Economy

3.1.1

Educational Attainment of Population, Boston and MA

• Percent of Adults 25 Years and Older with a BA or Higher
• Percent of 25 to 34 Year-Olds with a BA or Higher
• Adult Educational Attainment of Boston and MA
  

Increasing and retaining a pool of young knowledge workers - the growth tip of the region’s economy - is critical to the city and to the region’s future.  For decades, Metro Boston has relied on the ready pool of highly-skilled young adults turned out each year by colleges and universities in the area.  Current challenges - including labor force growth due principally to immigration of lower skilled workers and persistent racial and ethnic disparities in education outcomes - may require more balanced strategies to grow the pool of knowledge workers.

Metro Boston ranks 4th among the nation’s largest metro’s in the percent of adults 25 years or older with a BA or higher at 43%, behind DC, San Jose and San Francisco.  However, Boston ranks 1st in the percent of highly educated young workers with 54% of 25-34 year olds holding a BA or Higher.  The metro is anchored by Boston’s high educational attainment where 62% of 25 to 34 year old hold a BA or higher, topping all other large US cities.

3.1.2

Innovative Capacity Measured by Patents per Capita

Metro Boston ranked fourth globally in patent filings, accounting for 7.2% of all patents filed in the US and 2.5% of all patents filed worldwide, according to 2008 statistics from the Organisation for Economic Cooperation and Development  (OECD).  Metro Boston ranked second globally—behind only San Francisco—in biotech patents.  According to the Mass Tech Collaborative, the number of patents awarded in Massachusetts rose by 33% between 2009 and 2010 and the state ranked first among all leading technology states in patents issued at 931 per million residents, up from 622 in 2006.  The next highest state was New York with 749 patents per million.

3.1.3

Share of US R&D and Venture Capital Funding

• Venture Capital Deals per Million by State
• Venture Capital Dollars Per Capita by State
• Share of Venture Capital Deals and Dollars

3.2.1

Employment by Industry Sector

• Total Employment, Boston
• Employment by Industry, Boston
• Average Weekly Wage by Industry

A diverse regional economy offers a wide range of jobs and advancement opportunities for people at all skill levels and helps insulate from industry-specific down-turns. 

Total: As of 2011 Q3, Boston's average monthly employment was 565,164, the highest count since prior to the recession in 2008.  However, Boston has yet to recover more than 18,000 jobs lost in the 2001 recession.  This trend is not unique to Boston; throughout 2011 Metro Boston added a net 38,000 jobs, but total employment of about 2.4 million was 123,000 lower than last decade's employment peak in February 2001.  

By Industry: As of 2011 Q1, Boston’s dominant industries were Education & Health Services, with nearly 170,000 employees in 2011; Professional & Business Services, with more than 90,000 employees; and Financial Activities, with more than 73,000, together accounting for more than 60% of Boston’s 550,000 jobs. Within these super sectors are detailed industries describing specific goods produced and services rendered, such as Software Publishers, employing nearly 1,000 in the Information super sector. Boston’s largest detailed industries were: Medical & Surgical Hospitals, at 69,242 employees; Colleges & Universities, at 33,208; and Financial Investment Activities, at 19,569.

By Occupation: As of 2010, Boston's largest occupation categories were Office & Administrative Support positions at 90,640, Health Practitioner & Technical positions with over 53,000, Business & Financial occupations with about 49,000 and Food Prep & Serving occupations with more than 45,000 workers

3.2.2

Unemployment Rate

• Unemployment Rate, Boston and MA
• Unemployment Rate by Municipality

3.2.3

Small Businesses

• Loans to Small Businesses by Race/Ethnicity, Gender, Neighborhood
• Small Business Locations in Boston

3.2.4

Strong Office and Hotel Markets

• Hotel Occupancy Rates
• Office Vacancy Rates

3.3.1

Gini Index of Income Inequality

• Gini Coefficient
  

The Gini Index is a statistical method that measures the distribution of income.  An index of zero represents a condition in which every family earns the same amount.  Higher figures represent greater income inequality among families.  Comparing the income disparities between the top and the bottom 20% of the population provides the most dramatic contrast and tells us how wide the chasm is between wealth and poverty.

In 2010, Boston’s Gini index of income inequality .543—the highest recorded over the last fifty years—ranking as the third most unequal among the 50 largest US cities, behind Atlanta and Miami.  This surpasses the previous high of .533 in 2007 at the height of the pre-recession boom.  Because of the recession, in 2009 the Gini index fell to .519, the lowest since 2000, but quickly worsened in the recovery.  Historically, Boston’s GINI index has ranged between 0.335 in 1960 and 0.481 in 2000.  Statewide, Massachusetts’ Gini index in 2010 was 0.475 and tied with Louisiana as the third most unequal state behind New York and Connecticut.

In 2010 the share of aggregate income held by Boston’s top 20% of households increased to 56% in 2010, up from 54% in 2009 and the share held by the top 5% of households remained steady at about 26% of total income earned in Boston in 2010.  The bottom 20% of household held just 1.7% of aggregate income in 2010, down from 2.2% in 2009

3.3.2

Median Household Income by Race/Ethnicity

• Median Household Income by Race Ethnicity
• Median Household Income by Town
• Median Household Income Boston

Incomes in Boston are closely related to unemployment rates and levels of educational attainment.  Tracking income by race/ethnicity in Boston provides an indication of the success of efforts to eliminate racial/ethnic disparities in access to employment and education.  For example, improvements in neighborhood income over time may indicate that residents’ incomes have improved, or that a neighborhood’s demographic composition has changed, with lower income residents moving out and higher income residents moving in.

In 2010, Boston’s per capita income was nearly $34,000 but with stark racial ethnic disparities.  The per capita income for white, non-Latino Bostonians was over $45,000 compared to about $29,000 among Asians, $19,000 among African Americans and $15,000 among Latinos.  Overall, Boston’s per capita income increased by about 11% between 2000 and 2010, when adjusted for inflation.

Similar disparities exist across households where the median household income for white non-Latino Bostonians in 2010 was over $62,000 compared to $38,000 among Asian households, $35,000 among African American households and just over $23,000 among Latino households.

3.3.3

Unemployment by Race/Ethnicity and Education

• Unemployment by Race/Ethnicity
• Unemployment by Educational Attainment
• Unemployment by Neighborhood

Unemployment rates describe a mismatch between people of working age in a community and the jobs available to them.  Unemployment in particular communities may indicate that the workforce is not prepared for the types of job offered.  It may also indicate that people, while prepared, cannot access jobs, due to a lack of networking, transportation or other, more subtle, impediments. 

Though Boston’s city-wide unemployment rate dropped below 6% in early 2012, deep racial/ethnic disparities persist.  As of 2010 when the city-wide rate was 8.6%, the unemployment rate for white, non-Latino Bostonians 16 years and older was 6.5% compared to 12% among Asians, 21% among Latinos and 24% among African American Bostonians 16 years and older.

Deep disparities in employment persist along lines of educational attainment in Boston as elsewhere.  Averaged between 2006-2010, the unemployment rate for Bostonians between the ages of 25 and 64 without a High School diploma was over 12%.  For those with a High School Diploma the unemployment rate was 12%, and for those with some college education 11% were unemployed.  By comparison, among Bostonains with a Bachelor's Degree or Higher the unemployment rate was about 4%.  

Furthermore, labor force participation increases with educational attainment.  Roughly 35% of those without a High School diploma were not in the labor force as well as 25% of those with a High School diploma, 19% of those with some college and 12% of those with a Bachelor's Degree or higher.  Working-age adults who are not active in the labor force are not counted in official unemployment rates.

3.3.4

Families Living in Povert

• Percent of Children in Families Below Poverty
• Children in Married Families Living in Poverty
• Children with Single Moms Living in Poverty

Boston’s poverty rate in 2010 was 23.3% and has remained at or near 20% since 1990.  Among children under 18, the poverty rate was 30% in 2010, also relatively unchanged since 1990.

Race/Ethnicity: poverty rates were highest among Boston’s Latino population in 2010, at 35.4%, followed by 29.5% of African Americans, 26% of Asians and 16% white, non-Latino Bostonians.

Educational Attainment: poverty is highly correlated with educational attainment—38% of Bostonians without a high school diploma were in poverty in 2010 as were 20% of high school graduates and 18% of those with some college compared to 7% of Bostonians with a BA or higher.

Family Structure: about 10% of Boston’s families are single-parent families living at or below poverty and of all families in poverty 87% are headed by a single parent.  This correlation cuts across all racial/ethnic lines: 93% of African American families in poverty are headed by as single parent as well as 97% of Latino families, 76% of white families and 58% of Asian families in poverty.

3.4.1

Economic Independence Index, Boston

Boston’s Crittenton-Women’s Union  developed the Economic Independence Index, formerly the Family Self Sufficiency Status.  It includes the costs of housing, food, child care, health care, transportation, miscellaneous items, and taxes—without any public or private subsidies and no allowance for saving for retirement, children’s education, or emergency expenses.  The wage required for economic independence varies by geographic area and by family size and composition.  The high cost of living in Boston raises questions about the self-sufficiency wages for different categories of families.

The income required for a single parent in Boston to support one preschooler and one school-age child increased to $62,421 in 2010 from $39,156 in 1998, according to the Crittenton-Women’s Union.  The Economic Independence wage for a family of four including one adult rises to more than $80,000 to cover housing, food, clothing, education and other basic necessities.  This is more than four times the Federal Poverty Threshold and more than double 185% of Federal Poverty, the point at which most state and federal subsidies and supports expire.  An estimated 150,000 Bostonians—including 30,000 children—live between 185% of poverty and 400% of the federal poverty level—a proxy for economic self-sufficiency.

3.4.2
Consumer Price Index

3.5.1

Educational Attainment

• Percent of Asian Adults 25 Years and Older with a BA or Higher
• Percent of African American Adults 25 Years and Older with a BA or Higher
• Percent of Latino Adults 25 Years and Older with a BA or Higher
• Percent of White Adults 25 Years and Older with a BA or Higher

Education is the surest and quickest way to prosperity.  Not only do incomes rise with educational attainment, but also the rate of increase is higher for those with higher levels of education.  As education helps individuals become economically successful, it also helps regional economies.  Skilled workers are a region’s greatest competitive advantage, and Metro Boston is a leader in this area. 

Metro Boston ranks 4th among the nation’s largest metro’s in the percent of adults 25 years or older with a BA or higher at 43%, behind DC, San Jose and San Francisco.  However, Boston ranks 1st in the percent of highly educated young workers with 54% of 25-34 year olds holding a BA or Higher.  The metro is anchored by Boston’s high educational attainment where 62% of 25 to 34 year old hold a BA or higher, topping all other large US cities.

3.5.2

Job Training and Adult Wait Lists

In Massachusetts, many jobs remain vacant despite a large pool of unemployed workers, suggesting a jobs/skills mismatch. Vacancies as of the second quarter of 2010 (the latest available) showed:

High demand for high-skilled workers: 37% of open jobs required at least a BA, while 25% of unemployed workers had a BA or higher, indicating the need for more high-skilled workers. Often, filling a high-skilled job has a multiplier effect: For example, filling a vacant Computer Software Engineer position increases demand for middle-skilled Computer Support Specialists and low-skilled Receptionists & Information Clerks.

A mismatch between unemployed middle-skilled workers’ skills and job requirements: 8% of available jobs that required less than a BA but more than a high school diploma remained unfilled despite the fact that 23% of the unemployed held these credentials. Federal Reserve Bank of Boston research finds that over the last decade, the number of middle-skilled workers in the Bay State has declined while their wage premium has risen. This suggests that even middle-skilled workers with an Associate’s degree or some college lack the actual skillsets required by employers with open jobs in certain industries.

Low-skill-job churn: Low-skilled occupations comprised 55% of job vacancies while 50% of the unemployed have a high school diploma or less. These vacancies are largely attributable to high turnover. Employers reported that 80% of low-skilled openings were filled within 30 days and 13% of employers constantly recruited.

3.5.3
Skills Mismatch

3.6.1

Community College Tuition as a Percent of Household Income

The high cost of education is often cited as a top barrier to enrolling and persisting in post-secondary education and training.  Because community colleges are meant to be accessible by all in the community, it is important that it is affordable to all.

The average cost of tuition and fees at a Massachusetts Community College has remained between 4.7% and 4.9% of median household income between 2005 and 2009.  At Boston’s two Community Colleges, the cost burden was 4.3% of median income at Bunker Hill Community College and 4.6% of median income at Roxbury Community College.  However, Boston’s median family income is very high—at $81,569 in FY2009.  By contrast, the lowest quintile of households had an income of $13,557.  For these families, the average tuition at Bunker Hill and Roxbury Community Colleges would be more than 25% of household income.

3.6.2
Associates Degrees Awarded

3.7.1

Total revenue and expenditures, Massachusetts

• Massachusetts Total Budget
• Funding for Economic Development, MA
• Local Aid to Cities & Towns, MA
• Funding for the Department of Transitional Assistance, MA

The Commonwealth of Massachusetts is constitutionally required to end each fiscal year with a balanced budget.  In times of economic growth and expansion, this may provide the state with a surplus to save, spend or reinvest, but at times of economic contraction, declining revenues often require a reduction in spending resulting in cuts to programs that support the social safety net.

In FY12 the Commonwealth’s budget was more than $34 billion, a 4% decline since FY09 when adjusted for inflation.  Rising unemployment, declining wages and reduced purchasing power associated with the Great Recession have left the Commonwealth—along with every other state—with a budget deficit for the fourth year running of $1.9 billion for FY12 down from $5 billion in 2010.  However, the loss of Federal Stimulus Funding in FY11 meant that a larger share of the budget gap had to be filled with program cuts leaving crucial services to low-income residents underfunded, includining:

• Head Start and Universal Pre-K will funding were reduced by 27% and 40% respectively between FY09 and FY12;

• Child Care subsidies for income-eligible and TAFDC recipients were reduced by $629,000 and $4.9 million respectively from FY11. This follows a combined reduction of $55 million (-16%) between FY09 and FY11;
• Health Promotion and Disease Prevention Programs received just $3.4 million in the FY12 budget—a 43% reduction from FY11 funding. This follows a 57% reduction since FY09 when these programs received $14.7 million;
• Transitional Aid to Families with Dependent Children was cut by $8.1 million from FY11 to FY12, including a reduction of the child clothing allowance from $150 to $40 per child. This cut will affect an estimated 70,000 across Massachusetts.

• SNAP (Food Stamps) in FY12 allocates $900,000 in state support, down from $1.2 million in FY09. Because of Federal stimulus provisions, the state did not fund SNAP in FY11, but the stimulus provisions ended in FY11.

In FY11, Massachusetts’ budget shortfall was 5.7% of its total projected expenditures—which ranked it 5th lowest among all of the states. By comparison, states with the highest deficit-to-expenditure ratio had double-digit shortfalls: Nevada, 45% of total expenditures; New Jersey, 37%; Texas at 30.5%; and California at 29.3%.To close the revenue gap, the Massachusetts Legislature drew down part of the state’s Rainy Day Fund foresightedly built up during the good years. However, in FY10, the Legislature voted for a sales tax increase, which was projected to raise $1 billion from FY10 through FY12.

3.7.2

Total revenue and expenditures City of Boston

As of FY12, the City of Boston’s total budget was balanced with $2.394 billion in revenues and expenses after posting a budget surplus of $5.91 million in FY11 and $9.09 million in FY10.  The proposed budget for FY13 is balanced at $2.454 billion, a 2.5% increase over FY12.  Overall, expenditures have been rising faster than revenues, having increased by 7% and 6.6% respectively between FY10 to FY13.

Revenue: Growth in revenue has been driven by property tax levy which increased by 14% from $1.475 billion in FY10 to a projected $1.675 billion in FY13, a 40% increase in excise taxes from $103 million in FY10 to a projected $145 million in FY13, and a 27% increase in Payments in Lieu of Taxes (PILOT) from $34.9 million in FY10 to $43.5 million in FY13.  Over the same time, local aid from the state declined by 6% from $413 million in FY10 to $388 million in FY13.

Expenses: Health care costs comprise 12% of total FY13 expenditures and have contributed the most to the growth of costs over the last decade.  From FY01 through FY15, health insurance costs are projected to rise by 135% compared to a 39% increase in all other city costs over the same time.  Other high-growth expenditures include: other post-employment benefits by the City of Boston have doubled from $20 million to $40 million between FY10 and FY13; total pension payment increased by 25% from $108 million to $135 million from FY10 to FY13; and total debt service payments increased by 10% from $125.5 million to 137.5 million.

The City of Boston is comprised of 77 different departments organized into 13 mayoral cabinets:

• Office of the Mayor
• Administration & Finance
• Personnel & Labor Relations
• Advocacy & Strategic Investment
• Public Property
• Economic Development
• Information
• Education
• Environmental & Energy Services
• Housing & Neighborhood Development
• Human services
• Public Health
• Streets, Transportation & Sanitation

The city of Boston also includes non-Mayoral agencies such as the Boston Housing Authority and the Water & Sewer Commission and Intergovernmental relations with the state and county.

3.7.3
Tax Burden by Income Quintile 

More than half of Massachusetts’ total revenues come from taxes, with more than one-third derived from the income tax.  Tax policy can be progressive with higher-earning individuals and institutions paying a larger share of income toward taxes, regressive with lower-income earners paying a greater share of income in taxes, or neutral with a flat tax rate.

Massachusetts total state and local tax structure—including income, property, gas, excise, sales and other taxes—is regressive, with the poorest 20% paying nearly twice the rate of the wealthiest 5% in Massachusetts. In 2010, the poorest 20% of Massachusetts residents paid nearly 10% of their income in all state and local taxes combined, including the state’s income tax, while the wealthiest 1%—with incomes greater than $580,000— paid less than 6%