Strong Job Market Counters Recession Fears
STATE HOUSE, BOSTON, JULY 10, 2023…..Workforce shortages continue to hamper business confidence, with an index encompassing 140 Massachusetts employers barely showing signs of improvement in June.
The 100-point scale index from the Associated Industries of Massachusetts reached 49.7 last month, a gain of just 0.1 from May and 1.1 points lower than one year ago. The index climbed as high as 58.7 points last November, but has been largely flat over the past four months.
The 50-mark on the index distinguishes between optimistic and pessimistic business outlooks.
AIM said the latest nearly neutral rating released Monday reflects labor shortages in “almost every industry,” as well as “stubborn inflation” and the Federal Reserve’s pause on hiking interest rates. With the index nearly in positive territory, AIM described a “strong” job market in Massachusetts.
“As 2023 reached its midpoint, we experienced a tech-fueled stock market rally instead of the recession many economists believe is inevitable,” Sara Johnson, chair of AIM’s Board of Economic Advisors, said in the report. “Employers tell us that even though they worry about rising prices, they also remain desperate to find workers in a tight labor market.”
It’s a familiar worry for all types of employers and for Gov. Maura Healey and policymakers on Beacon Hill.
At the BIO International Convention last month, Healey announced the MassTalent platform to grow the workforce in the life sciences, clean energy and advanced manufacturing sectors, with $50 million available to support partnerships for training partners and companies.
Colleges and universities are critical in tackling the workforce shortages and preparing future employees, particularly immigrant-origin students who comprise a fast-growing demographic, said Marcelo Suárez-Orozco, chancellor of the University of Massachusetts Boston.
“The only group growing enrollments in higher education is immigrant origin students — and they are projected to be the primary group driving growth of the US labor market into 2035,” Suárez-Orozco said in the report. “They play a particularly important role in the science, technology, engineering, and math sector of the economy.”
AIM also reported that the confidence employers have in their own companies increased by only 0.1, notching 51.9 on a separate index. That’s 4.1 points less than last June, the report said.
Small companies were “slightly more optimistic” than large and medium-sized companies across the various economic measures included in the overall index, according to the report. Small companies are defined as having up to 25 employees, while medium-sized companies have 26 to 100 employees, and large companies have above 100 employees, an AIM spokesperson said.
Tax relief measures are being negotiated by a six-person House-Senate conference committee and represent an encouraging sign for employers, the report said. AIM said that tax changes “will at once improve the commonwealth’s economic competitiveness while also helping individuals struggling with rising costs for food, housing and other staples.”
“The governor and the House are wisely seeking tax changes that will improve our economic climate that has seen tens of thousands of Massachusetts residents leave the state in recent years,” AIM President and CEO John Regan said in the report. “We look forward to the final version of tax relief from the conference committee.”
