Consumer prices in Metro Boston are rising faster than the average, making Greater Boston one of the most expensive regions in the nation, squeezing many households, and driving up businesses costs, costing the region many young and talented workers.

• Metro Boston’s Consumer Price Index rose 33% from 1997 to 2006, faster than the US urban average of 26%. Prices increased for every major spending category except durable goods and apparel. Energy costs increased the most (93%) during this period.
• In 2006, Forbes Magazine ranked Boston 94^th out of 200 metros for places to do business. This poor showing is driven by Boston’s rank as the most expensive for business costs. This fact is driven home by the 2006 announcement that Boston based  Fidelity will expand its North Carolina operations by 2,000 employees.
• The Pioneer Institute’s 2006 study comparing Massachusetts business costs to that of competitor states found that while New Jersey and New York costs were generally higher than Massachusetts, costs in New Hampshire, Texas, and North Carolina were significantly cheaper in annual payroll costs, unemployment insurance, rents, and electricity costs.
• Greater Boston remains one of the most expensive markets for housing, and Massachusetts trails only Hawaii and California.  From 2004 to 2005, Greater Boston single-family median prices increased 5%, but retreated 2% from 2005 to 2006. Prices remain 46% higher than in 2000.  Despite weakness in the market and the potential affects of increased foreclosures on sub-prime loans, prices are unlikely to fall to levels affordable to low- and middle-income households.  A recent CHAPA survey cited housing costs as a primary reason for leaving the state.

Boston and Massachusetts have not fully recovered jobs lost in the 2001 recession.  According to US Bureau of Labor Statistics and Massachusetts Department of Workforce Development data, Massachusetts had 3% fewer jobs in 2006 than in 2001, and Boston had 5% fewer jobs in the 3^rd Quarter of 2006 than in 2001, while the US had added 3% more jobs by 2006. While job growth accelerated in the Boston region during 2006, given current trends, 2001 employment levels may not be reached until 2009.

Despite the importance of tax policy as a driver of economic outcomes, the lack of informed public discourse continues. Tax policy has become ideological rather than fact-based. For example, the Tax Foundation calculates that, contrary to popular wisdom, Massachusetts residents currently enjoy below-average levels of local and state tax and fees per $1000 of personal income, and the Commonwealth of Massachusetts currently ranks 28th among all states--much lower that its 4^th place position in 1981. Other New England States (except New Hampshire), as well as New York and New Jersey, ranked among the 10 most tax burdened. Meanwhile, local property taxes are rising and businesses cite the burden of excessive unemployment insurances taxes. While there various ways to arrive at rankings and to draw conclusions, the lack of broadly informed and engaged discourse on this critical issue hinders progress on key public policy initiatives.

Massachusetts, with the highest population in the New England region, is increasingly perceived as "old and cold" in contrast to other US and global regions, and is growing very slowly and only due to foreign immigration, with a looming workforce shortage.

• Massachusetts was the only state in the US to have a net decline in the number of residents in 2004. This decline continued in 2005, with Rhode Island and North Dakota also losing population, and from 2005 to 2006, the Census Bureau reported an anemic 0.06% increase in population.
• The pending retirement of the state’s 1.87 million Baby Boomers over a 20-year period (between 2010 and 2030), a failure to fully educate immigrants to 21st century standards, the continuing out-migration of young talent and families to competitor "city-states."
• A decline in foreign math and science graduate students put the state’s well-educated talent base at risk and suggests a skilled worker shortage in the future.

Education and training needs are unmet for many Massachusetts residents.

• MassINC reported in 2005 that 121,000 new immigrants were participating in the Massachusetts workforce and that without them, the state’s labor force would have declined by 78,000.  While 39% of these new immigrants had at least a bachelor’s degree, many newcomers do not have the language skills to contribute fully to the Massachusetts economy.
• Statewide, despite a 12% decline since 2004, more than 20,000 people were on waiting lists for Adult Basic Education in 2006, including English as a Second Language instruction, according to the Massachusetts Department of Education.
• Fewer than 6% of Massachusetts adults without a GED or high school diploma were enrolled in adult education to boost their knowledge and skills, as reported by MassFESS and the Women’s Union in 2004.  The Center for Women in Politics & Public Policy at UMass Boston notes that employed single mothers--often those who most need to boost their economic prospects--are least likely to access workplace training after hours due to family responsibilities.

Per capita funding for public higher education in the Bay State has declined and is among the nation’s lowest, although more than 90% of state college graduates and 95% of community college graduates are employed in Massachusetts or continue their education one year after graduation.  Massachusetts ranks 49th out of 50 states on FY06 tax appropriations for higher education per $1000 of personal income — and last among Leading Technology States. Per capita appropriations for public higher education were $155 in fiscal year 2007.

There has been a steady rise in income inequality in Boston over the past 40 years, with growing poverty in recent years. Driven largely by disparities in educational attainment — as the economy has shifted from manufacturing to high tech — groups with less education have fallen further behind, while wealth is more highly concentrated among those with more education.

• In 1960 in Boston, the Gini coefficient measure of income inequality stood at 0.335, but by 2000 it had climbed to 0.481. This reflects a national trend, but Massachusetts' change was more dramatic.
• According to the Massachusetts Budget & Policy Center, income inequality grew faster than all but two other states during this period. This trend has continued, as Census Bureau data reveals that the median household income for the top 20% of households in Boston increased from 13.3 times the median household income of the poorest 20% in 1999 to 20.5 times in 2005. Back Bay/Beacon Hill, for example, is one of the wealthiest neighborhoods in the US, and a number of Boston suburbs also show very high wealth. In contrast, high concentrations of poverty persistent in neighborhoods within the region’s older industrial cities disproportionately inhabited by newcomer immigrants and people of color.
• Project Bread’s 2006 report on hunger in Massachusetts found that hunger in low-income communities increased from 8% in 2003 to 18% in 2006.
• The 2006 Kids Count report found that poverty among Massachusetts children increased from 12% in 2003 to 14% in 2005 (See Indicator 3.6.1).
• Unemployment rates for Boston African Americans (10%) and Latinos (11.9%) increased from 2004 to 2005, while unemployment remained stable for whites (5.5%) and fell for Asians (7%). African Americans and Latinos remain over-represented in Boston’s lower-paying service jobs and underrepresented in professional and technical jobs.  According to a 2004 Harvard study, throughout the region, over 10% percent of Latinos aged 16-19 have no diploma, are not enrolled in school, and are unemployed (See Indicator 3.6.3).

Local business headquarters are being lost to mergers and acquisition. According to a MassInsight report, the number of Massachusetts-headquartered Fortune 500 companies fell from 17 in 1995 to 13 in 2000 and to 9 in 2006. Though acquisitions of Boston companies on the scale of Fleet Bank, John Hancock, and Gillette during 2004 and 2005 have been fewer, Germany’s Adidas purchased Reebok in early 2006. In addition, absentee-corporate ownership has led to prominent closures, including the downtown Filene’s department store. It is not clear if Boston will be able to regain its importance as a headquarters city, and philanthropic and civic leadership roles traditionally held by local businesses continues to suffer. The most recent data available shows a drop of 22% in corporate foundation giving in Massachusetts from 2002 to 2004 (See Indicator 1.10.3).