Fish raises concerns on income inequality at Gateway Cities Innovation Awards
The following is a transcript of remarks by John Fish, president and chief executive of Suffolk Construction, at the Gateway Cities Innovation Awards ceremony on November 12, 2013.
Thank you Greg Torres for your tireless efforts in making the Commonwealth a better place to live and work, and for your leadership at MassINC & Commonwealth magazine which has raised awareness of the strategic importance of our Gateway Cities.
Thank you Jay Ash, for your strong leadership in Chelsea and the Gateway Cities Institute, for your commitment to developing a skilled workforce and your vision for building a modern infrastructure.
Congratulations to Gateway City Innovators. Your participation and innovative ideas and programs are providing the energy to drive this whole initiative.
Welcome distinguished guests and friends. It is a privilege to be here with all of you.
We are here to celebrate and to recognize the important work of the Gateway Cities Innovators and leadership in this room. But we are also here to shine a spotlight on the challenges and opportunities we are facing as a Commonwealth, and to discover ways for us to join together and take action to meet those challenges.
No one can argue that Massachusetts is the undisputed leader in the nation for healthcare, higher education and science & technology. And fortunately, our Commonwealth has led the nation in issues of diversity and equal rights for all citizens.
Massachusetts has also served as the economic engine that has guided the nation out of the last seven recessions. The most recent “Great Recession” was no exception. How were we able to do this? Because more than 40 years ago, the seeds were planted to grow a Knowledge-based economy. At that time, we had anticipated a slowdown in manufacturing so we invested heavily in high-growth innovation sectors like healthcare, education, life sciences, technology and big data.
Our prediction was correct, and our strategy worked well. Or so it seemed. In fact just last week, the U.S. Commerce Department reported that the Massachusetts economy grew at 3.5 percent from July through September, while the national economy expanded at just 2.8 percent during that same period.
It has also been estimated that the Commonwealth gained approximately 1,000 jobs in September, lowering the unemployment rate to 7.1 percent, just below the 7.2 percent rate back in August. And the state’s rate of economic growth between April and June was recently revised up to 1.7 percent from previous estimates of just 1 percent.
However, despite signs of economic growth, we have not experienced any growth in the Massachusetts population. This is a significant problem, since more than 70 percent of our GDP is consumption. The truth is, put simply, if we can’t grow our population, then we can’t grow our economy. But I’m not here to share my opinions about immigration reform. That’s a different speech, for a different day.
We can all agree that most economic indicators are showing signs of slow and gradual growth. But as Mark Twain once said, “There are three kinds of lies: lies, damned lies and statistics.” There is no shortage of statistics that point to economic growth in Massachusetts. However, I would argue we are currently facing one of the greatest economic challenges in modern times. That challenge is the hollowing out of the “middle class” and the widening the gap between the “haves” and the “have nots.” A gap that is much more prevalent in Massachusetts than in any other state in the union.
Many of the haves may not be feeling the effects of this widening gap. At least, not yet. For some who are already college-educated and have transferable skills, our knowledge-based economy is still ripe with opportunity. But for others, the story is much different. Many of these individuals and families are hurting and hurting badly. We need to look no further than the Occupy movements in Boston and in cities across America for proof that the majority of our citizens are not reaping the benefits of our economic recovery.
Unfortunately, we are fast becoming the “Un – Commonwealth of Massachusetts.” Today, 20 percent of Massachusetts workers from households with annual incomes less than $20,000 are jobless while only 3.3 percent of workers from households with annual incomes more than $150,000 are without work. And 19 percent of Massachusetts high school dropouts are jobless versus only 3 percent of individuals with masters degrees. We never saw this coming.
Forty years ago, we had decided to accelerate our economy’s shift toward a knowledge-based economy to maintain our competitiveness in a global economy. But that shift has been rewarding only the best-educated and wealthy households. And it is leaving the middle and working class households farther and farther behind in the rearview mirror. Despite the greatest efforts by the Governor and legislature to draw attention to this growing dilemma, the economic situation has become especially harsh outside Route 128 and in Gateway Cities.
In cities like Worcester, Fall River and Lowell, where income levels have been at near depression levels, research has shown there has been zero job growth outside Route 128 over the past 25 years. The average unemployment rate for Worcester, our largest Gateway City and second largest city in Mass., has been higher than the state average for the last 20 years. And the disparity in income paints a picture just as bleak. Worcester’s median household income has held steady at $42,000, which is $20,000 less than the median household income average for Massachusetts.
Many of the Gateway Cities in other regions of our state are not faring any better. Fall River’s unemployment rate is almost double the Mass. average. And Lowell has a poverty rate that is almost 7.5 percent above the state average. While there has been some economic growth in Massachusetts as a whole, regional economic equity across regions has been virtually nonexistent. And worse yet, the gap between the haves and have nots in our Commonwealth, and nation, continues to widen.
The numbers are staggering. Today, the top 1 percent of Americans have 40 percent of the nation’s wealth, while the bottom 80 percent of Americans have only 7 percent of wealth. I would argue, the American Dream is in trouble!
So, how did we let it come to this? The answer is clear. We have been focused on the wrong things at the wrong times. Our economic strategy for the past several years has been centered on creating only highly-skilled, high-paying jobs in high-profile cities. Until now, we never paused long enough to develop a thoughtful, long-term economic development plan that benefits all of its citizens, rather than just a chosen few. The result has been limited growth throughout the rest of Commonwealth, and a middle class that has been cast aside. We have no one to blame for his myopic approach but ourselves. But now, we alone must fix it.
What we need today is a balanced strategy that will grow low and medium wage jobs for Massachusetts citizens who have the skills, talents and work ethic to help fuel our economic engine. And we need an economic development strategy that will accelerate our recovery and develop a more diverse and sustainable economy for future generations of our citizens.
Governor Patrick and Housing & Economic Development Secretary Greg Bialecki submitted an economic plan called “Choosing to Compete in the Twenty-First Century.” This plan set forth a clear agenda for growing our economy and creating jobs by building talent, empowering regions and improving cost competitiveness. The Boston Fed has also showed strong leadership by initiating a program called the Working Cities Challenge, which is a grant competition that is advancing collaborative leadership and spurring economic growth in our Gateway Cities. I am confident these plans and initiatives will have a positive impact on our economy. But we must also ensure that the tentacles of these initiatives and programs touch every region and Gateway City in the Commonwealth.
Our economic vitality can no longer be tied to just Boston. This Regional Equity plan must break down walls and leverage the strengths and resources of all the regions throughout the Commonwealth. For Boston and Mass. to grow again, we need all the regions in the Commonwealth to grow and prosper. As Michael Porter points out, we must address these significant challenges through shared values and economic Clusters. The criteria for these Clusters include industry mixes, value propositions, strategic gaps, commuter patterns and average wages, and would represent the six major regions of Mass.
While some people’s perception is that Boston is the only true center of growth and innovation in Massachusetts, the truth is that these Clusters, and the Gateway Cities located within them, have untapped strengths that must be leveraged for Mass. to be successful in the long-term.
When you consider the assets and strengths of these Clusters, this growth is well within our reach. Just look at Central Mass, and specifically the Gateway City of Worcester. Worcester is an educational powerhouse by any standard, Massachusetts or national. Worcester is also the home of high-growth innovation industries that will continue to drive our knowledge-based economy throughout the next decade. And Worcester is not the only Gateway City with a strong value proposition.
The truth is that every cluster and Gateway City in Massachusetts has its own unique strengths and compelling story to tell. We must first gain a better understanding of those strengths and then we must invest in them. But beyond investing in the strengths of our Gateway Cities and clusters, we must also invest in key strategic areas that will allow us to overcome Massachusetts’s most challenging barriers to competitiveness.
First, it is most critical that we invest more heavily in education. We must align education with the job opportunities of tomorrow so that our middle class and working class residents have the skills they need to succeed and contribute to our economy and society. In a region where institutions like Harvard and MIT receive more than their fair share of attention and funding, we must continue to invest in community colleges and form partnerships between these schools and the business community so that we can prepare our workforce for the jobs of the future. We have built the very best private school system in the entire world. There is no reason why we can’t have the very best public school system, as well. We have no choice but to invest in early childhood education and STEM education to ensure the next generation is prepared to compete in the 21st century.
But beyond that, we must also push for more serious, bold educational reform. For example, the prospect of extending the school day has been a popular topic of discussion, but is that enough? Why not extend the school year too? Why isn’t our school year 11 months long? Studies have shown that students forget much of what they learned during summer vacation, and then lose approximately 2-3 months of learning just trying to catch up again. Longer school years would lower crime during the summer months. Middle class and working class parents wouldn’t have to absorb the shockingly high cost of daycare just to maintain a fulfilling career while raising a family. And our school infrastructure is already prepared to meet the burden of a longer school year. Massachusetts led the nation in healthcare reform. Massachusetts is leading the nation in science & technology research. Massachusetts is the education hub of the world. We must lead the nation in serious education reform. And we must institute that education reform using a Regional Equity mindset so that it benefits all Massachusetts regions and citizens.
We must also invest heavily in transportation. Today, Mass. roads are ranked 45th in the nation in terms of surface and bridge conditions. Mass. has $2.2 billion in unfunded road enhancements. And one in nine Massachusetts bridges is structurally deficient. By 2030, between 12,000-16,000 jobs could be lost in Massachusetts due to deficient highways. Inadequate transportation clearly threatens Massachusetts’s ability to be competitive in a global economy.
We need to develop a smart, cross-regional transportation strategy that facilitates the movement of our workforce across all regions, not just within the Route 128 belt. We must complete the South Coast rail to New Bedford and Fall River. And we must upgrade the high-speed rail connecting Boston to Worcester, and extend the rail to Springfield. Investing in transportation is a must. We have talked about this for much too long. It is now time to take action. Infrastructure is the key to our long-term economic success, so we must look at transportation from a global perspective, and develop a comprehensive state-wide solution that meets the needs of our entire Commonwealth.
In our Gateway Cities, we must also leverage the low cost of housing, ease of doing business, cost of energy, and deep labor pool, which are distinct advantages in those regions and are key drivers of competiveness. And then we must market and brand the Gateway Cities’ unique value propositions to the rest of the Commonwealth, the nation and the world. And we must do all these things in an equitable way.
Whether it be Brockton, Fall River, Fitchburg or Haverhill, Holyoke, Lawrence, Lowell or New Bedford, Pittsfield, Springfield or Worcester, every city and Cluster must act as a sparkplug in our Commonwealth’s economic engine.But we also cannot depend on government alone to help us achieve economic parity across regions. Businesses, business groups and chambers of commerce must come together and initiate these conversations. We must form more public-private partnerships to ensure that there is a strong link and sharing of ideas between business, government and the communities we serve. Businesses and organizations like the Federal Reserve and Gateway Cities Innovation Institute must continue developing creative ideas and initiating the difficult conversations that will turn the best ideas into the most effective solutions.
Let us begin building those partnerships, developing those creative ideas and having those conversations today.