Massachusetts State Policies Hinder Economy

New England Political Environment

Felicia Whatley

Massachusetts State Policies

            The Massachusetts state polices have had an impact on the manufacturing industry. Though there have been some efforts by raising the minimum wage, wage levels are still low for their industry compared nationally. The high costs to run a business in Massachusetts are forcing not only the textile industry to look to other states or countries to do their business. But a positive aspect MA has going for them is the multitude of universities, leading to a small growth in health or biotech industrials from having a pool of scholars to hire from. The manufacturing job industry is unstable in Massachusetts.

            The Massachusetts government offers incentive programs to assist local manufacturers, but most manufacturers do not use the programs. Only a quarter of manufacturing firms use workforce training grants, a quarter use investment tax credits. The Massachusetts state government does play a role in stimulating the economy and supporting these companies, but most do not take advantage of the assistance programs. Less than ten percent of small firms use workforce training grants, as stated in “Staying Power: The Future of Manufacturing in Massachusetts”, The Boston Foundation; July 2008.

            The state also helps with the economy by raising the minimum wage to $8 an hour verses the national average of a little over $5 an hour, but the costs including taxes are much hirer in MA.

            “In line with what manufacturing believe to be the greatest cost challenge they face is the government initiative that respondents would most like to see enacted is a reduction in the cost of employee health insurance,” (“Staying Power: The Future of Manufacturing in Massachusetts”, The Boston Foundation; July 2008). Ninety percent of the companies who responded to the Boston Foundation’s study said such a reduction would be extremely or very important in their survivability. The new Massachusetts Health Connector law mandating all residents of MA must obtain health insurance puts more pressure on companies to pay a premium for health insurance.

            Another plea to the MA government from the manufacturing industry is a reduction in workers’ compensation costs, followed by a reduction in energy and unemployment costs.  “Respondents have very clearly demonstrated that the high costs associated with running a business in this state pose a real threat to the survival of local manufacturing enterprises and must be addressed and remedied,” (“Staying Power: The Future of Manufacturing in Massachusetts”, The Boston Foundation; July 2008).

            By 2016, the industry will have downsized to 250,000 people. They depend on Massachusetts reducing some of the cost burdens for the vitality of its future. The industry needs the state to provide vocational schools, community colleges, and workplace training programs, so they can continue to produce products.

            Massachusetts has become a knowledge sector powerhouse. “First it is far more specialized in certain service sector activities—including a variety of knowledge creation sectors software, and brokerage—than the rest of the nation. Second, in many of these industries Massachusetts pays workers wages that are well above the national average for these industries,” (Knowledge Sector Powerhouse: Reshaping Massachusetts Industries and Employment during the 1980s and 1990s”, Robert Forrant, Philip Moss, Chris Tully). This is attributed to MA having many educated knowledge workers.

            Massachusetts had high and low unemployment rates in the ‘80s and ‘90s, having tying with the national average in 1987 for having the lowest. The state held an average wage in 1984, but had become a high wage state by 1991. This is 20 percent higher than the rest of the U.S.

            There are some areas of growth. Knowledge workers are 35 percent higher in MA than the U.S. The pay and benefits are comparable, but managers and people in the management industry are paid more in Massachusetts. Health services are the number one export service in MA, and higher education is the most expanding productivity industry in the state.

            The MA drug industry grew ten times more than the nation. Employees were paid 37 percent more in the medical instruments industry than the rest of the nation.  Massachusetts is first in the nation in software and communication services, three times more than the national average.

            But the manufacturing industry is struggling. “If the high cost of living is driving working families away from Massachusetts, in  the long run the human resources that provide the brainpower and innovative spark that have made Massachusetts great may be undermined,” (Knowledge Sector Powerhouse: Reshaping Massachusetts Industries and Employment during the 1980s and 1990s”, Robert Forrant, Philip Moss, Chris Tully).

            Many knowledge professionals earn higher wages, but are less likely to receive pensons in Massachusetts. Professors and librarians in this state do no see higher wages. Employment growth has not kept up with the nation in the ‘80s and ‘90s.

            After WWII, the U.S. was an industrial, political, and military capitalistic power economy, but by 1927 only a tenth of mill jobs remained in New England. It was no longer a blue collar economy. The mill industry moved to the South where the cheaper costs were. This directly affected Massachusetts’ economy, having built the industrial revolution on famous mill towns. “Let us note that neither the financial help from the Depression era Reconstruction Finance Corp. nor employee wage ‘contributions’ kept these mills alive,” (Regional Reconstructuring and ‘Good Business Climates’” Sunbelt-Snowbelt; NY: Oxford Univ. Press, 1984).

            The boot and shoe industry also moved out of Massachusetts in 1930. Between 1930 and 1938, 79 companies left MA. The textile, shoe, and leather business dropped so much in the ‘30s and 40’s that whole towns, like Lawrence, MA were devastated with massive unemployment. Unemployment insurance began in Massachusetts in 1916, but was not enacted nationally until 1935 with the Social Securities Act. Also a public welfare program to aid widowed mothers was created in MA in 1926.

            The arms industry was big in the ‘20s and 30s, and two-thirds of total sales in the U.S. were to U.S. Army and Navy in CT and MA. This included arms in Springfield and ship building in Quincy. The war affected Massachusetts local economy. “General Electric was the largest industrial employer in New England,” (“Regional Reconstructuring and ‘Good Business Climates’” Sunbelt-Snowbelt; NY: Oxford Univ. Press, 1984).

            The unemployment rate in New England after WWII was still higher than the rest of the country because of the closing mills. Women in NE during this time were paid a lot less than other states.

            The manufacturing companies that have survived in New England have specialized their products—high function sportswear or athletic footwear. Technology has aided in this. But most of the manufacturing industry is going to see shrinkage in the next ten years. Massachusetts state policies play an important role in this. “Employment in Massachusetts is unstable…Part-time is growing and aircraft and metalworking are subject to drop to recession in the economy,” (“Regional Reconstructuring and ‘Good Business Climates’” Sunbelt-Snowbelt; NY: Oxford Univ. Press, 1984).