A newly published study by Alicia Sasser Modestino from the New England Policy Center of the Federal Reserve Bank of Boston points to a growing mismatch with the supply and demand for an important component of our skilled labor pool, “middle-skilled” jobs.  A gap of 780,000 workers could exist by 2018.  She observes that:

• Since 1990, the region’s population of working-age adults with any postsecondary education has been growing slower than that in the rest of the US due to slower population growth and greater net domestic out-migration.  Over time, New England’s labor force will likely shrink, while that of the nation is likely to grow.
• While the region has led the nation in terms of increasing the “high-skill” share of its population, it has consistently under-performed in terms of increasing the share of “middle-skill” workers (individuals with some college or an associate’s degree). The supply of skilled workers will not grow fast enough to keep pace with demand once the economy recovers.

According to the report, we need to ”grow our own talent” by increasing postsecondary educational attainment – especially utilizing the Community College system – through career-oriented programs that focus on preparing students for high demand middle-skill jobs. 

However, with limited state resources, putting more funding into community colleges must be tied with the responsibility to make sure that those resources are spent efficiently and effectively.

Suggested actions include:

• Programs in other states have shown that financial aid along with offering stipends, child care, and transportation during periods of study can boost completion rates.
• Greater communication between firms that hire “middle-skill” workers and the institutions that educate them could better align training curriculum with employer needs.
• Better collaboration among community colleges could provide a cost effective, strategic direction needed to achieve these goals.
• A single, unified system of community colleges could be an important part of an overall workforce development strategy, including other postsecondary education and training options such as employer and vocational training, certificate and apprenticeship programs, career centers, and ESL programs.

Strengthening community colleges can be a win-win-win for students, employers, and the region.

I just finished reading a recent interview with Northeastern University’s Andrew Sum in MassINC’s CommonWealth Magazine.  Andrew is the Director of the Center for Labor Market Studies, which he founded in 1971, so he is no newcomer to the issues plaguing the Commonwealth.

In the interview, Sum makes some powerful observations that illustrate the serious challenges facing the Massachusetts economy:

We are still down 240,000 jobs below where we were in 2001.  We have the fifth worst job creation record in the country. If you take it back to 1988, we are up only 13,000 [net] jobs from where we were 22 years ago.  Back in 1984 in Massachusetts, we were making a recovery back to full employment faster than just about any state in the country.  That year we created 140,000 jobs.  We created the equivalent of 13,000 a month. And that’s how many we’ve created in the last 22 years.

Clearly, we have a long-standing problem that has affected our economic activity for over two decades.

A few other points from Andrew that should catch your interest:

• We had the highest ratio of male job loss from the end of 2007 through the end of 2009 in the entire country — there was nobody close to us.
• Out-of-wedlock birthrates have risen and now represent over half the births to women under 30.  That means more single parent families facing severe income inadequacy.  These kids have a very high drop-out rate, very low college attendance rate, and an even lower college graduation rate.
• Teenagers are working at the lowest rate since World War II. (And there is a direct correlation between work experience at an early age and success in school and work.)

There are no simple solutions, and quick fixes without funding are not going to make a dent in the problem.  Avoiding these issues will only create additional barriers to growth.  Now is the time to determine the full range of action steps needed to end this downward trend. The future of the Commonwealth depends on it.

This is the final report on Boston’s “City to City” trip to Israel to learn about the best management practices of the major two cities in Israel to successfully attract and grow innovative businesses. 

I am not sure what the City of Boston can do to transform the Seaport District into an Innovation Zone.  There will be many more meetings of this group to discuss that goal.  However, what is very clear to me is that there is a great opportunity to attract Israeli businesses to the Commonwealth, in general, and to Boston, in particular.

A recent study by Stax Inc. showed that Israeli entrepreneurship is a significant driver of the Massachusetts economy with 100 Israeli companies employing nearly 6,000 Massachusetts workers, generating more than $2.4 billion in direct revenues in 2009 alone.

Israel is a global leader in innovation and this has not gone unnoticed by many other state economic development agencies.  California, Georgia, Virginia, New York, New Jersey, and Maryland have established strong ties with Israel.  Though 83% of respondents to the Stax survey indicated that Massachusetts is their top choice to locate their businesses, our advantage may be at risk unless we do more to create a true economic partnership. 

On a human services basis, we have had a Boston-Haifa Connection for years established through the local agency, the Combined Jewish Philanthropies, and I can tell you that the leadership in Haifa very much appreciates that partnership.  However, the City of Boston needs to take the next step to formalize an economic development relationship.

Just a few recommendations from the Stax report:

• Open a trade office in Israel (the Mayor of Haifa has offered Boston free office space!)
• Send trade delegations
• Form strategic industry partnerships (e.g. life sciences and clean-tech) with the Israeli government
• Promote direct flights to Tel Aviv from Boston
• Enhance our academic exchange programs
• Promote Massachusetts tourism in Israel

Israeli businesses are innovative and benefit from the support they get at home. However, when it comes time to grow their businesses globally, they first look to the United States.  By implementing the recommendations listed above and by publicly advocating such a partnership, I believe we make Boston their only choice!

At a recent John LaWare Leadership Forum at the Federal Reserve Bank of Boston, I joined a panel of business leaders to discuss “What Keeps Us Up At Night.”

My comments were as follows:

• Massachusetts was once known as Taxachusetts. Unfortunately, we are now becoming known for our cumbersome local and state regulatory system.
• This problem has grown over the last two decades to the point that it is an inhibitor of job growth.
• The problem on the local stage is a lengthy, unclear, and unpredictable permitting process with specialized regulatory bylaws that further raise the conservative thresholds established by the state.
• On the state level, regulatory agencies have operated in an economic vacuum for too many years, unconcerned with the impacts of their rules on business growth and competitiveness. Rarely, if ever, are cost/benefit analyses performed on proposed regulations to determine, in advance, their impacts on businesses.

Market risks are enough to make new innovative businesses think long and hard before starting up.  Massachusetts should not be adding unreasonable delays and uncertainty to this important economic engine.