Ultimate magazine theme for WordPress.

Despite uncertainty, experts see “bright spots” for the Massachusetts economy in 2022

Experts say there are many reasons to feel good about the Massachusetts economy in 2022. Employers keep hiring, investments in the Commonwealth’s high-tech and biotech sectors are breaking records, and the state has billions of federal funds available for things like infrastructure and human resource development.

“We’ve had many bright spots on the business front in recent months,” said Jeffrey Thompson, director of the New England Public Policy Center for the Federal Reserve Bank of Boston. “There are a lot of companies out there trying to hire.”

This sunny view comes with me An obvious caveat as a surge in omicrons is forcing new restrictions in some parts of the world, adding to uncertainty about the coronavirus pandemic. Hospital stays have increased both in Massachusetts and across the country. Although the Commonwealth has one of the highest vaccination rates in the country, it remains unclear how this new wave of infections could affect hospitals, residents, workers and businesses.

At the beginning of the new year, WBUR spoke to several experts about the economic trends they were following in Massachusetts and their projections for 2022.

Massachusetts employers are still optimistic

According to The Associated Industries of Massachusetts, employers are more confident than they were a year ago. The business climate was 57.9 in November 2021, compared to 49.3 in the same period in 2020. AIM’s measurement is based on a 100-point scale. Anyone over 50 is considered optimistic.

Business confidence has been falling since the summer of 2021, but is still well in the “optimistic” range. (Source: AIM)

Still, COVID fears, supply chain problems and inflation have dampened that optimism since the summer.

“This is important because confident employers hire people,” said Chris Geehern, AIM executive vice president of public affairs. “Confident employers invest in expanding their factories or offices or facilities and generally encourage economic growth.”

Geehern expects further growth in sectors such as software, biopharmaceuticals and advanced manufacturing. Construction will likely have a good year, he says, thanks to an expected $ 9 billion infusion in federal infrastructure funding. Geehern also believes 2022 will be a better year for retailers, who expect Christmas sales to increase by 11.5%.

However, industries that rely on face-to-face contact are likely to have another difficult year ahead of them. These include restaurants, hotels, gyms, and performing arts centers. Although visitor numbers are slowly increasing at some of these facilities, they are still not at pre-pandemic levels.

There are concerns about a shrinking workforce

Most of the people who left the workforce during the pandemic have returned, making the state recovering relatively quickly compared to the rest of the country. But Massachusetts is still about 6,800 workers short of pre-pandemic. A smaller workforce and high demand from employers mean we are likely to see a lot of new hires in 2022.

The Massachusetts workforce has not quite returned to pre-pandemic levels.  (Source: MA Institute for Economic Research)The Massachusetts workforce has not quite returned to pre-pandemic levels. (Source: MA Institute for Economic Research)

Nationally, the US only gained about half of the workforce lost during the pandemic, according to the Federal Reserve Bank of Boston.

The state’s labor shortage has not yet reached a crisis level, but it will take some work to keep it that way, says Mark Melnik, director of economic and political research at the University of Massachusetts’ Donahue Institute.

Melnik says a significant realignment is taking place right now in the Massachusetts workforce, especially among low-wage workers.

“People say, ‘This job is not worth the trouble I’m getting and someone else might be willing to pay me more,'” Melnik said.

Labor force participation is a key factor in predicting future economic growth. The pandemic accelerated the early retirement of older and better educated workers, but there were signs of a decline in the workforce before then. Massachusetts has reduced the alien-born workforce, which has been responsible for 80% of the state’s workforce growth since 1990. Net migration has slowed in the past five years due to immigration policies during the Trump administration, followed by pandemic lockdowns.

Given these challenges, Massachusetts has an opportunity to recruit new employees, says Karen Wallace, director of marketing at AIM.

“Businesses better have to hire people who don’t necessarily look like them to move the economy forward,” Wallace said.

You may also have to look for talent in different places. An example of this: in parts of the state with relatively low graduation rates, train and hire more workers.

Vacancies in Massachusetts in November 2021 (Source: MA Department of Economic Research, based on data from Burning Glass Labor Insight)Vacancies in Massachusetts in November 2021 (Source: MA Department of Economic Research, based on data from Burning Glass Labor Insight)

Massachusetts is going to need a lot of upskilling or re-skilling

The World Economic Forum estimates that half of all workers worldwide will need some type of retraining or “training” to keep up with the r -idly changing economy. The same  -plies to Massachusetts, where, according to the state agency MassTech, almost 40% of jobs are in the so-called “innovation economy”.

“We are more confident than other parts of the economy,” said Patrick Larkin, associate director of MassTech.

That confidence is unlikely to slow down. In 2021, Local biotech companies are set to break their investment record of $ 5.8 billion in 2020, according to MassBio. In the next four years this is expected to result in almost 40,000 local jobs.

The astonishing growth in the innovation sector is certainly to be celebrated, but it leaves large parts of the population behind. This includes many people of color, people without college degrees, and people living in rural areas outside of the greater Boston area.

Larkin says the Baker administration has plans to step up state staff redevelopment and training with federal funds for pandemic relief.

“They are having an aggressive push and are working very closely with us to try to identify needs in the technology sectors,” said Larkin.

2022 could be a big year for unions

There is a lot of movement on the work front. According to Gallup, 65% of Americans are in favor of unions. Steven Tolman, president of the Massachusetts AFL-CIO, says he’s seeing encouraging signals from the Biden administration.

“Life has changed for us with the new president and administration,” said Tolman.

Tolman cites workers’ efforts to unionize in large corporations like Starbucks and Amazon as evidence of a more energetic labor movement. He also hopes the US Senate will pass one of the most important labor laws of recent times, the Protecting the Right to Organize Act, or PRO Act. Among other things, it would make the organization easier and impose tougher penalties on employers who disrupt this process.

In Massachusetts, voters will also have the opportunity to help sh -e the world of work and the gig economy in 2022. A proposed nationwide poll question would ask voters whether ridesharing and delivery drivers should be classified as independent contractors or employees. The initiative is similar to Proposition 22 in California, which allowed companies like Uber and Lyft to list their workers as independent contractors.

“They’re trying to translate everything and create a lower class of workers,” said Beth Griffith, who heads the Boston Independent Driver’s Guild, a group opposed to the measure.

Griffith says voter decisions in Massachusetts could have dire consequences for gig workers in the rest of the country.

Proponents of the measure – including companies DoorDash, Instacart, Lyft, and Uber – argue that classifying workers as independent contractors gives them more flexibility and more control over things like scheduling and working hours.

Comments are closed.

%d bloggers like this: