A Labor Day Thought: The Case For Reform in Massachusetts

Massachusetts is a high cost state to do business for one reason–government.  

Regulation drives up the cost and hassle of stating a new business.

Land use regulation drives up the cost of housing, commercial rents, and the cost of living.

Labor market regulation drives up the cost to employ workers (and is not reflected in wages but in transactions costs like litigation costs).

Union contracts and procurement regulations drive up the cost of public services and the cost of public construction.

And it is killing the Massachusetts economy.

Today’s Boston Globe notes that among all states, Massachusetts ranks fourth in the nation in the proportion of jobs that are lost that are permanent job losses.  Jobs that won’t come back after the recession.  http://www.boston.com/business…

The only other states that are in worse shape were places where the home construction bubble got out of control.

“It’s not just lose a job, go find another one,” said John Silvia, chief economist at Wells Fargo & Co. in Charlotte, N.C. “The old jobs and the old locations are not coming back. That’s not going to be solved by a stimulus program.”

Nearly 52 percent of the nation’s unemployed have lost jobs permanently, either through layoffs or the end of temporary assignments, according to the Center for Labor Market Studies. That’s the largest share since the Labor Department began tracking that segment in 1994. US employers have slashed nearly 6 million jobs over the past year, while the national unemployment rate has jumped 3.5 percentage points.

In Massachusetts, nearly 60 percent of the unemployed have suffered permanent job losses, the fourth-highest percentage among the 50 states, according to the center. Only Florida, Nevada, and Arizona have higher shares in that category.

High costs have historically made Massachusetts vulnerable to permanent job losses, particularly as technologies mature and products can be produced in less costly areas, encouraging companies to shift jobs elsewhere. The cycle has been repeated among industries from textiles to shoes to software, and has accelerated during economic downturns.


The case for reform has never been stronger than it is today.  


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