The Boston Indicators Project
Sector Convening Notes
Economy Convening
Tuesday, July 18, 2006

Brief Project Overview
The Boston Indicators Project is a collaborative project of Greater Boston’s civic community. Recognized for its comprehensive framework and selected by the Government Accounting Office (GAO) to help inform the development of national indicators, the project is coordinated by the Boston Foundation in partnership with the City of Boston and the Metropolitan Area Planning Council. Its goals are: to democratize access to high quality data and information; to foster informed public discourse, and; to track progress on shared civic goals. Since 2000, the project has released four biennial reports, the last three as a summary in hard copy and a detailed web-based report on the award-winning www.bostonindicators.org. The Boston Foundation is committed to issuing a biennial report through 2030, Boston’s 400^th anniversary.

To begin to frame the findings of each report, the project hosts a series of convenings in each of the ten sectors it tracks: Civic Health; Cultural Life and the Arts; Economy; Education; Environment and Energy; Public Health; Public Safety; Housing; Technology; and Transportation. Each convening, chaired by stakeholders from within the field, includes a range of perspectives from academic experts, community-based practitioners, public agency and foundation staff, private sector representatives, and consumers.

The convenings range in size from about 20 to 100 participants, the latter for large, complex sectors such as education, civic health and housing, which are broken into sub-sectors, each with its own co-chairs. Each convening uses the same structured agenda, eliciting views on key long –term trends, major developments and accomplishments of the previous two years, and key remaining challenges. The notes are then compiled, reviewed by the co-chairs for accuracy and completeness, and used to frame and prioritize the findings of the next Boston Indicators Report.

What follows are the notes from the Economy convening.

In Attendance:

Co-Chairs: Gail Snowden, Chief Financial Officer and Treasurer, The Boston Foundation; Michael Goodman, Director of Economic & Public Policy Research, The Donahue Institute, University of Massachusetts, and President, The New England Economic Partnership

Fred Alvaro, Partner, Adorno, Yoss, Fitzhugh, Parker & Alvaro, LLP
Milton Benjamin, President, Initiative for a New Economy
Noah Berger, Executive Director, Mass Budget and Policy Center
Barry Bluestone, Dean, School of Social Science, Northeastern University
Angela Brown, Program Officer, Hyams Foundation
William Cheney, Chief Economist, John Hancock Financial Services
Torrance Childs
John Ciccarelli, Assistant to the Chancellor for Economic Development, University of Massachusetts, Boston
Alan Clayton-Matthews, Senior Research Associate, Center for Urban and Regional Policy, Northeastern University
Michael Forrest, President, Evergreen Partnering Group, Inc.
Robert Gallery, Boston Market President, Bank of America
Mike Glavin
Andrew Goldberg, National Program Director, InnerCity Entrepreneurs
Ronald Homer, President, Access Capital Strategies
Erika Kates, Research Director, Center for Women in Politics & Public Policy
Mary Lassen, Senior Fellow in Public Policy, The Boston Foundation
Mary Jo Meisner, Vice President for Communications, Community Relations and Public Affairs, The Boston Foundation
Rebecca Regan, President, Loan Fund, Boston Community Capital
Mark Sternman, Vice President, Research, MassDevelopment
Benjamin Thompson, Executive Director, STRIVE/ Boston Employment Service, Inc.
Peter G. Torkildsen, Executive Director, Massachusetts Workforce Investment Board
Darnell Williams, President and CEO, Urban League of Eastern Massachusetts
Bo Zhao, Economist, New England Public Policy Center

Welcome and Introductions
The co-chairs welcomed participants to the convening and asked participants to describe the primary indicators that they worked with.

Opening Remarks (describing primary indicators with which participants work)

• Cross-cutting and trans-sector issues
• Data on race and income inequalities, as well as broader issues of economic equity
• “Jobs, jobs, jobs…” including unemployment rate and the rate and type of job vacancies
• Minority-owned (and women-owned) businesses and how they can improve relations with the corporate sector in Boston
• Cost of living
• Small business and foundation growth
• Workforce skill
• Access to affordable housing
• Economic strengths
• Innovative ideas (saving $ in waste management)
• Gender inequities
• Access to higher education for women, immigrants, and minorities
• Educational attainment
• Role of higher education and the public sector in the economy
• Competitiveness
• Infrastructure

Context Setting
Michael Goodman provided a historical context for the economy sector

• Innovation plays a major role throughout the history of Massachusetts and Boston. Heavy reliance on human capital and skill of residents; periodic reinvention of economy (most recently the transition to a service-based knowledge economy).
• There is a countervailing trend towards issues of inequity within the city. This is not just a matter of income inequality based on class, race, or ethnicity, but also on educational attainment and skill level.
• To regain economic momentum, Boston needs to reinforce its fundamental strengths and extend opportunities to new groups to overcome this fundamental inequality. Also a question of whether we can continue to rely on the high-tech sector with its associated boom/bust cycle or if diversification of the city’s economic resources is needed.

Key Long-Term Trends, Recent Developments and Accomplishments, and Remaining Challenges
The co-chairs then asked participants to brainstorm key long-term trends, recent accomplishments, developments, and remaining challenges.

Key Long-Term Trends

• Boston’s shift from a manufacturing to a high-tech and health-care based (innovation) economy has been the major economic trend over the past few decades. This has been linked to the increasing quality and importance of Boston’s educational system and health care sector.
• Increasing income inequality (top quintile doubling in 20 years; bottom basically stagnant) and a need for case-specific strategies (can’t use another city as a template for how to solve our problems).
• Issues of income inequality, workforce skill, infrastructure, innovative culture, and education are all linked to immigration patterns.
• Boston’s demographics show a lot of new people entering the economy without sufficient skills and an educational system that is not helping them sufficiently, leaving them unable to participate in the region’s wealth creation.
• ESL and the like are declining in quality.
• Outflow of educated people is a major concern. There is a tendency for people to get educated at Boston’s top flight universities and then leave because they can get better jobs/pay elsewhere (also issues of decline/stagnation/disparities in education by race).
• Not many success stories here for minorities (no high profile successful group), Latino students at Harvard Law School never stay in Boston; Boston isn’t good in terms of diversity (lawyers). Minority students believe they have a better shot at succeeding elsewhere. Need to increase pipeline for local high school graduates (keeping 20% of private university grads and 70-90% of public school grads; this has historically been a major part of analyzing what makes states grow).
• The nature of Boston’s corporate leadership has changed dramatically in the past five years with the departure and consolidation of many of the region’s major locally-headquartered companies (128 companies, banks, financial services, high tech, all got gobbled up). As a result, leaders from other sectors have to step up to fill the void (emerging healthcare and service economy are the new big employers and are important in drawing well-educated immigrant populations). Possible that since hospitals and universities are a different business model, the type of leadership that emerges from this sector will be different, too (new submarket leaders).
• Boston and Massachusetts are recognized as being unfriendly to minority-owned businesses (MA is 43^rd in the nation for new business development among minorities; shocking comparison to Utah here).
• Hispanic businessesmove increasingly to NYC, Chicago, Miami, and say that MA is *hostile* to minority business; hard to form relationships with large corporations (“if you can make it in Boston, you can make it anywhere;” easier to “think NYC, Miami, etc.”). This isn’t a recent trend, either
• Our demographic and immigration trends aren’t indicative of our entrepreneurship (or a new middle class of color). We’re too insular; (not even racism, just civic culture: “if you haven’t been here 100 years, screw you”). Not a lot of statewide support for targeted growth of minority-owned businesses (too much focus on high-tech?)
• Besides issues of educational attainment (test scores will only get us so far, even if we doubled them; we’re doing ok with education), there is also inequity among people with similar and strong backgrounds. This is linked to political power (which translates to economic power here).
• There is a lack of focus and horizontal integration in the local economy.
• Many of the city’s problems stem from resting on our laurels; economic stability will require constant vigilance in the future, during good times as well as bad.
• Employers are withdrawing from long-term education; people not given enough time to earn a degree (jobs and night school, it could take 10 years to earn a degree) and welfare is not supporting it, either.
• Immigration plays a key role in Boston’s economy. A quarter of Boston residents are foreign born, but there is no real responsibility taken in caring for these people or investment made in immigrant communities (malicious, vicious process); need to break down the immigrant metrics.
• National trends in education are impacting Boston: 1)Inner city schools are growing rapidly (LA is building 100 that are all losing money) 2)Students are graduating with no job opportunities in the local economy, and vocational/industry links are failing to provide connections to employment (might be good to track corporation partnership with schools to provide education/work link programs, like Michael Forrest example with waste-to-dishes and school/workforce links).
• Health care is affecting how employers relate to their employees. It’s a job driver, but also a drag. The health care sector is also a center for local innovation.

Developments and Accomplishments, 2004-2006 

• Inner City Entrepreneurs, an organization that helps existing minority/female owned businesses “get to the next level,” is in its third year. The agency helps entrepreneurs with peer-to-peer conversations, coursework for a “streetwise” MBA, and networking with pro-bono advice from others in the sector. Their program helps to create jobs and wealth through a holistic approach, builds robust access to markets, and links entrepreneurs with the business community (speed dating match program recently, matching needs to talents…very successful in helping people who felt isolated). The program is currently working to replicate in Worcester.
• Boston Connects—could be an innovation (connect dots within state government; Boston empowerment zone).
• Decent K-12 restorations in $, higher education and pre-k.
• Mass tech transfer center: Long and short term view, (not a one-time investment).
• Keeping Hanscom in Natick was an accomplishment.
• A workforce competitiveness fund was established; the Cultural Facilities Fund represents an unusual coalition of people.
• Competitive higher education, workforce/creative class and newcomer immigrants (grow our own to be the now, workers of the future, tackle social inequities and labor supply).
• The immigrant community is a more visible political force in Boston today than it was only a few years ago.
• Improvement of wages at the bottom; a new minimum wage law will affect 315,000 people.
• The Initiative for a New Economy is focusing on growing existing firms and managing supplier development, attacking inequalities in regional economy; focus on CEOs in/around Boston ($1 mil or more); team to assess potential for growth (substantial); hire more minorities. Building a portfolio of firms and partners: growth metrics will be clear.
• We haven’t had an economic stimulus bill between 1993 and 2003; now, economic stimulus bills are becoming continuous, putting greater emphasis on the economy and on connecting companies to keep them in the state.
• Five development projects in Dudley Square have been successful.
• Regionally, we are developing an ex-offender strategy designed to normalize offenders’ return to society.
• What about health care? The new health care reform bill is innovative, but it remains to be seen whether it will work.
• The John LaWare Leadership Forum as an accomplishment addressing the need for civic collaboration. Leadership, integration, and collaboration are resonating.
• Boston state hospitals are going to be green…reinforcing the need to be innovative in everything we do.

Remaining Challenges

• Issues for young people in Boston: it’s hard to get an “in” in Boston; even if you get a job, is there any social life here? Young people and people of color want to be able to *live,* not just work, here (Red Sox nation phenomenon notwithstanding). 
• Boston is a very expensive place for young families to live (housing, health care, day care, taxes, etc.), and will never be a low-cost state; we have to ensure that people are willing to pay a premium to live here (with safety, public education quality, a great place to live).
• Boston’s population is only growing in the over 50 demographic and pushing out younger people. If we continue to drive out young people, we’re economically dead in 20 years.
• North Carolina is becoming very successful at keeping young talent in the state through a governor-led coalition of schools and corporations (we need a governor to stay in state to provide this kind of leadership). In NC, everyone links to state systems; we need to link up pre-K through *public* higher education for universal transcript accessibility, etc. (public ed. should be a priority; we’re not going to lose MIT or Harvard).
• What are the “dealbreakers” for businesses and individuals in Boston (e.g., good public schooling, uneven advantages, and inability to afford the cost of living)?
• There is a group of local studentswho aspire to leave Massachusetts for NYC and Chicago (all from families of means). Can they afford the apartments that are available here? Are they not seeing a future social life in Boston?
• Because of the higher cost of living, housing, etc. in Boston, companies locating here need to pay higher salaries and health care costs, making the city less attractive than other low-cost locales.
• No one if talking about energy costs and supply, which will become an increasingly important challenge for Boston.
• Role of job creation in innovation sectors (lagging in high-tech sector)?
• Question: Are housing (and other) costs in Boston high because the market is driving them up (article by Tom Keynes)? We never had the supply side increase that should have come with rising demand due to various barriers to construction (e.g., zoning, permitting, etc.). Despite a boost in production of multi-family housing, lack of production may mean market is saying we have enough people in Boston.
• Are we getting any closer to one or more of the possible scenarios BIP predicted for the city’s future (Boutique Boston)? Compare/contrast to example of Hawaii cab driver working three jobs because baby boomers with cash have driven up the prices in the housing market (could happen here; no local low-cost areas left).
• Governor and Mayor both need to be behind efforts, engaged with economic leadership; don’t currently see the business community as partners, but as infringers on their agendas (there’s a reason Vault doesn’t exist).
• If we have the public and private funding, then people can and will find their way to Massachusetts. Sector needs capital, state involvement, and worker resources to generate jobs. Worker resources need support of ESL, Adult Basic Education, and public higher education services (waiting lists could be an indicator).
• Questions arise regarding whether the economy is going to reinforce inequality. Don’t we *need* low-income service workers? Is inequality serving a purpose?
• There hasn’t yet been market demand for renewable energy, but it’s important to being well-positioned for the future and keeping young people here.
• Boston hasn’t lost the defense technology market yet, which is being reinforced by heavy spending from the federal government.
• Questions arise whether the apparent volatility of Boston’s high-tech economy (with its boom-bust cycles) is simply inherent to the new paradigm. How stable is this new economic model (and our strengths)? What can be done to maintain it and what state policies are needed? Should we work to diversify our economy to avoid this volatility?
• We need more political diversity (minorities still minorities in urban center politics).
• There are questions about the obvious availability of labor…“there are people here; why can’t we put them to work?” Some issue regarding the big “box” stores (K-Mart, etc.) using immigration as a source of cheap, unskilled labor. These companies already have what they need from the labor market (don’t need workforce education); this is happening in NYC, as well. Will redistribution and addressing inequality happen if it is serving a purpose?
• The success of the Bristol-Myers-Squibb deal has raised questions about similar efforts in the future. Can bring together an equally successful coalition in the future? Moreover, how can we do it so that small business as well as large corporations benefit? Success of these deals depends on teamwork to encourage firms to locate here as well as ease/speed of permitting and zoning (getting them in *quickly* is important; too many boards mean that just getting a “no” can take 18 months). We have a reputation for dealing with these issues poorly (need a governor who stays in the state to provide leadership in this area).
• A major part of attracting businesses to the region depends not just on ease of permitting and zoning, but also on being “ready” (having sufficient water and power supplies, etc.; some companies expect power sources for next five generations); we do have high levels of intellectual and innovative power here.
• The tunnel collapse is the worst disaster in 25 years for Boston’s economy. Where’s the civic leadership on this issue?
• BIP should track *policy trends* encouraging workforce development. Education mainly a post-secondary thing (not K-12). The percentage of out of state students who remain in the region to work after graduation is a key number (e.g., Ohio was producing most college grads per capita, but they all left). Is this an indicator of long-term policy shift?