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The Cape and Islands Region extends south and east into the Atlantic Ocean from the southeasternmost point of the Commonwealth. The islands of Martha's Vineyard and Nantucket lie in Nantucket Sound to the south, at roughly seven miles and thirty miles offshore, respectively. The landscape and economy of the long-hooked Cape and its companion islands have always been dominated by the sea. Fishing, whaling, waterborne trade, and a bit of agriculture once provided the foundation of this region's economy. Today, it is the recreational, aesthetic, and naturalistic appeal of the sea—and the unique access for millions of tourists, retirees, and commuting workers—that drives its rapid growth.
Since 1990, this has been the fastest-growing region in Massachusetts, as measured by its population, workforce, and total employment. More than half of its economic base depends on tourism, retirees, second-home owners, and Cape and Islands residents working in other parts of the state.¹ An estimated six million tourists visit Cape Cod each year, with nearly two-thirds of all visitors arriving in the summer and early fall. The region's volatility results from factors such as the weather and economic conditions in parts of the country that supply its tourist trade. Cape Cod has made more significant strides than the islands in diversifying its economy, though tourism continues to be the economic engine for Barnstable County. Diversification on Martha's Vineyard and Nantucket is more problematic because of their isolation from the Cape and other areas of the state. While the region's isolation lends to its attraction as a tourist destination, it is a hindrance in drawing other types of business to the region. The transportation infrastructure does not facilitate the easy movement of workers and goods within the region or to off-Cape destinations. It is likely that tourists, seasonal residents, and retirees will continue to provide the primary economic support for all three counties.
Employment Trends
The number of residents employed increased 13.8 percent, from 99,744 to 113,552, during the 1993–1999 economic expansion. The number of jobs in the region grew faster, rising 31.3 percent—more than the statewide pace of 20.2 percent—from 71,604 in 1993 to 93,985 in 2000. Employment increased more sharply on Martha's Vineyard (38.2 percent) and Nantucket (36.4 percent) than on the more diversified Cape (22.8 percent). However, the Cape accounted for 82.4 percent of the region's total employment growth over this period. The disparity between the number of residents employed and the number of jobs in the region reflects the significant churning of commuters to and from the Cape and the islands on a daily basis.
Since 1990, this has been the fastest-growing region in Massachusetts, as measured by its population, workforce, and total employment.
Unemployment has been higher in the region than in the state throughout this business cycle. The gap declined steadily, however, during the 1990s. By the end of the expansion, jobless rates seem to have fallen in line with statewide trends. The average regional rate in May 2001 was 3.9 percent, compared to the statewide average of 3.4 percent. Unemployment remains highly seasonal, based on the resort industry's employment needs. For example, the rate was 2.1 percent in July of 2000, below the Commonwealth's 2.8 percent, and 6.9 percent in January 2001, more than twice the statewide average of 3.1 percent.
Despite the recession, employment in the region has continued to grow, at least through 2002. At the same time, however, the unemployment rate has inched up, to 3.9 percent in 2001 and to 4.3 percent in 2002.
Sectoral Analysis
The three largest employment sectors in the region are services, retail trade, and construction. During the 1993–2000 expansion, job growth in agriculture and construction was significantly stronger than in other industries, though retail trade and services accounted for 66.5 percent of the job growth over this period.
The resort industry provides by far the largest component of the region's export base. An estimated 6,000,000 visitors come to the Cape and islands each year—largely from Massachusetts, New England, and Mid-Atlantic states—and they spend nearly $1 billion annually. While the region's year-round economy has grown significantly over the past decade, the resort industry remains highly seasonal. Monthly room demand on the Cape alone declines by 50,000 to 100,000 from the peak summer months to the industry's winter trough. The industry is also highly sensitive to factors such as weather and the economic condition of other regions and states that fuel its tourist trade.
The region has a better-educated population than the state as a whole, which may be attributable to its large retirement community. Nearly 90 percent of all Cape and Islands residents have high school diplomas.
The resort industry is defined as including eight major industry groups: general merchandise stores, food stores, apparel and accessories, eating and drinking places, miscellaneous retail, hotels and other lodging places, amusement and recreation services, and museums. The cluster accounted for 21.0 percent of regional employment, or 21,297 jobs in 2000. Adding the effects of indirect and induced impacts, the resort industry generated approximately 40 percent of the region's total employment.
Resort industry employment grew 12 percent over the expansion years since 1993, but its overall share of employment declined from 24.2 percent. While this decline highlights growing diversification, the resort industry is expected to remain at the core of the Cape and Islands economy. The activities that showed significant net gains over this period were amusement and recreation services (41.0 percent, or 557 jobs) and miscellaneous retail (29.1 percent, or 844 jobs).
Population
The region has a population of 246,737. This reflects a 20.8 percent increase during the 1990s, the largest gain in the Commonwealth. Retirees and commuters to the South Shore and Boston fueled much of this growth, which is placing increasing pressure on its existing infrastructure and environment. Nantucket had the highest rate of population growth (58.3 percent), followed by Martha's Vineyard (28.8 percent), and Barnstable County (19.1 percent).
As the region is home to a large number of retirees, the median age of the region's residents (44.3 years) is the highest in the Commonwealth and significantly higher than the median age in the state (36.6 years). The percentage of Cape and Islands Region residents aged 19 to 64, the years when most people are in the full-time workforce, is 57.4 percent. This compares to a statewide average of 62.8 percent. More than 90 percent of Cape and Islands residents are non-Hispanic Whites. This compares to 84.5 percent statewide.
At 5,117, African-American residents represent the largest ethnic minority in the region. The region has a better-educated population than the state as a whole, which may be attributable to its large retirement community. Nearly 90 percent of all Cape and Islands residents have high school diplomas, compared to 80 percent for the state. Cape and Islands residents are slightly more likely to have bachelor's degrees or higher: 34.1 percent, versus 33.2 percent statewide.
Outlook
The Cape and Islands Region has many strengths and competitive advantages, including an attractive quality of life, focused land use and economic development planning, high educational attainment levels, and skilled retirees. The region faces several challenges, particularly balancing the environment with economic growth, land availability for business growth, traffic, and lack of public transportation, as well as housing affordability, Internet access, and seasonal labor shortages.
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