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Massachusetts
When the Massachusetts Miracle ended in the late 1980s, the state slipped into the worst economic downturn since the Great Depression. Unemployment rose to 9 percent in 1991, as the Commonwealth lost thousands of jobs. Both the defense industry and the minicomputer industry collapsed, which caused a permanent shift, not simply a cyclical downturn. It was difficult to see how the state would regain economic health, yet the seeds of recovery were sown by the very severity of the events.
Newly unemployed skilled workers, including many engineers, fed the state's remarkable expansion during the 1990s. Led by the rapid growth of high-technology sectors (including information technology, biotechnology, and telecommunications) and the business services that support them, unemployment in the Commonwealth fell to less than 3 percent by 2000.
The story of the expansion was not limited to these high-tech sectors. The small but important financial services sector experienced rapid growth, as well. Construction, education services (especially in higher education), and health services provided a strong and stable base for the state's growth, along with an increasing industrial diversity that would help protect the state during the next downturn.
The construction sector experienced the largest percentage growth in the state during the 1990s, with employment rising more than 50 percent from 1993 through 2000. The increase was most obviously associated with the Central Artery Project. There was also a considerable volume of other public-sector construction activity, especially K–12 schools and a high volume of residential construction toward the end of the decade. Employment in the much larger ser-vices sector grew by over 30 percent.
All major sectors but one exhibited better than 10 percent employment growth during the same period. The manufacturing sector lost jobs. Even here, though, there was a bright side: Much of the decline in employment was driven by increased productivity, led by high-tech innovation. A large portion of manufacturing in Massachusetts is characterized by highly adaptable, small-batch processing at the leading edge of technology. In a way not evident from its size, the manufacturing sector drives—or at least motivates—the high-tech, nonmanufacturing sector.
During the 1990s, the state population grew by 5.5 percent, or approximately 333,000. Much of this growth was attributable to international immigration, without which the state's labor force would have remained stagnant. The racial and ethnic composition continued to change, as all non-White racial groups grew. The population of ethnic Hispanics also grew significantly.¹
The Massachusetts economy is currently suffering through a recession, one that is hitting its high-tech and public sectors especially hard. The impact of the recession has been experienced unevenly throughout the state, just as the 1990s expansion was not uniformly realized.² The Boston Metropolitan and Northeast Regions, representing the focus of the high-technology industry mix in the state, have been hardest hit. In contrast, the Cape and Islands Region experienced uninterrupted employment growth through the first eleven months of 2002. Other areas of the state, including the Central, Pioneer Valley, and Berkshire Regions, have resumed modest employment growth following declines in 2000 and/or 2001.
What follows are sketches of each of the seven regional economies. While the regions correspond to those Massachusetts Benchmarks has utilized since its inception, regional definitions differ slightly. These differences do not affect the analysis of the regions or the conclusions drawn.
A word about the data used in these analyses: Data measuring employment, unemployment, and labor force are reported and analyzed through the most recently available information, reported in January 2003. This allows us to track the state and the regions through the stages of the business cycle, covering the transition from the expansion of the 1990s through the onset of the current recession. These data are subject to revision, especially for substate areas, and analysis based on the most recent of these data should be viewed with caution.
Data measuring the sectoral characteristics of the state and regions are measured at two points in time, starting in 1993 and ending in 2000. This interval was chosen to facilitate an analysis of changes in the state since the end of the last recession. The ending date was chosen to provide a picture of the sectoral mix that would not be affected by the current downturn in the business cycle. Demographic data were taken from the decennial Census of Population and Housing, limiting the analysis of these data to the census years 1990 and 2000.
As we go to press, the data used in these profiles to track employment, labor force, and unemployment rates are undergoing important revisions. While we are not able to incorporate these revisions here, knowledge of them should serve to caution readers regarding reported employment patterns, especially for the years 2000, 2001, and 2002. These data remain very useful for examining trends in employment over time but at this stage are less useful for a precise examination of cyclical changes in employment in Massachusetts.
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