Massachusetts near full employment but dependent on migration to offset population slowing
WATERTOWN, Massachusetts – January 20, 2017 – MassEcon held its kick-off 2017 Members Meeting in Westborough this morning. Business leaders from across the Commonwealth attended to hear Alan Clayton- Matthews from Northeastern University deliver his forecast for the 2017 Massachusetts economy. Clayton-Matthews spoke about his outlook for employment and economic growth, the effect of the Trump administration on the economy, and the demographic headwinds from an aging population of labor force growth.
Clayton-Matthews, who is also a Director of the New England Economic Partnership, asserted that the state economy is currently near full employment, but Massachusetts faces the challenge of continuing to expand employment at the pace of recent years. Job growth is expected to be fastest in construction, professional and business services, leisure and hospitality, and education and health services. Meanwhile, employment growth in manufacturing is expected to decline.
He predicted that fiscal stimulus by the Trump Administration in the form of an expected $500 billion increase in federal spending and $1 trillion in tax cuts could give rise to boosts in demand, productivity, and economic growth over the next four years. On the other hand, Clayton-Matthews forecasts that increased federal spending will cause the national debt to rise over the next 10 years.
Clayton-Matthews said the U.S. economy and Massachusetts, under the administration of President Trump, could benefit from increased spending on the military and on infrastructure, which will increase the demand for workers. At the same time, he expressed concern that reductions in healthcare benefits could shift fiscal burdens to the state.
“Trade policy will become inward looking,” Clayton-Matthews said, which may increase employment but could hurt American exporters and raise prices on consumer goods.
Economic development will be limited by a demographic drag, a decrease in employment growth as the baby boomers retire and population growth decreases, according to Clayton-Matthews.
As labor demand and wages rise, Massachusetts will become increasingly dependent on in-migration to offset population slowing. Clayton-Matthews expects 25,000 net migrants to relocate to Massachusetts over the next several years. Influxes of young labor, especially millennials and international migration, will be vital to the economy.
“It is very difficult for employers to find workers they need now, and companies are working harder to keep the employees they have,” said Clayton-Matthews. “Massachusetts will continue to depend heavily on workers and students who move to the Commonwealth, he said.
View Alan Clayton-Matthews’ complete presentation here.
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