This document provides an overview of the current state of the Massachusetts economy and identifies several long-term challenges. It notes that while the state's economic expansion compares favorably to the national growth, conditions remain difficult for some groups. It also discusses how technology and globalization are changing business models and the relationship between investment, employment, and market value. The document concludes by outlining challenges such as the achievement gap, infrastructure issues, housing costs, energy prices, and climate change that could impede long-term economic growth in Massachusetts if not addressed.

1. Michael D. Goodman, Ph.D.
Executive Director, the Public Policy Center (PPC)
Associate Professor of Public Policy
University of Massachusetts Dartmouth
Co-Editor, MassBenchmarks
http://www.umassd.edu/ppc
Twitter: @Mike_Goodman
June 21, 2016
The State of the State Economy:
Meeting the Challenges Presented by an “Age of Disruption”

2. The Commonwealth is in the midst of its most
sustained economic expansion this century
3,537.4
3,395.1

3. Recent state economic growth compares favorably to the U.S.
US Growth in
Q1 was recently
revised to 0.8

4. The state jobs expansion has been broad-based of late but
has largely benefitted the highly educated and skilled

5. Conditions remain difficult for the young,
the poorly educated, and the long-term unemployed

6. The returns to education and skill are rising and those
without them are increasingly being left behind
Source: Autor, 2014

7. Greater Boston has been leading a regionally
imbalanced state recovery and expansion
Source: MA Executive Office of Labor and Workforce Development

8. The Massachusetts Innovation economy is
fueled by world class talent…
Source: 2015/2016 Index of the Innovation
Economy, John Adams Innovation Institute

9. … and billions in private and public investment in
research and development & new ventures
Source: 2015/2016 Index of the Innovation Economy,
John Adams Innovation Institute

10. Labor Force Participation remains low for both
structural and cyclical reasons
Source: Jason Furman, Chair, President’s Council of Economic Advisors (CEA)
Structural:
•The aging workforce is
putting significant
downward pressure on
participation. Female
participation has been
trending down for nearly
two decades.
Cyclical:
•The lingering impact of
the Great Recession
continues to disparately
affect the long-term
unemployed, and
younger and lower-skilled
workers.

11. Conditions in the slow growing global economy are weighing
heavily on our economic outlook
China is undergoing a necessary but painful
transition from a manufacturing to a service economy
Which helps to explain recent dramatic declines in
commodity prices and the serious problems facing
natural resource dependent economies around the
world
Source: The Financial Times

12. • Our aging population is
driving a declining rate of
labor force growth, which
can be expected to
significantly reduce job
growth in coming years.
• Better alignment of our
K-12/Voke and community
college systems with
employer needs is needed.
• Our major competitive
advantage remains the
education, skills, and
“yankee ingenuity”of
our residents.
Source: New England Economic Partnership (NEEP)
The near-term economic outlook for Massachusetts
is for continued growth but demographic challenges loom
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
2011 2012 2013 2014 2015 2016 2017 2018
Total Employment, Percent Growth from Prior Year
Source: Moody's Analytics (US), NEEP (MA)
MA
US

13. Business investment has been weak and is increasingly in
intellectual property rather than “bricks and mortar”

14. Source: http://qz.com/462605/amazon-is-now-bigger-than-walmart/
Technology and globalization are changing the relationship
between investment, employment, and market value

15. Geopolitical conflicts, economic instability, and climate change
represent large downside risks to the world economy
Source: Pew Research Center

16. Long-term impediment to economic growth:
The Urban K-12 Achievement Gap
Source: Massachusetts Department of Higher Education
Cohort: Massachusetts public high school students who were first-time 9th graders in 2002-03 academic year and/or who graduated
high school in 2006. Source: Massachusetts Department of Elementary and Secondary Education, End-of-Year SIMS and Edwin
Analytics (National Student Clearinghouse Data).

17. Long-term impediment to economic growth:
Inadequate Transportation Infrastructure
Source: Massachusetts Department of Transportation
Nobody rides for free

18. Long-term impediment to economic growth:
Inadequate Housing Production
Source: Us Census Bureau; Federal Reserve Bank of St. Louis

19. Long-term impediment to economic growth:
Uncompetitive energy costs
• Our growing reliance on
natural gas as the fuel for
electricity generation is
straining our pipeline/LNG
infrastructure
• Expected retirements of
plants in Salem Harbor,
Brayton Point, Vermont
Yankee, and Pilgrim Nuclear
will exacerbate system
capacity issues.
• Solutions should consider
impacts on emerging
domestic renewable energy
sectors (offshore wind and
solar in particular).

20. Long-term impediment to economic growth:
Climate Change/Sea Level Rise
Scituate, MA, Winter Storm 2015

21. Panel Discussion:
Designing the Future in an Age of Disruption
1.The relationship between employer and employee is changing
• The rise in contingent labor arrangements (e.g., the “gig economy”)
raises serious questions about the adequacy of programs/benefits
that rely on employer participation and payroll employment.
2. Public and private organizations frequently struggle to adapt to “disruptive”
technological developments
• Our medical devices can now seamlessly communicate with each other
yet, our health care providers still have a hard time doing so.
• Technological developments are increasing demands for regulatory
compliance, and raising security and privacy concerns (especially in
regulated industries).
• Our regulatory systems are frequently insufficiently nimble to keep pace
with contemporary developments (e.g., driverless vehicles, ridesharing).

22. Our distinguished panelists:
Sarah Biller, Chief Operating Officer for Innovation/Head
of Innovation Ventures, State Street Global Exchange
Jim Noga, Vice President & CIO, Partners HealthCare
Tom Ryden, Executive Director, MassRobotics
Brian Tilzer, Senior Vice President and Chief Digital
Officer, CVS Health
Cathy Zhou, General Manager, Uber Boston

23. INSERT PANELIST SLIDES IN PROPER
SEQUENCE HERE AS NEEDED

24. Audience Q+A
Please use the microphone and introduce yourself
when asking a question