GREG TORRES, MASSINC PRESIDENT: I’d like to welcome everyone. The topic is job growth in Massachusetts. Where are we doing well, where do we have work to do? MassINC put a report out on this at the end of last year. We said a shifting economy, referring to a knowledge-based economy. This week you think more about are we shifting into a recession. It’s very timely to have this discussion this morning. It’s a typical MassINC in-depth report covering trends. There is a tremendous amount of data in there. We describe a boutique effect of moving to a knowledge-based economy. Are we in danger of creating jobs that only help those with advanced degrees? This small boom, big bust picture we see is the pattern. If the losses are big in one sector and we don’t offset them with comparable gains, we end up with bigger busts. You also see regional contrasts in the report. Greater Boston seems to do very well and we have tremendous difficulty in Springfield and in other mill towns. Thanks to our sponsors who underwrite this research. It’s difficult to raise money for work like this. We thank Bank of New York-Mellon. Same to the Boston Foundation, Harvard Pilgrim Health Care, EMD Serono and the Merrimack Valley Economic Development Council.
DAVE LEMERE, BANK OF NEW YORK MELLON: I am impressed that everyone made it by the dance competition (there was a ballroom dancing competition in another room on the same floor of the hotel). I am pleased to kick things off. We think of this as putting sunshine on a gloomy issue, an important issue that today is framed. Our opportunity is to sponsor an event. Bank of New York Mellon has gone through several iterations. I have been through all of that. We have over 3,000 people here in New England. For us, this is a really important issue. We are not immune from the fundamental challenge of a skilled, talented, and committed workforce. As we look toward going up to 4,000 and 5,000, frankly we’re a little worried about it. You could call us at one end of the boutique and we are worried about having enough skilled workers. Let’s turn this over to the experts and the panel. Framing the issue is just one step. We can talk about real solutions and steps we can take. We are all dependent on each other for long-term success.
ROBERT HALPIN, MERRIMACK VALLEY ECONOMIC DEVELOPMENT COUNCIL: The council works with 24 communities, including Lowell, Lawrence and Haverhill. It’s a region that reflects all the challenges and opportunities. It’s my pleasure to introduce Secretary of Labor and Workforce Development Suzanne Bump, a member of the governor’s Development Cabinet. She represented Braintree in the Legislature from 1985 until 1993. The collapse of the Massachusetts Miracle was a difficult time for government and the economy. She helped reform the expensive workers compensation system. We still reap the benefits today. She is a graduate of Boston College and Suffolk University Law School.
SUZANNE BUMP, SECRETARY OF LABOR AND WORKFORCE DEVELOPMENT: I am really happy to be here today to give my perspective. The report took all of the information we see in the newspapers about job loss and companies being lost to competition. Expanding the number and kinds of jobs is a top priority of Gov. Patrick. So is preparing the workforce with skills. That’s why he’s presented an array of plans and given workforce development Cabinet-level status. I’d like to talk about three things the governor has established as priorities in job creation. Life sciences it plays a key role in our economy. As we shed jobs in the last recession, life science continued to grow. At UMass Boston last week, during a summit, Gov. Patrick said we’ve been in this position before and failed to act. We have to extend into product development and manufacturing to create jobs across the spectrum. I was part of the summit and was on a panel to discuss talent needs. One strength of the governor’s initiative is the inclusion of funds for universities and companies – assistance for workforce development, particularly with regard to post-secondary career development. What’s interesting is the extent to which participants focused on the need for PhD’s and entry level positions. Another high growth area we are investing in that hasn’t been in the news so much is the emerging clean energy sector. We are home to 556 companies and more than 14,000 jobs in this area. We have the second largest clean energy cluster, second only to California in capital investment. The governor convened a clean energy roundtable and we continue to work with industry leaders to develop worker training strategies. A grant went to Greenfield Community College to train workers in sustainable building technologies. The last job creation effort I want to mention, we are not allowed out of our offices on Beacon Hill unless we speak of destination resort casinos. Don’t tell him I said that. I actually have a genuine enthusiasm for the proposal. He expressed skepticism on the campaign. After a review that included a survey of what was going on with job development and our revenue picture, he created a strategic response to the question of what to do about gaming. His initiative will develop 20,000 permanent jobs. It builds on tourism and hospitality sectors and takes that many steps further. He has not embraced just slot machines at racetracks. He wants to attract a broad audience to come to Massachusetts. We know, it’s written into the criteria, that these will be good jobs with good wages and career paths to move people from the back of the house to the front of the house and management. At the same time we are keeping the base of our economy. In workforce development, the governor has tasked me with reforming the system. It is not an easy thing to do, primarily because it’s a decentralized system. I don’t get to decide how the system operates. There are 16 independent locally managed and regional boards. We have made tremendous progress in three key areas. We have built the capacity of the system, getting knowledgeable interested people on the Workforce Investment Board. This entity had really been dormant for a number of years. It’s been given a strong sense of mission. They are doing some really good work and starting to make change. We have been launching capacity-building activities with the local boards to enhance their strategic planning and partnering. We are trying to take workforce development out of its silo. We have been creating performance standards. The stimulus bill of 2006 created a performance accountability task force to inventory programs and evaluate their effectiveness. Our second priority has been the alignment of state resources, taking stock of agencies with workforce development clients. We revamped the workforce training grant fund program that all employers pay into through unemployment insurance. We have added new features and included a return on investment analysis. The third effort we are engaged in is focusing on the commitment to youth. We are working on why so many kids are dropping out of school and the workforce and what are the consequences for them. Along with these efforts, we have been making concrete investments through a trust fund that is shortly going to expire. There is $10 million at work in support of collaborations. Another $7 million will go out the door in the next couple of months. The governor proposes to recapitalize this fund at $15 million and to have that annually available. When I was first appointed, I thought I would spend most of my time on economic development proposals. I am, but I spend more of my time with (Gov. Patrick’s education adviser) Dana Mohler Faria and the presidents of the community and state colleges and universities. We need better connections with higher ed. We know we have to put a higher premium on higher education. The governor talks a lot about a skills gap. Right now, as of last count, there were over 90,000 jobs going unfilled. We need to create connections to higher ed to allow upward mobility. We have to quickly integrate new immigrants with sufficient language skills. I participated in a program in Lowell on gateway cities. Lowell only has 70 percent of population with high school degrees or higher and 22 percent with bachelor’s degrees or higher. There are severe language barriers in Lowell. There is a low level of English language proficiency. There’s a real urgency about how to make the best use of adult basic education and ESOL. We know from talking to folks in the programs that they want workforce-based education opportunities. It is in the mind of some traditionally involved a matter of heresy to suggest that anything different be done. We need to go to the next step and take adults we are providing with high school equivalency degrees and allow them to have smoother transitions into the workforce. The next thing we will be doing is taking statewide strategies and make them real at the regional level. After the first quarter, we will produce individualized labor market information packets that we will share with the local boards. We will show what demographic trends are and give them a higher degree of information for strategic planning purposes. We want to move from decision-making on a regional basis based on anecdote to decision-making based on data. We will do four or five summits and want as broad a participation as possible, not just the usual suspects. We want to cast a wide net so small business and private higher ed and community groups are all engaged in this discussion. There are good models from which we can build but we need to get this systematized. It’s a wonderful challenge that we all face and one I hope we all share in finding solutions to. I want to thank you very much for this opportunity to participate. I could go on and on but thankfully I have to go someplace else. Thank you again.
TORRES: Paul Grogan plays a behind the scenes role in mentoring young people. Tripp Jones would be the first guy to tell you that when he was putting MassINC together, a non-partisan think tank run by a guy who just ran Mark Roosevelt’s campaign against Bill Weld, Paul was one of a few who provided advice and counsel to Tripp. He is into numbers at the Boston Foundation. The foundation has assets under management of just under $1 billion. Paul has also taken on the issue of CORI reform. It’s a very important matter that doesn’t make it to the radar screen. He has been an advocate of pilot school expansion and he is absolutely right on that issue. Please welcome Paul Grogan.
PAUL GROGAN, BOSTON FOUNDATION (MODERATOR): Thanks for that exceedingly generous introduction, particularly the part about mentoring young people. Baby Boomers haven’t been that concerned because we think we are still young. Evidence is mounting that that’s not the case. The foundation has a lasting partnership with MassINC. It’s great to be here again with Mellon Bank and the other sponsors of this report. I want to ask the mood question on the jobs front. What are you feeling about it? To bring us up to date, in the past few months employment increased .74 percent, below the national average of .8 percent growth, ranking us 33rd among the states. That rating is low. But the states that benefitted most from the growth are being most affected by the slowdown. Three major sectors continued to grow in Massachusetts health care, education, and leisure and hospitality. It was noted earlier that we lost 100,000 jobs in manufacturing. There is a disadvantageous exchange of losing higher-paying jobs and the jobs being created paying somewhat lower. Talented young workers are exiting the state in larger numbers than we would like to see and they are being replaced by less skilled and unskilled immigrants. Talent has always been our salvation. That’s basically what we’ve got. We are going to have to have a human capital strategy that is very strong. I am heartened by what Secretary Bump said. A second pool of potential labor productivity is inner city young people. Enormous advances have come from the 1993 education reform law but there has been much less progress in the cities than we would like to see. There is going to be a forthcoming study on college completion among Boston students. Other cities that have done this study have shown that in the big cities, if you are an entering 9th grade in the Boston public schools, you have less than a 10 percent chance of achieving a college degree of any kind. Think about that. Unless we do something radical, we cannot tolerate a situation with enormous numbers of young people dropping out and not participating in the economy. We are not Taxachusetts but I would not describe us as pro-growth or pro-jobs. There is a culture in which job growth and business development is not celebrated. That goes back a long way. I went to see a top CEO and asked how many times do top elected officials from Massachusetts come and say how can I work with you to create more jobs, and he said that’s never happened. That was six years or so ago. We are not going to be able to survive if we are indifferent or even hostile to the people creating jobs. Housing is another issue. We got 40R and 40S passed. Are starter homes available to people making decisions in their late 20s and early 30s. We are at the end of the energy pipeline. We have to get religion about that. Health care. We have some news about the real costs of health care access. I am proud that we are providing national leadership. Even without the new numbers, the annual increase in health care premiums is crowding out in the public sector almost all of our capacity to invest in anything else. We are moving into a society that is more about maintenance than possibility. It’s not something we should settle for. I am an optimist. We have defined the problems better. But it will take more political will than I have seen yet to take on some of these issues.
MARK ERLICH, NEW ENGLAND COUNCIL OF CARPENTERS: Like you Paul, I am an optimist. From the construction industry, concerns about the R word, we are not going to see it as much as other parts of the economy. We rely on institutions that are not as vulnerable to the credit market collapse that’s been going on. They see this as a good time to build. I am hopeful. Any examination of job growth that doesn’t look at the shadow underground economy misses a large factor. A study estimated it grew by 28 percent. We have a broken immigration system and people functioning in a cash economy that is outside the legal employment system. The workers are easy prey for unscrupulous contractors. Any prescription for growth has to take note of that. The governor is very aware of it and is looking at it. The research crunches the numbers and looks at the quality of jobs. Good jobs at good wages is a political cliché but unless we measure the quality of jobs, it’s less than half of the picture. The report talks about the loss of manufacturing jobs. People say they were the good old days for people who didn’t go to college. What people conveniently forget was they were not good jobs until they became union jobs. We have new growth in the service sector and it needs to be understood that most of the new jobs do not provide decent wages and few if any benefits. The report asks about middle class families. Unless these issues are addressed, we won’t know the answer.
RICK LORD, ASSOCIATED INDUSTRIES OF MASSACHUSETTS: We survey our members each month and we had the lowest reading in five years this week. It’s reflective of what people think about the economy. Clearly there is an economic slowdown. Our two economies were not ready to use the recession word but there is great concern. Massachusetts is one of handful of states that didn’t regain all the jobs it lost. We still have a long way to go and there are signs that things are going in the opposite direction. Lots has been talked about regarding the loss of manufacturing jobs. There were 600,000 and there are now 300,000. In 2007, it appears we will have exported $25 billion, a five percent increase and a new record. So there is some good news out there despite a huge loss in that sector. A big challenge we see is health care costs. I sit on the Connector Board. I am proud to be part of this law. We have done some great things but have some huge challenges.
SEN. THOMAS McGEE, LABOR AND WORKFORCE DEVELOPMENT COMMITTEE: As I was reading the report and hearing from constituents, it’s great to see growth in biotech. We have people in manufacturing who are out of work or have moved out of state. We need a broad-based approach to job training. We have 700,000 people without language skills or high school diplomas. They are not moving in any direction. It’s a huge challenge we face. There is a real unease in communities I represent. People are not seeing income increases, health care costs are going up and the challenge of putting kids through college is huge. I have a new role on the Veterans Committee. We have a lot of veterans looking to get back into the workforce and seeing there is not that opportunity. We need to build collaborations we have fostered and hopefully that’s happening. There is a recognition that there are not the connections between employers and people looking for work.
UNA RYAN, AVANT IMMUNOTHERAPEUTICS: I am a great believer in building on success. Life sciences have really flourished here. You see a large number of biotech companies fail but the industry blazes on. As an employer, I seem to keep paying for the high-paying jobs. On the question of maintaining rather than building, life sciences does a very good job of startups. We are good at the beginning of the life cycle. What we are not good at are nurturing companies to become taxpaying big corporations that do philanthropy. I have been saying this is something we don’t do well. I was pleased to see the secretary give lip service to the whole life cycle. My company is one of the few that has decided to put a manufacturing plant here. It’s easy to fill good manufacturing positions. We pay well. So people who lose jobs here stay here because they know they will get another job. In manufacturing that’s not true. They go to New Jersey. We are building and renovating our facilities but I don’t see big sales forces in biotech. It’s more in pharma. We need to have a friendly business environment for selling our products at the end of that long life cycle of 10 to 15 years.
GROGAN: Why did you stay here? What is it going to take to convince your peers?
RYAN: Pride and loyalty are part of it. You have to want to make Massachusetts work. I was the chair of the Biotechnology Council. We did a report on building the economy here. It took engagement from the governor. I give high marks to Mayor Lambert of Fall River. He took me around to sites himself. It’s the kind of thing that North Carolina does. It takes the personal touch. Mike Rodrigues has become a great friend of mine. I didn’t know anyone in the Legislature when I first started. It takes legislators looking as if they care whether we stay or not. It’s hard when nobody in Massachusetts seems to care whether you stay or not.
GROGAN: How do you court enterprise in Massachusetts?
McGEE: I think it’s changing. The stimulus bill came about because labor, higher education and employers came together and realized we had to make this investment together. There is a recognition I worked with Mike Rodrigues on the permitting. There is a lot of space in Lynn for manufacturing or as feeder sites. I think it’s changing. We have seen positive results. We hope to increase money for the competitiveness trust fund. Training grants have been real successful. Companies are starting to grow a little bit in manufacturing. I think it’s changing and we need to work together with employers and employees and with the technical schools. Things are happening. We need to continue to work on that.
GROGAN: The workforce has been elevated. Economists say a talented workforce attracts jobs. Ranch Kimball (economic chief under Gov. Mitt Romney) said it stunned him how crucial workforce was going to be.
ERLICH: We are fortunate in our industry. We have a remarkable relationship with 1,500 employers. We like to say it’s the largest joint venture in New England. If they don’t succeed, we don’t succeed. We have a serious commitment to apprenticeship training. It’s collectively bargained. It’s classroom and on site. We understand that continuing education is important to our industry. We have to deal with changing technologies. We have a facility in Boston for after work. Two thousand people a year go through the program for free. We have ESL classes. It represents a model for how employers and unions can work together.
GROGAN: Research shows a shift in how workforce and adult education courses are delivered. Some industries are getting religion on that. We work closely with health care. Rick, where are your members on workforce?
LORD: I chair the state workforce training fund advisory panel. It’s a $21 million fund the state has that gives to employers for workforce training grants. There has to be a match. I see since I have been on the board eight years a huge demand for that money. Employers realize that to be competitive they have to have a highly trained and skilled workforce. The skills that are required are totally different. We have a lot of workers who don’t have the skills. Employers are seeing that they need to make the investment. Thanks to this fund, the state is able to provide significant resources to this effort. We did some briefings in the fall and heard about the usual challenges, but so many were looking to hire people and they couldn’t find skilled workers. There are 90,000 jobs out there where employers are looking for people.
GROGAN: There has been celebration of the Bristol-Myers Squibb achievement in Devens. Do you see other possibilities for this kind of approach?
LORD: The Bristol-Myers Squibb announcement was a great success. Six hundred new jobs. They really wooed the company, something Massachusetts hasn’t done a lot of in the past which other states do very aggressively. The reality is we are mostly small employers and our growth comes from employers who are here. That worked beautifully because it was at Devens and it was pre-permitted and the state gave them generous tax incentives. I don’t think we can do that for every business. We have to create an environment that is attractive for our existing employers, whether it’s permitting or workers comp we were able to tackle the business costs I’d like to see a concerted effort on health care costs. We have to tackle those issues.
GROGAN: What’s your one or two top priorities?
ERLICH: I testified on the life sciences bill. I think it’s a great program. The governor is focused on industries that have the best potential to grow. Two, the whole notion of training is absolutely key. Our model is not dependent on state government and it could be expanded. The underground economy is a complicated one that doesn’t get a lot of attention and could produce substantial revenues for the state with minimal enforcement.
LORD: We have to tackle bringing in our health care costs. The fact that health care costs consume every new dollar is not sustainable. It’s really important to get a hold of that. On the workforce and education side, our population isn’t growing. It would be declining if not for immigrants. We have to make sure the people who are here have the skills and we have to have a first class education system.
McGEE: Trying to engage young people and making sure they have the opportunities they need. They need to be able to tap into their own potential. We need to reinvest and continue to invest in community colleges and public higher education. So many young people are disengaged and not connecting in the schools. Out-of-school and after-school activities are important and those who participate turn in a different direction. It’s investment in housing, transportation, health care.
RYAN: We have a summer intern program that is well received. Unemployment costs are a concern. But my first concern is modernization of the tax code to make it appropriate for the types of companies we want to grow. Biotech companies go ten years before they are profitable. I would love to sell my net operating losses at 75 cents on the dollar. New Jersey has a program that is revenue neutral.
AUDIENCE QUESTION: I am David Begelfer from NAIOP. Housing was mentioned. The downturn in costs does not solve the problem. Many have left because of housing. Rick, do you see businesses in a position where because of not being able to add people, they are opening offices outside the state or moving out of state?
LORD: We did meetings in the fall. Housing is a problem – attracting workers and trying to get people to move here when they see the housing costs. It’s a huge challenge to get people to transfer here. Starter home prices are just unaffordable. There is a stark difference within 495. Outside, they have other challenges. It’s another issue we need to address to keep young people here.
AUDIENCE QUESTION: I am with the Lexington League of Women Voters. Sen. McGee mentioned the disengagement of high school students. What about regional vocational schools where people can look at careers starting at a younger age?
McGEE: There is a big waiting list for a school in Worcester. There is definitely a recognition that those opportunities need to be there. We want to create a regional school in my area, in Essex County. There really is an important piece that we recognize in the Legislature. I am working with 30 of my colleagues. Worcester is a great model. We are using that school to get young adults trained and into jobs.
AUDIENCE RESPONSE: The superintendent at Minuteman said 60 percent of students go on to college.
McGEE: It’s 70 to 80 percent at the school in Worcester. Exciting things are happening.
ERLICH: Vocational schools suffered from the devaluation of manual labor. The sense was everyone should go to college and be a white collar worker and get into high tech. That’s just not the case. The technical schools took it on the chin. The schools are now coming back. We need Harvard and MIT graduates and vocational school graduates. One cannot be seen as valuable and the other as worthless. There has to be a commitment to all layers of training.
AUDIENCE QUESTION: I am from AARP. We talk about the shifting economy and we talk about bringing people in at the young end. What are the policies to keep the older workforce here?
RYAN: I am thinking of keeping my job for quite a long time.
GROGAN: I think we’ve spotlighted an area that needs more thought. It’s a serious thought. We have people who are going to be healthy and productive for a long time.
AUDIENCE QUESTION: I am from the carpenter’s union. I never hear a true discussion about the inflation. It’s always about who is going to pay the bill. How are we going to get those costs down? Look at mass transit. Other big cities deal with high costs of housing in metro areas by having trains that are on time even if you are 50 miles out. Massachusetts has failed.
McGEE: I am 52 now. It’s not just seniors. Workers need to be retrained. We need to make sure the workforce out there gets training, at any age. Health care has to be done at a national level. We stepped up to the plate because uncompensated care was exploding. It’s the number one issue in many respects that we face. We need to do this as a country and that should be the direction we talk about when we talk about the next president. Mass transit, I feel strongly about it. Lynn has been boxed in. Water transit can connect communities. The T is looking at a huge deficit. We have to talk about fair tax policy. We need to talk about investments we need to make for easy accessible mass transit. There is discussion about casinos. We need to have a reasonable, rational discussion about tax policy. If you can’t get to your job, companies are going to leave. We are fighting for the Blue Line in Lynn. We have been fighting since 1946. I have seen plans from 1946. It will really create economic growth in Essex County. These investments have to be made. We need to find the money to make that happen.
LORD: The health law was about expanding access to care. That was a great thing. All of us knew we needed health reform 2 to address the rising costs. There is a huge commitment on the part of state officials to really get serious about addressing costs and looking at reimbursement systems that award providers for providing more and more services. We need to look at technology and wellness. I don’t think we can wait for the national level discussion.
GROGAN: We are offering local communities the option to come into the state health insurance plan. Are you satisfied with the pace of that program?
LORD: The GIC (Group Insurance Commission) purchases on behalf of state employees and retirees and has had increases that have been less than cities and towns. Cities and towns had to join by October 31 for fiscal 2009 and 12 or 13 joined. A small percentage joined. Some said they didn’t have enough time. We would have liked the Legislature to have said you just have to join. That wasn’t done.
McGEE: There has to be a much larger discussion with public employees. It would save cities and towns money. We really need to address the cost cutting. The health plan we put in place created opportunities for everyone. It didn’t really cut costs.
TORRES: If we made progress on those number one priorities, we could make substantial progress. I hope we can stay at this discussion. We are going to be in for a bit of a struggle in terms of this economy. I went through recessions, one in government and one in the private sector, and there is great opportunity as much as a lot of struggle, for us to make some progress over the next couple of years. We have a policy brief on public finance coming out in two or three weeks. We have reviewed state budget trends over 15 years. It underscores things like the health care costs. We have a research report later in the year on education reform 15 years later. We have a young adult survey that will be out late spring. Stay tuned for new elements out of CommonWealth magazine with our new editor Bruce Mohl. Thanks for coming.
