Alan Clayton-Matthews and Alicia Sasser Modestino of The Dukakis Center for Urban & Regional Policy presented on the Massachusetts Economy for recent graduates

1. The Massachusetts Economy and the
Market for Recent College Graduates
Alan Clayton-Matthews and Alicia Sasser Modestino
Dukakis Center for Urban & Regional Policy
May 12, 2015

2. The Massachusetts Economy
Current and Future Trends

3. The state’s economy weathered the winter well, but there was an impact on
employment and spending in the first quarter.
The Massachusetts Economy
-0.9
4.5
4.8
-1.6
5.5
1.5
5.0
3.7
-2.1
5.2
5.6
2.9
0.9
4.6
4.4
2.2
1.6
2.5
0.1
2.7
1.8
4.5
3.5
-2.1
4.6
5.0
2.2
0.2
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2012 2013 2014 2015
QuarterlyGrowthatAnnualRates(%)
Growth in Real Product, Massachusetts vs. U.S.
Massachusetts U.S.
Source: U.S., Bureau of Economic Analysis; Massachusetts: MassBenchmarks
Projected

4. Massachusetts fared better than the U.S. in the recession. In recent years, the
state and the nation have grown at roughly the same rate.
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015
Annual Real GDP/GSP Growth, Massachusetts vs. the U.S., 2009-2015
Massachusetts
U.S.
Source: U.S. BEA for 2007-2013; U.S. BEA for U.S. in 2014; MassBenchmarks for Massachusetts in 2014 and first
half of 2015 projection.
The Massachusetts Economy

5. Success in the labor market is closely tied to educational attainment.
0
5
10
15
20
25
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Unemployment Rates by Educational Attainment, Massachusetts
Less Than High School
High School or GED
Some College, Less Than a Bachelor's Degree
Bachelor's Degree or Higher
12-Month Moving Average.
Source: Current Population Survey
The Massachusetts Economy

6. Projected employment growth is most rapid in sectors that will require a
broad range of skills.
98.0
100.0
102.0
104.0
106.0
108.0
110.0
112.0
114.0
14q1 15q1 16q1 17q1 18q1
2011q2=100
Payroll Employment Trends Over the Forecast,
Massachusetts
Professional and Business
Services
Construction
Leisure and Hospitality
Education & Health Services
Information
Total Payroll
Financial Activities
Other Services
Trade, Transportation, Utilities
Manufacturing
Government
Source: NEEP, Moody's Analytics
The Massachusetts Economy

7. Strong job growth this year and next will taper off by 2018 because of massive
retirements of baby-boomers.
The Massachusetts Economy
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
07 08 09 10 11 12 13 14 15 16 17 18
QuarterlyGrowthatAnnualRates
Employment Growth, Massachusetts vs. U.S.
MA U.S.
Sources: NEEP, Moody's Analytics

8. The long-term trend of declining participation rates is largely explained by an
aging workforce, but not entirely by demographics alone…
30%
40%
50%
60%
70%
80%
90%
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Participation Rates by Age, Massachusetts
Less than 25 Years Old
25-54 Years Old
55 or Older
Total
12-Month Moving Average.
Source: Current Population Survey
The Massachusetts Economy

9. …but given slow to no labor force growth, this will require more intensive
training and skill acquisition of new labor force entrants.
3,300.0
3,350.0
3,400.0
3,450.0
3,500.0
3,550.0
3,600.0
3,650.0
07q1 08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 18q1
Labor Force Masschusetts
Sources: NEEP, Moody's Economy.com
The Massachusetts Economy

10. The Market for Recent College
Graduates in Massachusetts
Information from the American
Community Survey, 2009-2013

11. In this economic recovery, young college graduates have been participating at
high rates, and the labor market for them has improved.
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
2009 2010 2011 2012 2013
Labor Force Partcipation Rate by Year, College Graduates Age 20-30,
Massachusetts
Source: American Community Survey 5-Year PUMS 2009-2013
The Market for Recent College Graduates
0.00
0.01
0.02
0.03
0.04
0.05
0.06
0.07
2009 2010 2011 2012 2013
Unemployment Rate by Year, College Graduates Age 20-30,
Massachusetts
Source: American Community Survey 5-Year PUMS 2009-2013

12. It takes a few years for young college graduates to establish themselves.
The Market for Recent College Graduates
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
20 21 22 23 24 25 26 27 28 29 30
Labor Force Partcipation Rate by Age, College Graduates Age 20-30,
Massachusetts
Source: American Community Survey 5-Year PUMS 2009-2013
0.00
0.05
0.10
0.15
0.20
0.25
20 21 22 23 24 25 26 27 28 29 30
Unemployment Rate by Age, College Graduates Age 20-30,
Massachusetts
Source: American Community Survey 5-Year PUMS 2009-2013

13. The experience of the “class of 2009”.
The Market for Recent College Graduates
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
2009 2010 2011 2012 2013
Labor Force Partcipation Rate by Year, College Graduates Age 22 in 2009,
Massachusetts
Source: American Community Survey 5-Year PUMS 2009-2013
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
0.20
2009 2010 2011 2012 2013
Unemployment Rate by Year, College Graduates Age 22 in 2009,
Massachusetts
Source: American Community Survey 5-Year PUMS 2009-2013

14. Advice to new college graduates: “Don’t panic!!”
The Market for Recent College Graduates
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2009 2010 2011 2012 2013
Average Annual Earnings by Year, College Graduates Age 22 in 2009,
Massachusetts (dollars)
Source: American Community Survey 5-Year PUMS 2009-2013

15. The Market for Recent College Graduates
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Average Annual Earnings for College Graduates Age 20-30, Working Full-
Year, Massachuetts vs U.S., by Field of Study (dollars)
MA US
Source: American Community Survey 5-Year PUMS, 2009-2013

16. The Supply of Recent College
Graduates in Massachusetts
Recent Growth and Migration Patterns

17. Since 2000, Massachusetts and New England have experienced slower growth in
the recent college graduate population compared to regions.
The Supply of Recent College Graduates
Percent Change in the Number of Recent College Graduates, 1990-2006
Percent
-30%
-20%
-10%
0%
10%
20%
30%
40%
50% 1990-2000
2000-2006
1990-2006
United
States
New
England
Total
Southern New England Northern New England
CT MA RI
ME NH VT
Total

18. Massachusetts attracts a relatively high share of non-native students, many of
whom leave the region when they graduate.
Migration Patterns
Share of College
Students Who Are
Non-Natives
(Percent)
Share of College Graduates Living in Same
Division/State as B.A. Institution One Year After
Graduation (Percent)
Division / State of Institution:
All Graduates Natives Non-Natives
New England 33.6 63.6 85.7 19.8
Massachusetts 43.4 52.0 75.7 21.1
Competitor states
California 5.4 87.3 89.8 43.3
Illinois 13.1 78.2 87.6 16.2
New York 15.2 76.4 83.8 35.3
North Carolina 20.6 66.7 80.1 14.9
Pennsylvania 21.7 67.6 81.6 16.9
Texas 5.6 86.8 88.4 60.8
Washington 10.7 82.8 88.0 N/A
Graduating Class of 2008
Source: Baccalaureate & Beyond Longitudinal Study, National Center for Education Statistics, U.S. Department of Education, 2008-2009 and 2000-2001.

19. Since 2000, the rate of retention appears to have fallen in Massachusetts as well
as the broader New England region.
Migration Patterns
0
20
40
60
80
100
Class of 1993 Class of 2000 Class of 2008
Share of Recent College Graduates Living in Same Division as B.A. Institution
One Year After Graduation (percent)
Source: Baccalaureate & Beyond Longitudinal Study, National Center for Education Statistics, U.S. Department of Education, 2008-2009 and 2000-2001.

20. New England does a better job of retaining graduates in some fields of study, yet
retention still ranks below most other regions.
Migration Patterns
Share of Recent College Graduates Living in Same Division as B.A. Institution
One Year After Graduation (percent)
30 40 50 60 70 80 90 100
Other
Humanities
Social
Sciences
STEM
Health
Business
Education
New
England
Middle
Atlantic
South
Atlantic
Mountain
Pacific

21. Contrary to conventional wisdom, recent college graduates leave New England
primarily for job-related reasons—not high housing costs.
Migration Patterns
Employment Family Housing Other
Division to division moves:
New England 57.9 11.3 1.6 29.2
Middle Atlantic 54.0 9.6 5.2* 31.1
East North Central 61.0 10.0 3.3 25.7
West North Central 57.7 10.6 3.2 28.5
South Atlantic 58.6 14.2 3.2 24.0
East South Central 70.1* 9.1 2.8 18.1*
West South Central 66.6 9.8 4.1 19.5*
Mountain 49.8 13.5 2.3 34.5
Pacific 52.5 15.5 6.7** 25.3
United States 58.1 11.6 3.7* 26.6
Primary Reason for Leaving
Source: March Current Population Survey (Annual Demographic File), 1999—2012
Note: *Indicates that the difference between New England and the division is statistically significant at the 10-percent level and **at the 5-percent level.

22. Employers and policymakers in Massachusetts have already been pursuing
policies to boost retention among college graduates.
Migration Patterns
 Building stronger ties between colleges and employers to better link
students to jobs through internships that lead to permanent positions.
http://intern.bostonchamber.com/about-chamber-intern-connect/
 Branding the region to appeal to recent college graduates as a place to
work, play, and stay in the Commonwealth’s “It’s All Here” campaign.

23. Employer Demand for College
Graduates during the Great Recession
Shifting Requirements for Skill

24. -.02
0
.02.04.06.08
0 .2 .4 .6 .8 1
Share of Workers with College Degree by Occupation, 2007
Between 2007 to 2012 the share of workers with a Bachelor’s degree in traditionally middle-
skill occupations increased rapidly.
Employer Demand
Change in Share of Workers with a Bachelor’s Degree
Within Occupations, 2007–2012

25. The slow recovery in the labor market raised concerns of rising skill requirements
for jobs that previously did not require a college degree.
Employer Demand
“Education Requirements for Employment on the Rise, According
to CareerBuilder Survey.”
March 2014
“Degree Inflation? Jobs That Newly Require B.A.’s”
December 2012
“Welcome to the Well-Educated-Barista Economy.”
April 2014

26. What might explain the rise in employer skill requirements within middle-skill
occupations during the Great Recession?
Demand-Side Explanations
Factors that differentially affect demand for low-skilled jobs, affecting the
composition of vacancies within occupations.
• Local demand shocks
• Credit market constraints
• Changes in technology
• Changes in policy
Supply-Side Explanations
Factors that differentially affect supply of lower-skilled workers, affecting the
composition of applicants within occupations and their relative value.
• Increased supply of labor (e.g. number of applicants)
• Changing composition of the workforce (e.g. quality of applicants)
Employer Demand

27. Anecdotal reports suggest that employers may respond to labor
market slack by opportunistically raising their skill requirements.
Employer Demand

28. Anecdotal reports suggest that employers may respond to labor market slack by
raising their skill requirements.
“I’m seeing more high-quality applicants. These days the group doesn’t narrow itself
down… I’m left with far more high-quality candidates than I can interview.”
– Alison Green, hiring manager at non-profit lobbying organization.
Employer Demand

29. “I’m seeing more high-quality applicants. These days the group doesn’t narrow itself
down… I’m left with far more high-quality candidates than I can interview.”
– Alison Green, hiring manager at non-profit lobbying organization.
“When I started recruiting in ‘06, you didn’t need a college degree, but there weren’t
that many candidates. When you get 800 resumes for every job ad, you need to weed
them out somehow.”
– Suzanne Manzagol, recruiter for administrative positions in Atlanta.
Anecdotal reports suggest that employers may respond to labor market slack by
raising their skill requirements.
Employer Demand

30. “I’m seeing more high-quality applicants. These days the group doesn’t narrow itself
down… I’m left with far more high-quality candidates than I can interview.”
– Alison Green, hiring manager at non-profit lobbying organization.
“When I started recruiting in ‘06, you didn’t need a college degree, but there weren’t
that many candidates. When you get 800 resumes for every job ad, you need to weed
them out somehow.”
– Suzanne Manzagol, recruiter for administrative positions in Atlanta.
“The recession is a wonderful opportunity to acquire top talent.”
– Barry Deutsch, chief executive of Impact Hiring Solutions
Anecdotal reports suggest that employers may respond to labor market slack by
raising their skill requirements.
Employer Demand

31. We explore this mechanism using a novel data set of online job vacancy postings
from Burning Glass Technologies (BGT).
Medical Records Coder
Medical Records Coding is responsible for managing and coordinating the
medical records staff involved in coding and abstracting diagnosis, treatments
and other information from patient records. The manager is the primary coding
and documentation consultant, and an ongoing resource to the leadership,
physicians, non physician providers, and the Compliance department.
Job Requirements
• Must be certified as an AHIMA Certified Coding Specialist (CCS).
• Bachelors’ degree in Medical Record Technology, Health Services
Administration, Nursing or Finance/Business.
• Five years coding experience.
• Thorough knowledge of coding practices and official guidelines, HCPCS, ICD
and CPT codes.
• Experience using electronic medical record/health record systems such as
Cerner, EPIC or other comparable systems desired.
• Demonstrated auditing skills for coding quality and compliance.
• Strong interpersonal and analytical skills.
Employer Demand

32. In some cases, the change in the share of employers requiring a BA was quite
substantial during this period.
Employer Demand
Occupation Share Requiring/
Preferring a B.A.
PP Change
2007 2012 2007-12
Commercial And Industrial Designers 50.7 88.7 38.0
Fashion Designers 14.6 51.3 36.7
Business Operations Specialists, All Other 37.8 73.2 35.4
Purchasing Agents, Except Wholesale, Retail, And Farm Products 36.2 70.7 34.5
Industrial Production Managers 40.9 74.6 33.7
General And Operations Managers 31.5 65.1 33.7
Administrative Services Managers 32.9 65.5 32.7
First-Line Supervisors/Managers Of Office And Administrative Support
Workers 22.8 49.2 26.4
Preschool Teachers, Except Special Education 13.8 39.4 25.5
Paralegals And Legal Assistants 21.6 46.4 24.8
Medical Records And Health Information Technicians 14.9 39.0 24.1
Change in Employer Requirements for “Top” Middle-Skill Occupations
Within Occupations, 2007–2012

33. Our research shows a positive relationship between the change in the state unemployment
rate and the share of jobs requiring a Bachelor’s Degree or 2+ years of experience.
-5
05
1015
-5 0 5 10
P.P. Change in State Unemployment Rate
Requested Educational Qualifications
Employer Demand
-5
05
1015
P.P.ChangeinShareofPostingsReq.2+YearsExperience
-5 0 5 10
P.P. Change in State Unemployment Rate
Requested Experience Qualifications

34. Why does upskilling occur? During a recession, the college wage premium for newly hired
workers decreases so employers can essentially hire college educated workers “on the cheap.”
The College Wage Premium and the Unemployment Rate Over Time
Source: CPS Matched Monthly Sample, Federal Reserve Bank of Boston analysis of monthly CPS Data, 2000-2013.
Employer Demand

35. Our results suggest two key implications for labor market policy going forward.
The demand for skilled workers is perhaps more dynamic and responsive to labor market
conditions than previously thought.
This finding suggests the need for worker training and education programs to be
increasingly targeted and nimble.
Re-evaluation of the Workforce Investment Act
Some states are re-designing their worker training and education programs.
One possibility is to make greater use of real-time labor market information contained in
online job postings to be able to:
Help unemployed workers search more efficiently
Provide guidance to individuals when selecting a training program or field of study
Assist administrators when designing programs at colleges and other institutions that aim to
train workers to meet employer demands.
Employer Demand

36. Thank You!