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The Greater Boston Region includes all of Suffolk County, a large share of Middlesex and Norfolk Counties, and portions of Plymouth and Essex Counties. It is widely recognized as one of the world's most innovative economic areas. Home to some of the finest institutions of higher education, the region has generated a tremendous concentration of science- and technology-related research and development. These intellectual resources, combined with the region's rich heritage and extensive cultural offerings, make Greater Boston the center of much of the Commonwealth's economic activity.
The region is home to half the state's workforce and jobs. According to the Bureau of Economic Analysis, the personal income generated by the residents of Suffolk, Nor-folk, and Middlesex Counties accounts for more than 50 percent of the state total. The knowledge-intensive export clusters that drive the state's larger economy—knowledge creation, information technology, financial services, and health care—are concentrated in Greater Boston.
The region's economy has its share of challenges. The economic boom of the 1990s benefited the region un-evenly, as some residents actually saw a decline in their own financial well-being. The economy also faces the growing challenge of housing affordability. There is an insufficient stock of low-income housing and a growing "affordability gap" (the difference between families' median income and the income required to buy a median-price home) that can have a significant dampening effect on the ability to recruit workers.
Employment Trends
Over the 1990-2001 period, the Greater Boston Region's workforce increased by a modest 3.6 percent, the same as the state's overall rate. Almost all of this growth came in 2001, after a decade of recovering losses incurred in the early-1990s recession. During the decade, the Greater Boston unemployment rate was below that of the state, reaching a low of 2.2 percent in 2000. This was not uniform across the region. The I-495 West subregion had an unemployment rate around 0.2 percentage points below the region overall. Several communities continue to experience higher unemployment rates, such as Chelsea (8.3 percent), Hull (3.4 percent), Revere (6.4 percent), Everett (5.4 percent), and the I-495 towns of Hudson (5.3 percent), Marlborough (5.2 percent), and Stow (5.0 percent).
The unemployment rate in Greater Boston increased from 2.2 percent in 2000 to 2.8 percent in 2001, and then to 4.3 percent in 2002. The increase has been accompanied by the loss of thousands of jobs, especially in the high-tech sector. While household-based data show a decline of approximately 23,000 jobs in 2002, the number of "establishment" jobs lost is surely larger. Establishment employment data account for commuters into the Boston area, while household data do not.
The personal income generated by the residents of Suffolk, Norfolk, and Middlesex Counties accounts for more than 50 percent of the state total.
Sectoral Analysis
In 2000, services made up the region's largest industry sector in terms of employment. This was followed by retail trade; manufacturing; and finance, insurance, and real estate (FIRE). The industry mix changed during the economic expansion between 1993 and 2000. Notable were the increases in services and FIRE, at the expense of manufacturing and some government employment. Overall, regional employment grew 20.7 percent during this period, with services growing 30.7 percent, retail trade 15.4 percent, and construction 67.5 percent.
In the I-495 West part of the region, services employment dominated growth, rising by over 30,000 jobs, or 62 percent. Comparisons with the state over the 1993–2000 period show the regional growth of employment in construction and agriculture far exceeding statewide aver-ages. Most of the increase in construction can be attributed to the Central Artery Project, and increasing demand for home-building services and commercial space. The expansion of yard-service companies also boosted growth in the agricultural sector. The more rapid expansion in the FIRE sector is almost all due to growth in the mutual fund and brokerage industries.
There was a steep decline in the region's manufacturing employment, as compared to the state and the much slower increase in government employment. With the exception of the transportation and government sectors, pay growth matched or exceeded statewide growth in each of the region's industry sectors.
The downsizing of regional manufacturing also shows up in the layoff data. Between 1993 and 1998, 50 percent of jobs lost to plant closings or permanent layoffs in the Metropolitan Area Planning Commission region¹ were from the manufacturing sector. In Greater Boston in 2001, 35.5 percent of layoffs were in manufacturing, over three times its share of total employment. This is in contrast to services (35 percent), where layoffs more closely approximated their relative proportion of employment in the region.
Much of the region's economic growth during the 1990s benefited high-wage, educated workers and was concentrated in its outer ring.
Population
Greater Boston is by far the most populous of the state's regions; its 3,015,981 residents account for almost half of the Commonwealth's population. The region has lagged the state in population growth, rising 4.9 percent vs. 5.5 percent between 1990 and 2000. Changes were uneven, with the population of some cities and towns remaining stagnant or declining, while others saw tremendous growth.
Areas close to Boston experienced very little population change, with one exception—Chelsea—increasing by 22 percent. Otherwise, the highest growth in the region was along the I-495 corridor, particularly in the north (Wilmington, 21 percent), the west (Boxborough, 45 per-cent), and the southwest (Hopkinton, 45 percent; Southborough, 33 percent; and Franklin, 34 percent). Overall, the I-495 West subregion experienced an 11.3 percent increase in population, over twice the rate of Greater Boston.
In the 1990s, the median age in Greater Boston rose from 34.0 to 36.3, slightly below the statewide median of 36.6 years. This small increase masks a significant shift in the region's age profile. The population of those aged 45 to 64 increased almost 22 percent to 666,805, while the 19- to 24-year-old group fell by almost 19 percent, to 291,454.
While both the state and the region experienced a mini "baby boom," this has not been enough to counter the aging of the population, which is likely to have a significant effect on the economy. Employers will find that the aging workforce will require them to adjust their hiring practices for older, more experienced, entry-level workers. Displaced workers (whose numbers have increased substantially with the current recession) are older, and many will be crossing industry sectors and requiring considerable retraining.
Two cities in the region—Boston and Chelsea—have become "minority majority" communities, as non-Hispanic Whites account for less than 50 percent of their populations. In twelve towns close to Boston, over 20 percent of the population is classified as "minority." In 2000, the region was home to 194,051 Hispanic residents, almost half the state's Latino community.²
Outlook
While the Greater Boston economy is large, diverse, and clearly successful, significant challenges remain. Much of the region's economic growth during the 1990s benefited high-wage, educated workers and was concentrated in its outer ring, between Routes 128 and 495. Many workers without college educations did not share in this prosperity, nor did older industrial cities within Route 128, such as Chelsea, Everett, Lynn, Revere, and Saugus. Overcoming these educational and locational barriers will be critical if the benefits of economic growth are to be distributed more broadly in the future.
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