo's career had stalled. With prospects for promotion dim, he decided to learn an occupation that offered more potential: cobbler.
You might not expect a lot of demand for a shoe-repair guy in a world where people toss out footwear nearly as often as they change socks. But there is some demand – enough for Belluardo to secure a slice of a niche business for the last two decades. His Methuen shop, The Town Cobbler, thrives on a base of customers that prefers to get quality shoes fixed instead of tromping around in cheap plastic heels with the life expectancy of paper coffee filters.
"Women don't come in with just one pair," he says. "They bring them in shopping bags. They say to me, 'Please, don't ever retire.' "
Belluardo, 61, has achieved what career counselors and economists say anyone working in a waning profession must strive for – continued relevancy by excelling in a specialized field or providing a human touch that's superior to automation. His success offers hope for others whose paycheck doesn't come from being a biomedical engineer, home health aide, data communications analyst, or any of the other jobs the US Bureau of Labor Statistics projects will be hot through 2018. In its latest outlook report, the bureau offers assurance that career paths in industries that are receding or growing only sluggishly are not all headed off a cliff. But making it in a shrinking field will take razor-sharp skills, a shark-like appetite for competition, and motivation rooted in genuine interest. Put another way: If you don't love your uncertain occupation, start divorce proceedings with it now.
Andrew Brown, president of Career Ventures, a jobs-counseling company in Boston, says he doesn't necessarily try to steer clients from entering or staying in unstable professions. "I put all the pieces on the table so they can objectively look at it," he says. "If they're really interested, I won't tell someone not to do something, because they may be a real driver, they may get ahead of the curve. I say, 'Look at who you are and what's going to keep the passion there. If you like it, if you're enthusiastic, you'll make it.' "
But it might be nerve-rattling. Historically steady lines of work have eroded in recent years. The nation's employment landscape has undergone "radical change," according to Paul Harrington, associate director of Northeastern University's Center for Labor Market Studies. The same high-tech wizardry that lets people carry music collections on wafer-thin devices is also putting more of these people on unemployment. Routine jobs such as file clerk and receptionist are being rendered obsolete by technology that gets cheaper and faster by the month. A broad swath of US manufacturing positions and other blue-collar jobs has also been wiped out. Harrington sums up the trend this way: "Stuff that's easily computerized will just be done on a computer." Simultaneously, however, the electronic economy is creating a wave of sophisticated customer-service positions. For instance, as paper medical records are digitized, more people will find work maintaining and managing online systems for hospitals and insurers. Such super-clerk positions "are jobs that require a little bit more skill, a little bit more savvy," Harrington says.
Other jobs that might seem as unnecessary in 2010 as a VCR technician can actually complement technology. For instance, ATMs, direct deposit, and online accounts make it possible for many people to avoid bank lobbies, but you will still find tellers behind counter windows, often helping customers navigate all those self-serve tools. Their ranks are expected to increase by 6 percent between 2008 and 2018, according to the Bureau of Labor Statistics, compared with the 8.2 percent job-growth rate projected for the overall US workforce.
Melissa Reardon became a Salem Five teller eight years ago, when online banking was starting to take hold. Long-term prospects did not factor into her decision. "I was good at math, and it was about a mile from my house," the 27-year-old says. It turned out to be a smart career move. Today, Reardon manages Salem Five's main office. "The typical teller's position is no longer mostly about cashing a check or making deposits and withdrawals," she says. "There's an expectation that they will be able to answer questions like 'How does my debit card work around the world?' It's customer service."
Basic functions once handled by travel agents, such as booking flights and hotel rooms, have become self-serve consumer tasks. Expedia, Orbitz, Travelocity, and other websites have helped speed thousands of travel agencies to their final destinations – there are about 16,000 in the United States, down from 37,000 in 1995, according to Bill Maloney, chief executive of the American Society of Travel Agents. Despite the numbers, Maloney believes there is still a future in the travel business. People will happily pay for assistance in planning eco tours, destination weddings, reunions, and other complicated specialty excursions, he says.
"We've done a terrible job of selling this profession," says Maloney. "If I told somebody you should look into a job that's on the cutting edge of technology and involves both consumers and suppliers, people would be interested. If I told them there's the flexibility to work from anywhere and literally go anywhere, they'd get excited. Travel agents today don't all have stores, but they all have websites, they all have blogs….There are just fewer traditional jobs."
That suits Carolina Murillo, leisure district manager for Garber Travel in Chestnut Hill. "Travel agents used to be order takers," she says. "We've become destination specialists. People want to talk to an expert, someone who's been there. It's not where can I go and what can I do, it's what can I experience."
To stand out, an agent needs a college degree in marketing, geography, or cultural studies such as sociology or anthropology, Murillo says. Speaking a foreign language and being well traveled helps, and savviness about social media is mandatory.
Librarians, too, must prove themselves more valuable than a search engine if they are to remain employed over the next decade. While openings are predicted to increase by about 8 percent between 2008 and 2018, most new jobs will be at consulting firms, corporations, and nonprofits that need people who know their way around sophisticated databases. And only top-tier candidates will get hired. "The technology makes it much more skill-intensive," says Northeastern's Harrington. "This isn't the lady who made sure you brought the books back."
At Newbury Comics, co-owner Mike Dreese has been adapting for more than 30 years, regularly tweaking his marketing focus to keep pace with customers' changing habits. The 28-store regional chain offers a case study in how to maintain altitude in a free-falling industry – retail music. While national companies became dinosaurs after the dawn of the iPod age in 2001, Newbury Comics perseveres. "We've always innovated around the fun stuff," Dreese explains. CDs and DVDs still account for about 65 percent of revenue, "but it's other things that make us an attraction, like comics and collectable action figures you can't find at Wal-Mart." Two minutes into a conversation, Dreese is already revved up, speaking with the same zeal that drove him when he hawked Joy Division and Jam import records from Newbury Comics' original Back Bay store.
Others who are determined to stick with struggling industries because they crave the challenge, not out of desperation, seem to share that kind of intensity. "It's about survival of the fiscally fittest and the most adaptable," says Garber Travel's Murillo. "I see opportunity all the time. If there's less travel agents, I become more in demand."
Pace of foreclosures may be slowing in Massachusetts
By Megan Woolhouse, The Boston Globe
March 3, 2010
The number of foreclosures initiated by lenders in January dropped to the lowest level in more than a year in Massachusetts, an indication that fewer people may lose their homes this year.
At the same time, the number of foreclosure deeds – one of the final steps in the foreclosure process – increased to the highest level for the month of January since 2006, according to Warren Group, a Boston company that tracks the housing market.
Timothy M. Warren, chief executive of Warren Group, said the decrease in petitions to foreclose could be due to the Obama administration's efforts to get lenders to modify more loans. The increase in deeds, Warren said, is probably attributable to a Massachusetts Land Court decision last year that temporarily slowed the foreclosure process, artificially depressing 2009 figures.
If loan modification efforts are truly beginning to have an effect, Warren said, "that would certainly be a hopeful sign and some kind of indication that the worst of the foreclosure problems are over." But he added that in historical context, foreclosure numbers are "still at high levels."
In January, 1,061 deeds for foreclosure were registered in Massachusetts, compared with 978 during the same month last year, Warren Group said. There were 1,874 petitions to foreclose in January, a 9 percent decrease from the 2,060 filed in December and a 4.4 percent drop from a year earlier. Typically, a petition to foreclose is filed by a mortgage holder when a homeowner is 90 days behind on payments.
January marked only the second time since February 2009 that monthly petition filings fell below 2,000.
The report also said home auction announcements in the state were up 81 percent from last January. Nearly 3,000 auctions were announced in January. Warren said many times auctions are scheduled but either postponed or canceled. Nonetheless, he said, "That's quite an increase."
Nearly 28,000 Massachusetts homeowners last year received foreclosure petitions, 28.1 percent more than in 2008. They included a small but increasing number of homeowners in affluent communities, such as Concord, Winchester, and Weston, an indication that more of state's higher-income residents are facing financial problems because of the recession.
Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University, said many people who have been unemployed for several months or more may have bought their homes at the peak of the housing market, putting them in an especially vulnerable position.
"They have seen the value of their home decline and they have been laid off a long time," Bluestone said. "We fear we may see another spike in petitions if unemployment continues to be very high, which it looks like it may."
Megan Woolhouse can be reached at email@example.com
Corporate tax breaks proposed to boost Mass. economy
Chamber says more breaks for business will add jobs
By Robert Gavin, The Boston Globe
March 3, 2010
The tax breaks would eventually cost the state about $165 million a year in lost revenue, but would create an estimated 40,000 jobs over five years and generate enough growth to produce $167 million a year in new revenue from payroll, income, and other taxes, Chamber officials said. The tax breaks offer incentives for investment in start-up firms, equipment, buildings, and new employees, they said.
"These are not short-term, quick fixes," said Paul Guzzi, Chamber president, unveiling the plan in business group's downtown headquarters yesterday. "They are designed to build on our competitive assets and position our economy for the future."
The Chamber's plan follows a flurry of new proposals to boost the Massachusetts economy, which had one of the nation's worst records of job creation over the past decade. With unemployment at a 33-year high and a state election year underway, Governor Deval Patrick, state Senate President Therese Murray, and House Speaker Robert DeLeo have all offered prescriptions for the ailing state economy.
Meanwhile, a new group of corporate executives reminiscent of Boston's old Vault organization, which calls itself the Massachusetts Competitive Partnership, said it is also developing proposals for job creation. The proposals are being driven by projections of a long period of high unemployment in both Massachusetts and the nation, said economist Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University.
"We've all learned that this is going to be a slow recovery, and we need do all that we can at the state level and federal level to accelerate the recovery," said Bluestone. "Also, given all the pain and suffering we're seeing, this is the time to look at ways of changing the way we do business in this state."
Kofi Jones, spokeswoman for the state Executive Office of Housing and Economic Development, said Patrick welcomes those who want to join the discussion on how to jump-start job creation in the state. "The governor said from the outset that he intended for the filing of his jobs legislation to be a conversation starter, and is glad to see it is having that effect," she said. "The Chamber acknowledges there would be a significant cost to the state budget to implement its proposal at a time when the state is facing unprecedented fiscal challenges and cutting services that individual and families depend on."
Chamber officials said they don't expect action on their proposals this year, but want to start the debate in the hope of seeing legislation passed over the next couple years. They said their plan would lower business costs, while building on the state's economic strengths, such as innovation and entrepreneurship
The proposals include lowering the capital gains taxes for investments that are made in start-up firms and held for at least three years, increasing the tax credit for investments in equipment and buildings, allowing companies to spread losses for up to 20 years to manage tax burdens and lower tax bills in boom years, and allowing all companies with operations in several states the option of being taxed based on their in-state sales, as opposed to the current system that assesses taxes based on combination of sales, property, and payroll. This last proposal, called the single sales factor, is limited in Massachusetts to manufacturers, defense contractors, and mutual fund companies. It aims to encourage hiring and investment in property and equipment.
"These proposals go right to the heart of the Commonwealth's greatest challenge: high business costs," said Jim Klocke, the Chamber's executive vice president for public policy. But Noah Berger, executive director of the Massachusetts Budget and Policy Center, a nonpartisan think tank, said there's little evidence that cutting business taxes does much to generate job growth.
"The state already spends hundreds of millions of dollars on business tax breaks, and there's been painfully little study on whether any of that spending has any effect," Berger said. "What are we getting for all this money?"
Robert Gavin can be reached at email@example.com
Massachusetts home sales, prices rise in January
Some see signs of a rebound, but end of tax credit could hurt
By Jenifer B. McKim, The Boston Globe
February 24, 2010
Massachusetts home prices and sales surged in January, providing added evidence that the state's real estate market is on the rise.
Median prices for single-family homes rose 9.6 percent in January to $285,000 compared with the same month a year before, the second increase in two months, according to the Warren Group, a Boston company that tracks the housing market.
Sales volume was up 11.8 percent in January, marking the fourth consecutive month of double-digit percentage increases in single-family home sales, the Warren Group said.
Condominium prices also rose, increasing 16.7 percent in January to $245,000, and sales were up 25.3 percent, compared with January 2009.
The strong data surprised some housing market specialists, who have been pointing to signs of a real estate recovery since last March. Still, many question what will happen in the spring when the federal government pulls back on programs that are keeping interest rates artificially low and a federal tax credit for homebuyers ends.
"We had surprising gains in January, and that's good news for the economy and that's good news for the housing market," said Timothy M. Warren Jr., chief executive of the Warren Group. "The real wild card is what will happen after mid-year."
Nationwide, home values increased 0.3 percent during the fourth quarter, according to seasonally adjusted data released yesterday by the S&P/Case-Shiller Home Price Indices, which track repeat home sales. Boston-area home values increased 0.9 percent in December, according to the index, widely considered the best measure of home values.
"The indices have established a bottom and are now showing some stability," said David Blitzer, chairman of the Standard & Poor's Index Committee.
Robert Shiller, cofounder of the home price index, said new data show "dramatic swings in home prices." He said prices dropped 11 percent during the six months before April and then increased 6 percent during the next six months before leveling off.
"There is no precedent for such a sharp turnaround," Shiller said. "We are really in uncertain times."
Fueling those doubts are questions about the tax credit's expiration on April 30. The government extended and expanded the credit last year to include homeowners as well as first-time buyers. To qualify, buyers must strike a purchase deal before May 1 and complete all paperwork before July 1. Once that incentive is gone, housing specialists say, sales may slump again.
Also, the Federal Reserve plans to halt its purchase of mortgage-backed securities, which is helping to keep interest rates down, by the end of the first quarter. Historically low rates have convinced some prospective buyers to commit to mortgages.
And the inventory of homes for sale is down, complicating any assessment of the market's health. January's supply of single-family homes in Massachusetts was at its lowest level since January 2001 and marked the 22d consecutive month in which inventory has fallen, compared with the same month the year before, according to the Massachusetts Association of Realtors, which also released data yesterday.
"To get back to a more normal market we still need to see more homes for sale than we currently have," said Kevin Sears, president of the realtors' association and co-owner of Sears Real Estate in Springfield. "If not, prices will continue to go up to the point where it will impact sales and drive the market back down."
Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University, said the new housing data add to optimism that the state's housing prices and the economy in general have stabilized. "I'm reasonably confident we are going to see a better spring and a better summer," he said.
Jenifer B. McKim can be reached at email@example.com
State should yell 'cut' to film tax credit
By Joan Fitzgerald and Peter Enrich, The Boston Globe
Published February 19, 2010
IT STARTED with Canadian cities luring movie producers with subsidies when the Canadian dollar was low. Then a few US states got into the competition and the race was on. Now, Massachusetts is competing with at least 45 states in offering film tax credits, with some states paying as much as 50 percent of a movie's production costs.
Are states benefiting from this competition? There are potentially two types of benefits – gaining new long-term jobs and a less tangible (and implausible) possibility that people who see the film will be motivated to locate their businesses and major conventions in the state.
The supposed pay-off in film employment in Massachusetts is clearly not happening. The Department of Revenue data show that, even assuming that all the jobs in the industry are entirely attributable to the credits, Massachusetts spent $94,000 in credits per full-time equivalent job with salary and benefits of about $68,000. That is a losing bargain.
Measured by the tax revenues generated by the subsidized film productions, Massachusetts only gets back about 16 cents per dollar invested. The evidence isn't any better elsewhere. Connecticut gets an 8-cent return on the dollar, and Rhode Island reaps 28 cents. Michigan state senator Nancy Cassis puts the irrationality of the spending in perspective: "The state needs more than 20,000 small businesses, or almost 148,000 taxpayers with an income of $45,000, just to pay for the credits next year. It takes 789 individuals or 109 small businesses to fund a single star in a movie."
And that's exactly what states are financing – skyrocketing marketing costs and the exorbitant pay that top stars get per film. Research by Susan Christopherson of Cornell University shows that producers are no longer employees, but subcontractors to the six major production companies – Sony, Viacom, General Electric, Time Warner, Disney, and News Corporation. As subcontractors, they are responsible for financing the production. In the pursuit of upfront cash, they play states off against each other. And states are eager to play – competing to pay for up to half of these costs, most of which go to the stars and the production companies.
The Commonwealth's expenses can only be justified if they are creating long-term employment here in Massachusetts. But these jobs are predominantly transient. The contract workers that fill the new jobs work on a project-by-project basis and typically move on when the film is done shooting. More than 40 percent of the wages that are subsidized through the credit are paid to people who both live outside of Massachusetts and were paid more than $1 million on the project. These are not expenses that will be recycled in the local economy.
Several states are cutting back, and in the case of Wisconsin, limiting tax credits to the creation of permanent jobs. That was the rationale behind the failed attempt to provide a $50 million bonding subsidy for road, water, and sewer construction to Plymouth Rock Studios – that its $400-million complex would create up to 4,000 permanent jobs.
But the evidence on creating permanent film centers outside of New York and Los Angeles is not compelling. Toronto bought a 20 percent stake to entice Filmport to build large movie studio complex there. The $65 million facility has not attracted a single major production since it was completed in 2008.
Massachusetts expects to spend some $150 million in film credits this year, which will bring little long-term benefit to the state. That money could be much better spent on education and training, roads and bridges, and similar services that really can strengthen the state's economy.
Stimulus funds for clean energy largely unspent; Only 63,000 of the jobs directly created or saved by the stimulus bill last year were clean-energy jobs. That number should rise, economists say.
By Mark Clayton, Christian Science Monitor
Published February 18, 2010
Making a "tremendous down payment on the clean energy transformation' of the United States was a top priority of the Obama administration's economic stimulus package — but, despite some notable accomplishments, it remains mostly a promise at this point.
Most of the funds from the stimulus still haven't been spent, and the clean-energy down payment is a long way from being completed. Its impact so far on those jobs has only been lightly felt in pockets across the nation, economists and others watching its impact in their regions say.
"It's fair to say the stimulus is a down payment, but I wouldn't call it a tremendous down payment at this point," says Joan Fitzgerald, an expert on economic development at Northeastern University in Boston, who has analyzed the stimulus's impact on the wind-power and other clean-technology industries.
Overall, the American Recovery and Reinvestment Act, or stimulus bill, has seen $263 billion spent of the $787 billion available by the end of last year. As a result, the US economy is now employing about 1.5 million to 2 million more workers, the President's Council of Economic Advisors recently reported – and other independent economists agree.
But so far, just one-third of the roughly $90 billion ($60.7 billion in direct spending and $29.5 billion in tax incentives) targeting the clean-energy sector has actually hit the street to fund wind-farm development, solar plants, battery factories, high-speed rail, and home weatherization, among many other projects.
As a result, just 63,000 of the jobs directly created or saved by the American Recovery and Reinvestment Act by the end of last year were clean-energy jobs, the president's economic council reports.
That so-far modest impact should become much more significant as the US Department of Energy ramps up its approval process and spends the remaining billions by September, David Sandalow, assistant secretary of energy for policy and international affairs, said at a press conference Wednesday.
Over the next two years, the $90 billion spent on clean energy is expected to create 720,000 job-years of employment. In addition to jobs, some 16,000 megawatts of wind, solar, geothermal, and other renewable energy capacity propelled by the stimulus will power about 4 to 5 million homes.
"Each one of [these jobs] is doing work made possible by the recovery act," Mr. Sandalow said. "The recovery act has been crucial to unlocking financing" for new wind, solar, geothermal power projects.
High-speed rail construction in Wisconsin, new-generation plug-in hybrid vehicle battery factories in Detroit and wind farm turbines sprouting across the US landscape last year — all would not exist without the stimulus passed by Congress last year, other observers agree.
"Some folks on one end of the spectrum say the stimulus hasn't done a darn thing," says Rob Sargent, who tracks clean-energy for EnvironmentAmerica, a Washington-based advocacy group. "If you look around and see — it has led to investments in clean energy of a magnitude we've never seen." Other expert watchers agree.
"Broadly speaking, the stimulus has helped an enormous amount," says Alex Klein, research director for Emerging Energy Research, a market research company based in Cambridge, Mass. "Treasury grants have helped expedite wind development, manufacturing incentives have jump-started battery manufacturing — and kept wind and solar manufacturing in the US alive."
The stimulus has expedited both project development and helped to build local supply chains, Mr. Klein says. But some note that the stimulus, while keeping the wind-power and other renewable industries from tanking in 2009, has not worked a miracle on US clean-energy manufacturers' competitiveness.
"We're not competitive yet with other clean-energy export nations," says Kevin Book, managing partner with ClearView Partners, a Washington energy research and consulting firm. "There's an argument to be made that we could become the next big manufacturer of clean tech, but we're not the most compelling candidate right now. China and Germany are ahead of us."
News reports highlighting Texas wind-farm projects that purchased Japanese-made turbines –and others with plans to purchase turbines from China — have had congressmen throwing up their hands in protest.
So is Bob Lloyd, plant manager at Clipper Wind Power's Waterloo, Iowa, manufacturing plant. His plant had layoffs a year ago and is still operating at less than half its capacity.
"We're trying to build this product," he says. "'Hey, we're paying taxes, and we don't want to pay taxes to bring in foreign-made products' — that's the feeling of folks around here."
Clipper and General Electric are America's only domestic wind-turbine manufacturers. But while Clipper's business is picking up, their plight highlights a conundrum: Until US demand for clean energy grows, it will be hard to develop domestic clean-energy manufacturing that can out-compete overseas companies on price as well as quality, experts say.
The stimulus support can't produce an overnight transformation for US clean-energy manufacturers, Mr. Book says. What's needed is a "natural demand" for clean-energy, or a "legislative demand." And yet, a cap-and-trade climate bill that would do just that, by putting a price on carbon emissions from coal-fired power plants, is stalled in Congress.
"Unless natural demand for clean energy develops in the US — or it can become a competitive exporter to markets overseas, the spending won't have succeeded," he says. "We have to have a price on carbon."
Boston's brewing battle for student housing
By Lawrence Harmon, The Boston Globe
Published February 17, 2010
IT'S TEMPTING to poke fun at parents who would pay a 50-60 percent premium to house their sons and daughters in the new suite-style college dormitories that are cropping up on campuses across the United States. Wood-fired pizza ovens in the dorm aren't exactly character builders. But city and university officials in Boston who are serious about attracting and retaining well-educated young people need to maintain a steady supply of all manners of housing.
Though obviously overstating a point, Northeastern University economist Barry Bluestone compares the competition for young people to a war between the states. And if Boston wants to be on the winning side of this war, it will need to ensure an adequate and attractive supply of housing for college students – especially graduate students – says Bluestone. Otherwise, the region faces "domestic net out-migration," the modern equivalent of typhoid during the real Civil War.
The Boston-area exodus got underway in earnest in the 2002-2004 period, when the population of young people in the 20-to-24 age range declined by 2.3 percent while rising nationally by 3.9 percent. The hemorrhaging has slowed down in the past few years due to a nationwide economic downturn. But Bluestone says Greater Boston will be "in the soup again" if housing prices spike.
A key battle was lost last year in Boston with the collapse of an effort to build a high-rise private dormitory behind the Huntington Avenue YMCA complex. The developer – Dallas-based Lincoln Property Co. – specializes in building commodious private dorms for students near major campuses, including the state universities in Maryland and Virginia. Similar dorms ring the University of Texas in Austin. Surely there should be room for one or two such dorms in Boston, home to 155,000 college students.
Last week, during an Urban Land Institute forum on student housing, John Cappellano of Lincoln Property Co. analyzed his company's two-and-a-half year dorm misadventure in Boston. Some of the blame rests with the company's out-sized effort to create a 34-story dormitory with 1,140 bedrooms to accommodate students attending Northeastern University, Berklee College of Music, Massachusetts College of Art, and other nearby colleges. But even after the company offered to reduce the project by 10 stories and 350 bedrooms, suspicious Fenway neighbors and city officials blocked the project.
Northeastern University officials also put up fierce resistance. They worried that the private dorm would upset their own plans to build a new 600-bed dorm on the same street. But Northeastern later abandoned its dorm plan, leaving the student housing market underserved. That's how it happens too often in Boston: Kill the other guy's project and then provide nothing in its stead.
Bluestone, who issues an annual housing report card for Greater Boston, says the city needs a "multi-university graduate village" to house upwards of 1,200 graduate students. Graduate student housing is a rare commodity across metropolitan Boston, despite the presence of about 95,000 grad students. Given such demand, construction loans for such housing should be easier to secure than financing for commercial office space.
"A graduate facility built by a private company should do well," said Peter Cusato, who has overseen the construction of 2,000 new dorm beds for undergraduates in recent years at Boston University. "We'd recommend it to our students."
Bluestone sees Downtown Crossing, with its extensive public transit connections, as the perfect site for such housing. The stalled redevelopment project on the Filene's block comes readily to Bluestone's mind. As it turns out, the same idea has been on the mind of developer John B. Hynes III, who controls the controversial site.
"We're open to it," says Hynes, who is under enormous public and political pressure to make something happen on the demolished block in the heart of the city's business district. Hynes says he already has consulted with two unnamed companies that specialize in private dormitories. It might be feasible, he says, if he could secure long-term master leases from two or three local universities. The idea, he says, could also dovetail with the Menino administration's effort to create a new district on the South Boston waterfront linking housing designs with industry clusters attractive to the city's cadre of young researchers.
In his fifth and likely final term, this is a chance for Mayor Menino to look forward for creative housing solutions instead of over his shoulder for signs of neighborhood resistance.
If Bluestone's civil war analogy really holds, Boston needs to get busy on reconstruction.
A year on, experts size up effect of stimulus How much better off are we?
By Jay Fitzgerald, Boston Herald
Published February 17, 2010
President Obama yesterday dispatched dozens of administration officials across the country to tout the benefits of the now year-old economic stimulus package, despite mixed reviews from economists about how well it's worked.
Exactly one year ago today, Obama signed the massive $787 billion bill when the nation's jobless rate was 8.1 percent. The rate eventually rose to 10 percent last year before settling at 9.7 percent in January – and that high level leaves some wondering whether it's been worth the expense.
"It hasn't worked," said David Tuerck, executive director of the conservative Beacon Hill Institute. He said President Franklin Roosevelt's New Deal policies never substantially knocked unemployment down during the Great Depression – and now Obama's plan hasn't during the Great Recession.
"It's the same bad policies under a new brand," Tuerck said.
But other experts said the stimulus plan – which pumped money into everything from unemployment insurance to highway projects – may well have prevented a Great Depression II.
William Cheney, chief economist at Boston's John Hancock Financial Services, said the Obama administration "absolutely oversold" the stimulus program a year ago, by predicting it would create or save millions of jobs and possibly keep unemployment from moving above 8.1 percent.
"But the economy would have gone into a deeper hole without it," said Cheney.
Few people across the political and economic spectrum predicted how severe the recession would eventually become, he said.
Cheney added that stimulus programs such as last fall's "cash for clunkers" and the $8,000 home-buyer tax credit worked suprisingly well.
Part of the problem in assessing the stimulus program is that it's nearly impossible to calculate with certainty how many jobs it's created or saved. The administration initially said million of jobs may have been created or retained, but it changed the formula for calculating jobs on Oct. 1.
In Massachusetts, the Obama administration and Gov. Deval Patrick said the stimulus program created or saved about 9,200 full-time-equivalent jobs last quarter, when both federal and state stimulus spending are combined.
Alan Clayton-Matthews, an economist at Northeastern University, said the important thing was that the stimulus money was pumped into the economy at a time when the private-sector was contracting. Expanded unemployment-insurance benefits literally put money into the hands of jobless workers, while money for Medicaid averted potentially huge cuts in state government services, he said.
Unemployment and Inequality
Interview with Barry Bluestone and Andy Sum, OnPoint, WBUR Radio
Broadcast February 16, 2010
Jane Clayson: "As Congress works on a pared-back jobs bill, a bracing new study shows that unemployment isn't hitting all Americans equally. Far from it.
The country's top income brackets are barely touched by joblessness, while low-income groups face staggering unemployment — levels over 30 percent. Those are Great Depression numbers, or worse.
What this means for American society — not just inequality but long-term economic stability — is an urgent question. Our guests today have the numbers, and a sobering analysis."
A powerful and cheap stimulus
By Barry Bluestone, Boston Globe editorial
Published February 3, 2010
THE ECONOMIC crisis began with a collapse in the housing market and probably will not end before the housing market enjoys a real recovery. While home prices are no longer plummeting, many potential homebuyers are waiting to see whether this is a safe time to enter the market. Sales of previously occupied homes rose in 2009 for the first time in four years, but sales could fall again with the end of the extended home buyer tax credit in the spring.
In repairing the economy, President Obama and Congress face a dilemma. More economic stimulus is needed, yet there is little appetite for expensive new government programs with the federal deficit running more than a trillion dollars. What we need is a new policy, one that could garner bipartisan support, would likely cost the government little or nothing, but should spur many credit-worthy homebuyers to buy now and help rejuvenate the economy.
Here is one idea worth trying. The US Treasury in conjunction with the Department of Housing and Urban Development should put in place for the next 18 months a home price insurance program providing a form of catastrophic loss protection for homebuyers taking a chance on the current housing market.
If families knew that they were insured against taking a large loss on a home bought this year or early next, many would likely begin looking for a home to buy. After all, if the program were in place and they postponed purchasing, they not only would lose the insurance option after eighteen months, but if many others took advantage of the program, they might miss the bottom of the market altogether. That should give enough encouragement for several million homebuyers to move quickly, taking much of the current inventory "off the shelf" and encouraging new home construction.
To qualify for the insurance, which would not cost more than $500 to cover administrative expenses, a home for sale would need a full and fair valuation by a licensed qualified appraisal firm and a home inspection by a licensed inspector. To discourage speculators from entering this market, the insurance program would be limited to owner-occupied properties with no more than three housing units. The purchaser would be required to obtain a conventional mortgage and pay a minimum of 10 percent down. To assure that homes are not "flipped," the insurance would only be paid if the homeowner held onto the property for a minimum of three years with the possible exception for homeowners who faced an economic calamity due to an unexpected health problem or long-term unemployment.
Once the homebuyer resells the property, the government would pay 85 percent of any loss between the original purchase price and the subsequent selling price after deducting mortgage closing costs on the original purchase. The homeowner would be responsible for the rest. The maximum insured loss would be limited to $100,000.
If few take advantage of this new program, the cost to the government would be trivial. If a large number of buyers come into the market, increased housing demand would contribute to stabilizing prices and therefore negate the need for paying a large number of claims.
Three years from now, almost everyone expects home prices to be higher than today so the risk to the federal budget is tiny. But even under an unlikely worst case scenario where one-fourth of the homes insured somehow suffered a staggering 22 percent further decline in prices – the price drop used in the worst case scenario when the Treasury stress-tested the banks for TARP funds – the cost to the government would be less than $10 billion on a million insurance policies.
The US Congressional Financial Services Committee has already drawn up draft legislation for such a plan. This would be a great time to dust it off and try to pass it. If it works, all kinds of good things could happen. Home prices should quickly stabilize, the current pressure on rental markets would begin to subside as some renters move to homeownership, the number of foreclosures because homebuyers are "underwater" should decline, new home construction would begin to become profitable, and a good number of jobs would be created. Not bad for a stimulus on the cheap just when we need it.
Barry Bluestone is the dean of the School of Public Policy and Urban Affairs at Northeastern University.
Economy focus of area summit; Assets and liabilities of the region discussed by local leaders
By George Barnes, Telegram & Gazette
Published January 31, 2010
Leominster – Addressing a gathering of about 150 education, business and government officials Friday in the Sheraton Four Points Hotel, Fitchburg State College President Robert V. Antonucci said all those attending must work together for a better economic future.
"In times like these, we have to be stronger than we have ever been. If we don't believe in what we do, if we don't believe we can make a difference and get the economy on track, we won't," he said. "In order to do that, we have to work collectively to make it happen."
Mr. Antonucci joined Lt. Gov. Timothy P. Murray, Mount Wachusett Community College President Daniel M. Asquino and the heads of state agencies at the first of several regional economic summits the state is holding as a follow-up to statewide economic summits held by Gov. Deval L. Patrick in October.
The summits are focused on creating long-term economic recovery in the state by looking to the particular strengths of the various economic regions.
Offering a measured but generally upbeat view of where the state is in dealing with its economic challenges, Mr. Murray said that although there is high unemployment, Massachusetts is doing better than much of the rest of the country.
"Massachusetts will lead the way out of the nation?s economic downturn," he said, adding the state's AA bond rating was recently confirmed, an indicator of the continuing strength of the state's recovery efforts.
"This is compared to 18 other states that are our economic competitors who had their bond rating downgraded," he said.
The lieutenant governor noted that although northern Central Massachusetts has the highest unemployment rate of all eight economic regions in the state at 10.6 percent, the state is working to improve that situation through infrastructure improvements and investment in businesses and education in the region. He said he believes the region can turn around and is what the conference is aiming for.
"What we can do at this point is get more private sector jobs in the next 12 months," he said.
Mr. Murray said he met last year with Mr. Antonucci and Mr. Asquino to talk about how education fits into efforts to revive the state economy. Those discussions resulted in northern Central Massachusetts being the focus of the first of what will be six to eight regional economic summits.
Mr. Asquino said the colleges, as the largest employers in the region, are among the economic drivers in northern Central Massachusetts, but the key to economic recovery is job development. He said many jobs have been lost because of the economy and changes in technology.
"Many of these jobs lost are simply not coming back," he said, adding those companies that do rehire workers will not be hiring back in the same numbers.
Mr. Asquino said the region needs to continue its transition to a more technology-based economy.
"It's going to require a greater partnership between government, business and education," he said.
Barry Bluestone, dean of the School of Public Policy and Urban Affairs at Northeastern University, said Massachusetts may be doing better now than the rest of the nation, but that it has faced more long-term challenges than many states. "It has been a reasonably bad time for us," he said.
Since December 2007, economic prospects in the state have been looking brighter, at least in comparison to the rest of the nation, he added.
"We have actually created 1,400 jobs in the past month in manufacturing," he said.
Nationwide, manufacturing jobs are down 15.6 percent. Massachusetts is also down significantly, but much less – at 8.4 percent.
The state has also gained 25,000 jobs in education and health services since the recession began, and professional and business services jobs have increased by 9,000 since April.
Also in the last quarter, the amount of wages and salaries have increased. Since March of last year, the number of initial unemployment compensation claims per month has also dropped.
"That is the beginning of a turnaround," he said.
A lost decade for Bay State jobs
By Robert Gavin, The Boston Globe
Published January 25, 2010
Massachusetts marked a sobering milestone last month: For the first time since World War II, the state ended a decade with fewer jobs than it had at the beginning.
The decade started with a technology bust and ended with a historic national recession. Job loss was spread over most of the state's major employment sectors, as the decade's quickening pace of globalization, competition, and technological change pressured the Massachusetts economy. Manufacturing took the biggest hit, shedding one job in three.
"The job creation engine for Massachusetts is broken," said Michael Goodman, an economic analyst and professor of public policy at the University of Massachusetts Dartmouth. "We have a high tech, innovation economy, but one that is not creating enough jobs."
In the decade from 1999 through 2009, average employment in the state fell by 55,000 jobs, or nearly 2 percent. The employment base grew by 4 percent in the 1990s and by 20 percent in the 1980s.
The jobless decade was not unique to Massachusetts. A dozen other states lost jobs over the past 10 years, led by Michigan, where the imploding auto industry drove annual average employment down by more than 15 percent. Nationally, job growth was essentially zero from the end of 1999 to the end of last year.
The major reason for the woeful decade: two recessions. Massachusetts, with a high concentration of technology firms, suffered a severe downturn after the dot-com bust of 2001, one that was much longer and deeper than was seen in the nation as a whole. The recovery that followed was lackluster, and the state failed to regain all the jobs lost before the recent recession began here in March 2008.
But underlying this dismal performance was acceleration in the long-term shift from manufacturing to a knowledge-driven, service-producing economy, analysts said. As the Internet eliminated distance among US firms and lower cost areas and other technologies sped up automation, tens of thousands of high-paying manufacturing and technology jobs vanished in Massachusetts.
"As the state has become more concentrated in high-skill jobs, we have lost these middle jobs," said Alan Clayton-Matthews, a Northeastern University economics professor. "The question is, what's going to replace them?"
In many ways, the former Lucent Technologies plant in North Andover captures the wrenching changes in the Massachusetts economy. At the beginning of the past decade, Lucent employed more than 5,000 workers at its manufacturing operations there. Today, the plant is closed, and the company, now known as Alcatel-Lucent, employs about 800 in Massachusetts, mainly in engineering and research and development.
The technology bust of 2001 wiped out most of Lucent's manufacturing jobs, with the remaining several hundred vanishing after it was acquired by the French firm Alcatel, which moved the North Andover manufacturing operations to Italy.
With the help of severance packages negotiated by their union, many of Lucent's manufacturing workers were able to retrain and find jobs in other industries. Mike Lanza, 50, who worked at the plant for nearly 29 years, earned an associate's degree in biotechnology and landed a job at Tufts University as a laboratory coordinator, setting up chemicals and equipment.
Others haven't been so lucky. Gary Nilsson, who worked more than 20 years in the plant and served as president of the union local that represented the North Andover employees, is working part time at a big-box retailer, earning just one-fourth of his old salary.
"Once the jobs are gone, they don't come back," said Nilsson, 54. "I'm at a hell of an age to be looking for work."
The loss of jobs has weighed on the incomes of many manufacturing workers such as Nilsson, creating an additional drag on the economy, since it inhibits consumer spending, which accounts for more than two-thirds of economic activity. Service sectors are adding jobs, but many of those jobs don't pay as much as manufacturing.
For example, education and health care employment in Massachusetts grew by more than 20 percent over the past decade. Leisure and hospitality, which includes restaurants and hotels, grew by almost 12 percent.
But average wages in education and health care, more than $900 a week, are a third lower than manufacturing's average of nearly $1,300 a week, according to state statistics. The average weekly wage in leisure and hospitality, about $400, is two-thirds lower than manufacturing.
The erosion in manufacturing has contributed to another troubling trend: the stagnation of incomes, said Andrew Sum, director of Northeastern University's Center for Labor Market Studies. Adjusted for inflation, median income for Massachusetts families fell by more than 1 percent over the past decade, the first such decline since the end of World War II.
The loss of purchasing power was spread across lower- and middle-income families, according to the center. Only the top 10 percent, those families making more than $190,000 per year, experienced any inflation-adjusted gains over the past 10 years.
"This was the lost decade," said Sum. "No job growth, no wage growth. It was a total wipeout."
Before the national recession hit the state in early 2008, Massachusetts was adding jobs at a solid pace, said Greg Bialecki, state secretary of Housing and Economic Development. The Patrick administration, he said, has targeted job creation polices at key industries that were not only adding workers before the recession hit but have the potential to add more. Those industries include biotechnology and health sciences; alternative energy; information technology; and advanced manufacturing.
To help maintain middle-class jobs, Bialecki said, the administration is working with firms that have developed new products, offering incentives for them to manufacture them here. In addition, the state is working to link companies that want to add production and other facilities to regions of the state such as Western Massachusetts, where lower costs make it easier for companies to grow.