Recent Performance of the Massachusetts Economy

(The Governor’s top economic team member discusses the state of the Massachusetts Economy.   – promoted by Rob “EaBo Clipper” Eno)

There were a couple of posts last week about the growth of the Massachusetts economy. The posts, and the comments on them, suggested that the statistics were all over the place and did not tell a consistent story. In fact, putting aside for a minute the reasons behind our economic performance, the numbers from various sources do tell a very consistent story:

1. The state’s employment and GDP growth from 2000 to 2006 were among the worst in the nation, compared to other states.

2. The state’s employment and GDP growth from 2007 to date have been among the best in the nation, compared to other states.

3. Our economy’s recent performance has not yet been enough to offset our economy’s earlier poor performance, so our numbers for the last decade as a whole are still not good.

The statistics on our economy’s performance in this major national/global recession are particularly noteworthy, since Massachusetts had performed relatively poorly in both of the last two major national/global recessions (1989-91 and 2001). Something very different is happening in our Massachusetts economy now.

There are a lot of great questions to discuss, such as whether our economy’s performance will continue to be relatively strong, compared to other states, and what are the reasons for its good recent performance. But the fact that the Massachusetts economy is now performing very differently should be the starting point for those discussions.

Note: I am the secretary of housing and economic development for the Commonwealth of Massachusetts.

About Greg Bialecki


  1. That’s what Romney left his successor, Patrick. How much do you suppose Patrick will leave his successor?

    Or is he running the government in a fiscal hole, spending cash to prop up cronies, unions and failed businnes, and presenting an illusion of growth.

  2. Mr. Bialecki:

    The below story clearly indicates that the Governor has different plans relative to crime in our “gateway” cities. It’s hard to argue that less crime increases home values and increases the ability and willingness of entrepreneurs to open and succeed in establishing businesses in those same “gateway” cities.

    Please help me understand the motivation and the secondary plan that the administration has in place to bring industry back to places like Lawrence. I choose Lawrence in my example simply because there is no greater example of a community that needs the kind of help that a robust and usefull program such as “Secure Communities” offers. Plus, I’m already paying to educate my kids, put out fires, and staff a police department in my community. Isn’t it about time we took advantage of the programs that are actually working?

    I look forward to your response.

    Massachusetts has become the latest state to reject DHS’s controversial Secure Communities program.

    On Monday, Massachusetts Governor Deval Patrick announced that he would not sign a memorandum of understanding to participate in the DHS program. Governor Patrick is the third governor to reject Secure Communities program in recent weeks. Under the program, the fingerprints of individuals apprehended by local law enforcement officials are automatically run through DHS and Department of Justice databases to verify their immigration status as well as their criminal record. But the program has drawn sharp criticism from opponents who say that it has been used by zealous immigration officials to deport large numbers of law-abiding undocumented aliens.


  3. the increase in the cost of healthcare in Massachusetts included in the “growth of the GDP” calculation?

    I will not that the traffic streaming in on Rt. 3 from NH seems to have increased in the 6am commute over the last 2 years.

  4. It is amazing to see the effort to blur the lines and try and convince everyone that Deval Patrick has had any success in this job market.  

    Let’s first look at the interesting time frame that Mr. Bialecki wants us to look at.  

    Number one he cites the years 2000-2006.

    Amazingly, in 2000 – Massachusetts had it’s lowest unemployment rate in history, 2.6% – let me repeat that, in the year 2000 the unemployment rate was 2.6% – best ever.  

    So – Mr. Bialecki takes that as the starting point, the historical peak – and then argues… everything’s going downhill since then…makes you wonder

    BUT more interesting he then stops at 2006 – when the unemployment rate was 4.7% – how terrible.

    He is trying to talk about ‘growth rates‘ instead of looking back and seeing, hey look at that, lots of people were actually working in the 2000’s, more people than today!  

    Correct me if I am wrong but according to the Labor and Workforce Development office in Jan 2007 when Deval took office, the total non-farm employment was 3,283 – yet the latest available month, April 2011 – shows total non-farm employment (both seasonally adjusted) at 3,228.  Am I wrong, but is it true that less people have jobs today, then 4 years ago??

    When Deval Patrick was sworn into office, the unemployment rate was 4.6%

    There are currently 21 – yes 21 states that have LOWER unemployment rates than Massachusetts.

    Arkansas has a lower unemployment rate – yet Mr. Bialecki thinks that’s a great job.  Today’s unemployment rate stands at around 8% – after Deval’s starting point at under 5%.  

    In my opinion Mr. Bialecki is trying to spread desperate  propaganda – with carefully selected dates to confuse the public, to cover up the failed record of Deval Patrick.

  5. Thanks for this great posting! I just complete reading this  recent performance of the massachusetts economy. Thanks!  

  6. Start with some throat-clearing: Greg is a great guy.  He really is.  Now some facts:

    Taking credit for sudden economic success upon stepping foot into office is, well, political, and that’s cool from the governor’s appointee.  But is it true?  Start with: Why would it be true? What would generate that success?  Has time to permitting gone down for state agencies?  There is no evidence of that.  No.  Have housing regulations changed in any substantial way?  No.  Has the emphasis on giving special incentives to “sweet-spot” industries created more than a few thousand jobs?  No.  Have business fees gone down?  No, they’ve gone up.  Credit goes to the Patrick administration and legislative leaders for slowly lowering the corporate tax rate, though that comes with other changes that increased costs for businesses on the tax front.  And then there is the sales tax, which went up by 25%.  Greg: That’s not a great encouragement for businesses.

    Then on whether something different is occurring under Governor Patrick, consider this: Governor Patrick came into office with the economy already growing jobs at a strong clip.  In Romney’s last year, 34,000 jobs were created.  In Governor Patrick’s first year (2007) until the start of the recession (December 2007), 21,000 jobs were created.  What I find a little troubling is that Greg is claiming that something totally different is happening in the past 4 ½ years-years during which, as BLS notes, Massachusetts has lost 42,000 jobs.  Please don’t call that a victory.

    The fact is there is evidence that we are losing opportunities.  Look, NH is not doing as well as some would like to say (it too has lost 14,000 jobs since 2007, after gaining 30,000 between 2003 and 2006).  But in 2003, the Massachusetts unemployment rate was 0.8% higher than NH’s; it is about 3 times that amount today.  Regionally, we are outcompeting some troubled New England states; but when it comes to a lower cost state like NH, the gap is widening in terms of where they are and where we are.

    If it’s not fair for Greg to give the governor credit for substantially changing our economic direction, it’s similarly unfair to fault him for single-handedly cratering the economy.  At Pioneer we are taking a look at the longer term, because right before our eyes over the past two decades, something different did happen-and it is not good.  The number of headquarters in MA has collapsed by 33% (16,000 to 11,000) since 1990.  The average size of accompany in MA has dropped 40% (16 to under 10 employees per firm).  Young firm creation is down.  

    And meanwhile the state agencies continue the same old, same old policies of picking winners and seeking to relocate companies here.  On that latter point, to show you how off-base the policy is, consider this: Only 2% of job growth in any one year over the past two decades has been through relocation.

    You can check out the facts about “Massachusetts’ New Economy” here: http://www.pioneerinstitute.or

    Is all of this Governor Patrick’s fault?  Nope.  But while the blame game on the all-important issue of jobs and business growth is tired, Governor Patrick hasn’t shown serious leadership, which starts with recognizing the depth of the challenge before us.  Greg’s post is, frankly, just spinning.  Try to get your arms around his “facts” and all you’ll end up is dizzy.

  7. The state’s employment and GDP growth from 2000 to 2006 were among the worst in the nation, compared to other states…[meanwhile] The state’s employment and GDP growth from 2007 to date have been among the best in the nation, compared to other states.

    A tough conclusion to suggest that 2000-2006 were bad and 2007 good, when:

    Employed in 1/2000: 3,274,000

    Employed in 12/2006: 3,281,300

    Employed in 12/2010: 3,208,300

    Employed most recently stats: 3,228,000

    To take away the big picture: fewer people are working today compared to over 10 years ago.

    Respectfully?  Dispense with the ‘compared to other state’ bullshit:  Are you really having good recent performance if someone in California is up to his neck and you, are only up to your chest?

    And regarding the back-slapping recent good performance, the jobs numbers (keep in mind we’re still below the 2000 level of employment) are merely, ok, when compared to other states:  better than average but hardly leading the way.

  8. Thank you Secretary Bialecki for initiating a discussion about the state of Massachusetts’ economy.  Massachusetts’ relative outperformance is due to several factors, some of which may not be sustainable.  Contributing factors include a less severe real estate recession, a relatively stable healthcare industry, and weak dollar induced exports.  Having said all that, nothing the Patrick Administration has done has supported Massachusetts’ performance.  Instead, overbearing regulation and higher taxes have impeded true progress.  Employment gains in the Commonwealth are essentially non-existent over the last decade.

    Taxes were raised in 2002 and again in 2009 because our state government refuses to live within its means. Governor Patrick has publicly mused about imposing a graduated state income tax. Why would an entrepreneur establish a business in Massachusetts after the capital gains tax was raised from ZERO for 6+ year gains in 2002 to 5.3%, while New Hampshire has no income or capital gains taxes?  With the widening of Rte 3 from Burlington to Nashua, such entrepreneur can start a business in New Hampshire, travel easily into Massachusetts to visit customers, and return home to a state with no income taxes on his employees. While income from Massachusetts sources will be taxed, the capital value of the business will grow in New Hampshire and will be tax-free when it’s sold someday.

    For those entrepreneurs already established here, Massachusetts’ onerous estate tax will drive them out eventually to lower tax locales.

    The 2009 sales tax increase, beyond raising the tax burden on all Massachusetts families, widened the zone along the border that is now incentivized to shop in New Hampshire.

    Regulation — some examples worth noting. Municipal construction project costs are elevated due to state mandated prevailing wage laws, thereby burdening local propery taxpayers.  Building codes: ever increasing requirements drive up construction costs, thereby elevating housing costs. Health insurance: regulation restricts the type of policies the remaining insurance carriers can offer: one can’t purchase a catastrophic care policy customized to individual circumstance; benefit mandates require citizens to buy coverage for services they may not want.  

    Green energy mandates drive up the already near-highest power costs in the nation.  When the price of conventional fuels are high enough, the private sector will adopt the then competitive fuel sources.  

    Solutions: The Patrick Administration should adopt pro-growth economic policies that include aggressive tax reduction along with a less bloated, less intrusive state government. Studies show that states with the  lowest tax burdens outperform economically.  Politicians and bureaucrats can’t pick winners and losers among companies or even industries — eg Evergreen Solar.  Reduce taxes on investment capital, and let the private sector take the risks with its own funds.  New industries emerge out of seeming nowhere (e.g. social media). We deserve a state known for creating a business  environment that encourages risk taking, not a state famous for egregious patronage hiring.  Cut personal and corporate income taxes and then go and recruit businesses from New York, New Jersey and elsewhere to move here.

  9. There is a simple explanation for the trends cited by Secretary Bailecki.  National economic developments have a differential impact on different regions of the country.

    The recession of the early part of the decade was due to the bursting of the internet/telecommunications/media bubble.  Massachusetts was a big player in internet content and telecommunications equipment companies.  Hence, employment levels in the state were crushed when the bubble burst.  That accounts for the poor performance over 2000-2006.

    Massachusetts did not have a large residential construction sector nor does it have large numbers of manufacturers that produce household goods.  When the housing bubble burst in 2007-present, it had relatively less impact on Massachusetts than other places.  In Florida, much of the economy was dependent on demand from inflows of people from other regions of the country.

    Employers do not make expansion decisions based on short run considerations.  Taking credit for short term swings is the stuff of politicians.  Long term, businesses look for:

    – Low commercial electricity rates

    – Low cost commercial space

    – Right to work state

    – Light regulatory environment

    – Low commercial property tax rates/low corporate income tax rates

    Massachusetts ranks low on every one of these metrics.

  10. In doing some research for the Gubernatorial election, I admittedly came to similar conclusions as Greg. And I appreciate how he presented the data – these are the facts, let’s agree on that first bfore we analyze.

    The fact of the matter is, Massachusetts did perform better than most through the downturn.

    The key part here is the analysis of why, and really, how to keep improving. If we want to look purely at data, and then draw conclusions – we should talk about Texas, and how it simply dominates in terms of job creation. No income tax. And great tort reform. If we lowered (or eliminated) the income tax here, our growth would be incredible. The numbers don’t lie, there is a tremendous correlation between tax rates/structure, and economic growth/job creation. Massachusetts actually is one of the few with a flat tax (which is great), and relative to its Northeastern peers, it is generally a low rate. This is why Massachusetts can outperform. Period.

    By the way, the other numbers that don’t lie are healthcare costs. MA costs are growing faster than anywhere in the country. We have RomneyCare. Want costs to fall? Repeal RomneyCare…

  11. I was mostly just observing that the data in the prior posts here, here and here are all consistent with each other and with the three statements in my post.

    We do our own internal analysis as well, but a third party validation of our relative employment performance through the recent recession and through the recovery is in the third and fourth graphs here.

    By the way, we consider employment growth the more important measure than GDP growth. Jobs is priority one.

  12. Is the Patrick administration committed to stopping the never ending patronage in MA and are you guys willing to commit to no more political appointments of folks like Tim Murray’s former campaign aid?

    BOSTON – The former director of Lt. Gov. Timothy Murray’s political committee has been hired to a new $105,000-a-year job in charge of coordinating the Patrick administration’s “Gateway Cities” agenda.

    A day after it was announced that Jennifer Murphy of Wilbraham would be leaving as director of the Citizens Committee to Elect Tim Murray, Secretary of Housing and Economic Development Greg Bialecki introduced Murphy as the state’s new assistant secretary for gateway cities initiatives.

    The job, newly created within the Patrick administration for Murphy, will pay a salary of $105,000 and involve “work across the eight cabinet secretariats to develop, coordinate and implement the Patrick-Murray Administration’s Gateway Cities agenda to best address the needs and fully maximize the potential of these twenty-four distinct municipalities,” according to Bialecki, who is traveling with Gov. Deval Patrick in Israel

    WORCESTER –  After being defeated in a special election last month, former state Rep. Geraldo Alicea has returned to his old job as a probation officer in Worcester Superior Court under an obscure state trial court policy known as “political leave.”

    Mr. Alicea, 49, a Democrat from Charlton, served in the House of Representatives from January 2007 until his defeat May 10 by Republican Peter J. Durant of Spencer in a hotly contested court-ordered election that followed a disputed election in November 2010.

    On Dec. 27, 2006, just before being sworn in to his first two-year term, Mr. Alicea took a leave of absence from his $65,000-per-year probation job.

    Of course to be fair, the Mass GOP plays the same game. State Committeeman and former State Legislators get tucked away nicely on bloated Sheriff’s payrolls.

  13. Vote3rdpartynow

    I can’t help but think this is another ‘the science is concluded – global warming is here’ type of moments.  Two of the three original links argue quite the opposite of what you propose and yet you suggest we are all in agreement that Massachusetts is red hot economically.  Arrgghhh!!

    You claim that the Massachusetts employment and GDP growth from 2007 to now is among the best – really?  This Bureau of Labor Statistics link here shows that there are currently (as of April 2011) 21 states with unemployment rates lower than Massachusetts.  That sounds like the middle of the pack!  

    From April 2010 to April 2011 the Unemployment rate in MA went from 8.6 to 7.8, which is a change of .8%.  The same BLS reports shows that 23 states produced an equal or greater reduction in unemployment rates over that same one year period.  So I just do not see, nor agree, that somehow Massachusetts is performing exceptionally well.

    If we are doing so well, then why did the entire AJ Wright retail operation go belly up a few months back?  TJX Cos are among the best managed organizations in MA and yet even they are suffering.  How about Evergreen Solar?  Even with $58M in state aid they were unable to compete in Deval Patrick’s favorite ’emerging green industry’.  How about the fact that at one time Putnam and Fidelity were giants in the investment and mutual funds industries.  Now they are a shell of their former selves, and find that they need to relocate in order to survive.  

    Now, you do have a point when it comes to GDP growth (See Tables 1-3) as Massachusetts has been in the top percentile, but that can be deceiving.  Overall GDP growth has gone up, but it is half as strong as the nation as a whole in the wholesale industry and less than the national average in the retail industry.  It seems most of our growth is coming from the communications industry and the healthcare and social assistance industries.  I hate to bring it up but Massachusetts actually had negative growth in the finance and insurance industry for 2009 – 2010 year.  

    And seeing as you are the Governor’s expert in housing and real estate, how is it that Boston and surrounding markets show such poor performance.   This June 2011 article titled ‘Greater Boston lands on list of “lowest performing major markets”. claims that the Boston real estate market is a “laggard”.

    Nationally, prices fell 2.3 percent, on a quarterly basis, in May, less than half of April’s 4.9 percent drop.

    By contrast, the Boston area home prices fell 4.1 percent in May, landing it on a list of laggards topped by the likes of Detroit, Hartford and Cleveland.

    Now that’s quite a turnaround

    So our real estate market is now comparable to cities such as Detroit, and Cleveland?  Is this really a point to celebrate?  

    One last thing, where do I sign up to get that property tax relief that Governor Deval Patrick promised?  Is there a telephone number I should be calling?  

    As a footnote, I admire your willingness to come here and engage in some dialogue, and share your thoughts…  

  14. My main point is that there is value in establishing as best we can what the relevant facts are. I believe the three statements I made are well supported by the available facts. Whether or not Massachusetts is “red hot economically” (your words, not mine) is a matter of opinion, so folks can agree or not. But it helps the discussion to agree on the facts.

    Which brings us to your good point about the unemployment rate. The employment data tell us how many jobs there are in the state. The unemployment data tell us how many people are still looking for work.

    We think the better measure of our success is the employment data: is our economy adding jobs? We think a lower unemployment rate is not necessarily the best measure of economic success. The unemployment rate may go down because people stop looking for work or retire or because people leave the state (this has been a problem for Massachusetts). We obviously do want the unemployment rate to go down (as it has been doing), but we believe that if our economy keeps adding jobs, then it will do so.

  15. post I linked to BLS data that shows we have more unemployed now than we did at this time 2 years ago. It is a very relevant fact that unemployment numbers include those who have given up looking for work. That means they can’t find a job. If our economy is adding jobs at a slower rate than the number of people looking for work then that is a sign of a poor economy. We’ve got companies moving jobs out of MA as fast as they can. Companies that have been here for decades. They must know something you don’t.

  16. Vote3rdpartynow

    I think we should also agree on the types of jobs that are being created.  For example – if a stock broker earning $250K per year loses his job, and a retail sales clerk gains a job earning $25K per year the local employment data does not change.  But in fact, the local economy has actually lost 90% of the $250K in spending.  

    I know over the last 4 to 5 years the Governor has worked to attract bio technology and pharmaceutical jobs to Massachusetts.  At one point, many of the local biotech companies couldn’t find enough trained persons to fill the available jobs, and as a result the companies had to hire from outside the area.  In the meantime, many resident unemployed retail and wholesale executives were losing their houses to foreclosure.  It seems hardly logical to promote one industry so heavily that there is a shortage of workers, while at the same time allowing other industries to rot on the vine.  This is what happens when the government is allowed to try and pick favorites.  I think a better idea is to have government step back and let the market determine for itself the right mix of industries and workers.

    There are so many nuances to the employment/unemployment data that the state government can not possibly bring about jobs growth in any kind of organized fashion.  For every job it helps create in one sector it forces another job out somewhere else.  If the government let the market grow where it wanted there would be greater balance to the scope of industry in Massachusetts.  So perhaps we agree that there needs to be some agreed upon measures of relative economic success, but knowing what the government should/shouldn’t do is important too.

    We need to cut the sales tax in order to help local retailers get their people back to work.  You see, for every executive job in retail you create you help eliminate one foreclosure.  For every job in big-pharma you create you add one more nationwide search for a position that will likely go unfilled for a year or two.

  17. The facts are that we are adding jobs faster than the rest of the country. More companies are adding jobs here than are moving them out. (It is true that you will likely read more about those moving out than you will about the ones growing here.)

  18. …in different industries, at different skill and income levels and in different regions of the state. We have been working to do that by lowering the corporate income tax for all MA businesses, lowering health care costs for small businesses of all kinds, etc.

  19. They say that he has run a tight ship during the downturn.

  20. Governor Patrick has been the best partner that our gateway cities, including Lawrence, have had in many years. That includes housing, economic development, education and public safety. Anyone involved with those cities would tell you that. He understands what those communities need and what will help them succeed.

  21. Tens of millions of dollars into Lawrence in new funding from RTTT and chapter 70 with little or no oversight. Patronage, watse, and indictments and Deval somehow is a “good partner?” How about an enabler? The suburbs, the place where the revenue actually comes from, gets squat.

    You didn’t respond to the Secure Communities question, but that’s how the Patrick Administration does things.  

  22. I say that seriously, as it is not often that we get a chance to dialogue with senior members of the Patrick administration.  Thank you for coming here and speaking candidly with us.

    So, what exactly is the Patrick administration doing to lower health care costs for small businesses and what are the results thus far?  As someone that can only find work 30 hours per week on a contract basis, and therefore forced to pay for his own family’s health insurance on my own – I am very interested.  

  23. How about having a talk with the DOR on aggressive sales tax audits of what few manufacturers are left in Massachusetts.

    My business results, 10K in accounting fees, $800.00 to the state and an auditor wasting my staffs time for 2+ weeks. Even the $800.00 was wrong but we just gave up.

  24. The Massachusetts Unitary Tax filing rule, when you have mutiple corporations in multiple states is even MORE unfriendly than before(friendly towards my accounting bill though), and also, the length of operating losses (5 years in Mass) carry forwards should match the Federal length (like 15-20 years), and 5 years does not give Mass businesses enough time to recover them.

    Lowering the tax rate is great, but let me use the hundred of thousands of NOL’s I’ve accumulated by investing and staying in Massachusetts the last 5 years too!

  25. One of the biggest problems with the DOR is training. They frankly don’t know what they are doing in many instances.  

  26. The state commissioner of insurance does have some regulatory authority over the health care premiums charged to individuals and small businesses. He used that authority last year to keep most rate increases to single digits. That may not sound like a big deal when most other prices and wages are flat, but it was in fact a big difference from the rates the insurers proposed to charge.

    A law passed last summer made some additional helpful changes, including allowing small businesses and individuals to get together to do group purchasing of insurance (which, interestingly, was not legal in MA before that new law). We hope and expect that this new group buying power will help a bit more.

    Governor Patrick has also filed a bill this year to move the health care system towards global payments (doctors and hospitals get paid to take care of patients, not just for how many treatments and procedures they perform) and to give the commisioner of insurance further regulatory authority to control cost increases.

  27. In the economic development legislation Governor Patrick signed last summer, net operating losses can now be carried forward 20 years in Massachusetts. Doesn’t help with your losses incurred prior to 2010, though.

    This is the kind of progress we are making in improving the overall business climate that is not getting much attention. One of the reasons I am posting here.

  28. Maybe because they audit so few manufacturers left in Massachusetts. Our records are really good, on 10M of audit purchases $800.00 is a .08% error rate.  But the 10K could have gone to my staff, helped with health insurance or advertising, instead it went to my accountant :(

  29. Please answer the question that I raised relative to Secure Communities.  

  30. Sadly, I had over $2MM in losses expire when I filed my corporate taxes this year.  I could have used those losses to create a much better proforma as I go to banks over the next year to TRY to borrow over $15MM to invest in my Worcester company.  All these ‘little’ regulatory stuff (huge elevator costs(inspectors, yearly maintenance, yearly mandated fix/repairs/upgrades at $150/hour to elevator company), electricity costs(top 5 in nation thanks to ‘green’ mandates), HUGE property tax rates in Worcester) make it much more difficult to create a positive proforma that will encourage me (and the banks) to lend.

    Instead, just waiting on the sidelines until Massachusetts really shows reform.  Some legal reform (triple damages if I mess up a payroll by accident?!?, and pass the ‘loser pays’ Texas bill to stop wasting time, money, resources on nuisance lawsuits.  That will help business!

    PS – Please push to match the state estate limits with the Federal Limits.  At this stage, I might just move (and take my wealth) down to Texas to avoid filing since I’m between the $1MM (state), and $5M (Federal)  Very hard for small, successful small businesses to pass on.

  31. The GDP calculations referred to above do include adjustments for inflation, so that if costs increased but “real” output did not, then the GDP growth would be 0%. So the positive numbers being reported for Massachusetts appear to reflect real growth, not just price increases.

  32. http://workforcesecurity.dolet

    (jump to page 10 on the PDFs that download)

    At the end of Q1 2009 total unemployed was at 297,000.

    AT the end of Q1 2011 total unemployed was at 299,600.

    Just exactly how is that adding jobs?

  33. Rob "EaBo Clipper" Eno

    Will drive costs up.  Hospitals and practices will not compete on quality of care, just to get the most number of payments.  This scheme is eerily similar to the one set up by Wesley Mouch in Atlas Shrugged.  This is not going to work, basic economics tells you it won’t.  

  34. more regulatory control. How about fewer mandates? I have  3 kids and don’t plan on having any more, so fertility was/is not a problem for either me or my wife. And yet our insurance HAS to cover those procedures. Which we end up paying for in higher premiums. There are probably hundreds of other instances of this, all driving the cost of insurance up. Every specialty wants their procedure covered. And lawmakers continue to tack on the mandatory elements of what qualifies as “basic” insurance. Comprehensive insurance is not basic.

    So yeah, we get to regulate increases in insurance costs that are mandated to be high. And now you’re hoping we get an unelected bureaucrat to gain further regulatory control over costs? That’s called rationing.

    What is it about you guys that you can’t understand free markets? You regulate everything into higher costs instead of letting consumers drive prices by purchasing decisions. Instead of making everyone pay higher prices why not let those who want or need comprehensive coverage pay for it?

    Guess what medical profession lobbies the least. Veterinary services. Why? Because they’re not regulated to death. And guess what, folks who want that $3,000 surgery for Fido pay it. And I don’t have to subsidize it with inflated charges if I choose not to.

  35. What I am really trying to do is to create a reasonable context for the question: How is the Massachusetts economy doing?

    For a lot of people (including, apparently, a lot of people on this blog), the answer is a simple one. The number of jobs is down versus four years ago and the unemployment rate is up. Therefore, the Massachusetts economy is not doing well.

    I cannot disagree with those basic facts (jobs down, unemployment up). But where I do disagree is when people take these basic facts and use them to make public policy conclusions (e.g., Massachusetts has a bad business climate).

    We have gone through a major national/global recession, the worst most people can remember. For almost every state in the country, jobs are down and unemployment is up.

    I am proposing that the appropriate context for a public policy discussion, therefore, is the question: How is the Massachusetts economy doing compared to other states? And I am also proposing that the available facts lead to the conclustion that the Massachusetts economy did worse than the rest of the country through 2006 or so (whether you start from 2000 or 2001, the rankings are about the same) and has been doing relatively better than the rest of the country since then to date.

    We should be looking at why that it so and how we can best keep it going.

  36. Won’t Secure Communities grow faster economically? I say yes!

  37. Massachusetts did ‘better’ though this economic collapse because the rest of the country was devastated by the housing collapse, brought on by massive foreclosures caused by the subprime industry.  That is proper context, its like you don’t even think the housing market matters.  

    Places like Florida, Arizona, Detroit, and Southern California, have been killed by foreclosures – with literally lines of people that can fill stadiums looking to get their houses back or modify their loans, all because of predatory and subprime lenders, like…. Ameriquest.  

    Places like Massachusetts was hurt, but not NEARLY as bad by the housing crunch as those other places.  That’s for a host of reasons, housing is more stable historically here, less investment properties, higher incomes prior to 2006.  

    Yes, Massachusetts is doing better than Florida, Nevada and Southern California – RealtyTrac said that in 2009 alone there were 3.9 million – let me repeat 3.9 million foreclosures – in 2009 alone.  MA was always near the bottom of that list, all the New England states were, it’s the nature of living in an ‘old’ part of the country.  

    Don’t you think foreclosures have something to do with struggling states elsewhere?  Its tough to rebuild an economy in Nevada when you have food lines and families displaced left and right.  That doesn’t make Massachusetts ‘great’ it may make Massachusetts ‘better than that’, but not great.  

    I say ironically because your boss was a top executive at the worlds largest subprime lender, Argent and Ameriquest – and yet he’s never addressed what happened.  Ameriquest sold those subprime loans to Lehman Brothers, do you know what happened next?

    I can’t say I’m happy with Deval’s private sector track record leading up to 2007.      

  38. Because they self insure and are subject to federal guidelines, not the state.  While your and my BC/BS must cover In vitro fertilisation (IVF) BofA or Microsoft isn’t required to.

    Also someone in their infinite health care wisdom merged the individual market with the small business market.

  39. Jim, I was very careful not to take credit for any of the data I was describing. I am talking about the performance of the Massachustts economy, not about the performance of Governor Patrick. If you think the data show that our economy started to out-perform the nation earlier than 2007, I am all ears.

    I was also careful not to “call that a victory.” Times continue to be tough. I am, however, trying to promote a discussion of our economic development policies that is grounded in the facts of our state’s economic performance, in particular, our relative economic performance compared to other states. Did Massachusetts weather this national recession much better than the two previous ones? I think we ought to ask that question, and then ask (if so) how and why.

    I know that (deep down) you agree with this, too. In fact, in your fourth through seventh paragraphs, your focus is in exactly the right place. Let’s have a substantive discussion on these points. Is NH really the state we want to compare ourselves to? Should we be spending any time and effort on seeking to relocate companies here? (By the way, Jim, I think you have misunderstood our policies in that regard. Name me one out-of-state company that we have sought to relocate here.)

    So let’s all agree have a fact-based discussion of what it working and what is not in the Massachusetts economy (and how we measure our success). We will “recognize the depth of the challenge before us” if you will keep your mind open to the possibility that some things are going well here.

  40. Isn’t that a reasonable way to assess our performance, even on the downside? How many more people would be unemployed if our unemployment rate equalled the national average? Seems relevant to me.

  41. In an economic recovery, you can be adding jobs, but the number of people who start (or re-start) looking for work can grow faster than the number of jobs. So you can have both more jobs and more people looking for work. That’s pretty typical for a recovery actually.

  42. What is the question?

    Do we care about public safety in the gateway cities? yes

    Do we think that public safety is important to economic developmnent in the gateway cities? yea

    Do we think that “secure communities” advances the cause of public safety in the gateway cities? we have concerns about that

    Do we think that “secure communities” could have a negative effect on public safety in the gatewsy cities? we have concerns about that

  43. No question, the relative strength of our regional housing market and (I think correspondingly) of our local banks is one of the key factors in our relatively good performance this time around. As well as the fact that the state itself is in fiscally sound shape, I might add.

  44. We have unfunded pension and retiree health insurance costs in the billions. The reserve fund is empty and the sate is facing a $2 billion funding shortfall for FY12. Oh and according to this study the biggest fiscal problem for Massachusetts is debt, which equals more than a quarter of personal income.

    What planet are you on? Do you have to drink kool-aid every day just to function up there? You’re delusional.  

  45. And what makes us so special that we have concerns that other states have dismissed?

  46. guessing that output in the healthcare industry is difficult to measure, being a service…and that much of the increase in GDP is because health costs have gone up immensely.  Sure…more “services” may be tendered overall, but are healthcare services really the growth we want?

  47. Vote3rdpartynow

    Myself included..

    I hate to say your argument is a bit subjective.  If you want to paint a very rosey picture then we could imagine how many people would be out of work if our unemployment rate rate was that of Nevada (12.5%).  Heck, imagine if we were Haiti?  

    I think what is more relative is the recent prior unemployment rate.  Massachusetts Unemployment Rate isn’t bad, but relative to where we were just a couple years ago it is not so good.  Rates elsewhere don;t matter.  But your point is well taken.

  48. But, Greg, by referencing the starting point of 2007, you are indeed trying to take credit for an illusory “different” path.  If we are outperforming “the nation” since 2007 or 2006, and that outperformance is a loss of jobs, I’m sorry, I am not interested a conversation about “success.”  There has to be a sense of urgency on this — and that means comparing ourselves to states that have created jobs.  If you want to compare, then compare to TX, which has created 40 percent of the jobs in this country since the recession started and has created 732,000 jobs since 2001.  Meanwhile we as a state have lost 142,000 (around 100,000 from 2001-2006 and 42,000 since 2007).  

    I agree deep down (and on the surface as well) with working from facts, but let’s not cherry pick numbers.  We are on very much the same trajectory we’ve been on for the decade.  And it is not good news.  After 2001, the rest of the country created millions of jobs.  We’ve lost jobs.  

    On measures of success, with hundreds of thousands of people out of work, I’ll settle for a one simple metric: private sector job creation.  After we crawl out of the jobs hole, we can get more sophisticated metrics.  And call me a hard**s, but I am unwilling to be open to the possibility that things are going in a good direction until we make real progress on that front.

    Demonstrate real progress on time to permitting, lower the cost of doing business (unemployment insurance, energy, etc.), open the Connector up to more plans with fewer mandates so that small businesses have lower cost options, and then I will have some reasonable basis for thinking that the state is trying to move the dial in the right direction.


    Perry boasted of the state’s economic affluencea product, he argued, of his administration’s policies. Recently, the Lone Star State has created more jobs than the other 49 other states combined. And that success comes from three principles, Perry said: First, “don’t spend all the money.” Second, “have a regulatory climate that is fair and predictable.” Third, have “a legal system that doesn’t allow for over-suing.”

    Bold added by me.

  50. All three proposed budgets (Governor, House and Senate) address the potential $2B shortfall with a balanced budget (i.e., no shortfall) that does not raise taxes.

    Also, reserve fund has more than half a billion dollars in it, a very appropriate amount for this point in the economic cycle.

    I am treating the last two questions as mostly rhetorical.

  51. “balanced” by borrowing $2 billion?

  52. got $1.8 billion in “Porkulus” money and used $1.4 billion in Rainy Day money. And raised the sales tax by 25%. That’s some sound fiscal management you got going on up there. Meanwhile MA is still borrowing money and still has, according to Moody’s, the uncomfortable distinction of carrying one of the worst double burdens of state budget debt and unfunded pension liabilities in the country.  That adds up to more than $50 billion in Massachusetts, or more than 14 percent of our total Gross Domestic Product (GDP).

    Glad to see you’re still handing out raises though. Nothing inspires confidence and makes taxpayers feel like their government is sacrificing like they are like cutting programs and giving the managers a raise.  

  53. Yeah, on the backs of cities and towns. And how about an answer to the question relative to your concerns about the Secure Communities program.  

  54. I agree that there are many factors behind the results I described above. Interestingly, the original point of my post was simply to get some agreement on what the results actually were. Hard to have a good discussion of the factors if there is not even agreement on the results.

    I also agree that we need to focus on the long-term considerations in evaluating our strategy. In addition to the items you mentioned, businesses also care about:

    -education level of workforce

    -health of workforce

    -quality of life

    -crime/public safety

    All of which we rank high on.

    Do we agree about that?

  55. …budget cuts

  56. So how does deciding to ignore the benefits of the Secure Communities program advance the crime/public safety issue? What is Deval Patricks alternative plan to get criminals off the streets?  

  57. I have put a lot of thought into the factors that you cite.  It certainly is true that these factors are desirable to business.  But in stating that we rank high, you may be considering the wrong unit of analysis.  

    Consider Texas versus Massachusetts.  Massachusetts ranks higher in educational attainment than Texas.  But Texas is a very big place.  There are parts of Texas that rank higher than parts of Massachusetts in these metrics.  For instance, in Collin County Texas (pop 780,000 located in the north Dallas suburbs), 47& of the population age 25 and over has a BA or higher.  BA attainment in Collin County TX is about equal to Middlesex county, MA (48%) and twice the rate of Bristol county, MA (24%).  If I am an employer thinking about locating a business, I have access to the same labor pool in North Dallas that I have in Burlington.  Does it really matter that educational attainment in other parts of Texas is lower than Massachusetts?  Probably not since I’m not doing business there.

    Or consider India.  India is a very big place.  Does it matter if Kolkata is poor?  Your competition is in Bangalore.  If you think that Massachusetts can rest on its laurels because we are a better place to do business that Kolkata, we’re in trouble.  Given our cost structure, we had better be competitive with Bangalore, and Shanghai.  

    I think that citing state averages gives Massachusetts policymakers a false sense of comfort.    

  58. Secretary Bialecki’s list of factors that attract business is secondary to the real issues facing Massachusetts.  If we rank so high on his list, why has our state suffered weak population growth over the last decade?  Why are successful businesses like Fidelity Investments moving jobs out of state? If he and Gov. Patrick are serious about enhancing Massachusetts’ competitiveness, he should interview major private sector employers to find out what matters to their decision making regarding locating their operations.  I suspect the answers will focus on the cost of doing business here.  In an earlier post, I provided a list of some major hurdles to economic growth in Massachusetts.  Secretary Bialecki should start there in his quest for enlightenment.

  59. Really, do you think they really care about the first two of those things you mention?  I don’t.

    I have worked for some of Massachusett’s best known companies and not once did I ever hear anybody in those companies talk about the relative education level, health or quality of life issues of Massachusetts versus another state.

    When I hire people I look for a specific set of skills.  I do not look for the education level of the masses.  I hire the fish, not the pond they swim in!  What does it matter if I hire someone that is one in a hundred, or one in a million?  As long as I get the person I want I am happy.  If that person doesn’t live nearby then I conduct a larger search.  

    And what the heck does the relative health of our population have to do with hiring?  Do you really think companies try and find office space in communities of healthy people?  

    Let me tell you what companies look for:

    1. Low tax rates.  Companies want to keep more of their hard earned income.  And why shouldn’t they?  That is why there are border retailers in NH.  We lose a phenomenal amount of money to them every day/week/year.

    2. Low crime/public safety – we agree on this.  Nobody wants gangs of thugs and drug dealers hanging around their business.  Kerry Healey said this (keeping the public safe) was the most important thing government does.  I agree with her.

    3. Affordable space; access to transportation and decent roads.  We pay for this through gas taxes, income taxes and all kinds of tolls and fees, and still our roads are awful.  Recently, I have stopped driving through the town of Maynard on my way to work, because the roads suck so bad.  This means I stop buying my coffee, gas and groceries in Maynard on my way home every day.  Maynard stopped fixing roads, so I stopped going thru Maynard.  It works the same for companies thinking of relocating to MA from other states.  

    4. Affordable labor force – This is why companies relocate to China, India, Pakistan or wherever.  A CEO’s job is to maximize profits, and moving to a location where labor is cheap is an easy way to do it.  Unions destroy cheap labor by issuing demands for greater pay, more generous benefits, and lower expectations.  My company makes shoes.  We make everything in China and Brazil.  None of the major footwear companies of MA make shoes in MA anymore – the only exception is New Balance.  

    Overall, I think MA ranks poorly on the issues of labor costs, roads and transportation, safety and tax rates.  

  60. Republican Ram Rod Radio


    Long term, businesses look for:

    – Low commercial electricity rates

    – Low cost commercial space

    – Right to work state

    – Light regulatory environment

    – Low commercial property tax rates/low corporate income tax rates

    Massachusetts ranks low on every one of these metrics.

    Greg Bialecki

    In addition to the items you mentioned, businesses also care about:

    -education level of workforce

    -health of workforce

    -quality of life

    -crime/public safety

    All of which we rank high on.  

  61. I don’t think any of the major footwear companies make shoes in the USA anymore, except New Balance.

    So should our job creation strategy include trying to bring footwear manufacturing back to Massachusetts?

  62. Yes, I do think that businesses care about all of the factors mentioned in this thread, including the ones I mentioned and the ones you mentioned.

    But being the cheapest is not by itself a winning strategy.

  63. If you are interested in talking more one on one about how we may be able to help your business, please feel free to email me at

  64. it not-so-odd that the factors mentioned by others are directly business-related factors, while those mentioned by you are social factors that businesses might care about.

    If I’m looking to start a small business in MA (and I am), what do YOU think I’m more concerned about…those factors that directly influence my bottom line and meager starting income and quality of MY family life……or the education, health level, and quality of life of my neighbors?  

    Frankly, I couldn’t care less about the social factors you mention.  I care about how much of my hard earned $$ will be taken from me for having the nerve to try to make it on my own… much I have to charge for my services/products due to local regulations, taxes, mandates, fees, licenses, greasing politicians etc…

  65. I’m not a shoe manufacturer – but a custom manufacturer that sells product all over the world (even China). But the cost of electricity in Massachusetts is out of control.

    I can drive 5 hours to Quebec and pay .06/KWH, but my current rate in Massachusetts is .18/KWH (Demand and distribution) . Everything in my facility is high tech and high efficiency. I am very worried about Cape Wind, or other un-economic power generation sources which we may be forced to pay for. The additional cost is enough to reduce my profit to zero.

    I’m not sure the Patrick administration understands  how serious this is. If will effect sheet metal shops, machine shops even food (notice the recent departure of Beyer). These are all good jobs at good wages.  

  66. has added 20,000 doctors to its ranks. Why? Tort reform has made their malpractice insurance cheaper. There’s no income tax so they keep more of THEIR money and have more discretionary income to spend on cheaper goods and services. Housing is cheaper which means property taxes are lower(cheaper). Fewer regulations and mandates so they can offer their services at a cheaper price.

    Texas has created more jobs than the other 49 states combined. Why? Because it’s cheaper to do business there. Sounds like a winning strategy to me.

  67. Secretary Bialecki, Massachusetts doesn’t have to be “cheapest”; it needs to become a much less expensive place to do business.  It seems that the Patrick Administration is incapable of grasping the core issues facing Massachusetts’ competitiveness, some of which I outlined in an earlier post.  Perhaps it’s because it has no clue how to promote a broad-based economic growth strategy, so it ignores the root problems. Or perhaps it really has no interest in doing so, since doing so might harm the special interests that support the Administration. After all, if the Administration knew how to promote economic growth it would have adopted intelligent policies during Governor Patrick’s first term.

    Assuredly, no business cares about the relative health of its workforce — there’s not enough difference across states to matter; instead, businesses care about the cost of providing health insurance to their employees, the cost of which the Patrick Administration has managed to drive up, thanks to its poor implementation of “RomneyCare.”

    The “quality of life” criterion that Secretary Bialecki asserts is an important factor is too subjective to be taken seriously. Quality is in the eye of the beholder.  

    I will conclude with the following thought in the hope that it will educate the Secretary: if I were designing a low cost energy supply system to attract value-added, export-oriented manufacturing to Massachusetts, I wouldn’t promote uneconomic power generation sources like Cape Wind.  Last I checked there is now a glut of shale-based natural gas supply coming on stream in North America.  Hint, hint.


    PEORIA, Ill.-Heavy equipment maker Caterpillar Inc. says it will expand its hydraulic excavator plant currently under construction in Victoria, Texas, and add 100 more jobs to the original plans for 500 employees.

    “Based on our comprehensive review of possible locations, Victoria’s proximity to our supply base, access to ports and other transportation, as well as the positive business climate in Texas made this the ideal site for this project,” said Gary Stampanato, Caterpillar vice president with responsibility for excavators.

    And in North Carolina too.

    Caterpillar last week said it will expand a North Carolina plant that makes tight-turning skid loaders widely used in landscaping and construction, adding 325 jobs over four years. It also plans to build a new factory in Winston-Salem, N.C., producing axle units for large mining equipment that would employ about 500 full-time and contract workers.

    We get “investments” in economically unsound “green” technologies that can be produced by cheap labor in China instead of investments in a proven winner and market leader like Caterpillar.

  69. Most employers care about the education, health and quality of life of their employees. Not for altruistic reasons, even, just because it affects the company’s success and its bottom line. At least that’s what they tell me.

  70. The cost of electricity in New England (not just Massachusetts) is (and has been for years) relatively high, not because of any state policy (as you probably know), but because we are not located near the coal, oil, gas or big hydro. (Electricity is cheap in Quebec due to big hydro.)

    Your cost of electricity is significantly lower now than two years ago, isn’t it? (Market reasons, not state policy.)

    There are places in Massachusetts where electricity is cheaper (like Holyoke) and there are new programs to improve your business’s energy efficiency. Feel free to contact me off-line to talk about what we may be able to do to help at

    I can assure you we take the issue quite seriously.

  71. Here is why I made the point about being the “cheapest”…

    It is easy to say that our core issue/root problem is that we are much too expensive. But the facts are that:

    Our per capita income here is very high (third highest in the country), which most people would say is a good thing, but it makes our labor costs high.

    We are the third most densely populated state in the country, which means our commercial real estate and housing costs are high (not a lot of cheap land left here).

    We have high energy costs here (and elsewhere in New England), almost all due to geography (not state policy).

    We have high health care costs here (and not because of health care reform).

    So there are real practical challenges to a strategy that aims to just make us a lot cheaper place to do business. We need a more broad-based approach than that.

    As to whether health of workforce and quality of life are too soft to matter, I would urge you to think again.

    On your last point, are you suggesting that producing most or all of our electricity from natural gas will make us cost competitive? I don’t know anyone who agrees with you about that.

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