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THE CONTEXT
KEY TRENDS AND FINDINGS
MAJOR ACCOMPLISHMENTS AND INNOVATIONS 2002 - 2004
REMAINING CHALLENGES
COMPETITION
THE CONTEXT
Boston anchors a regional economy of five million people that extends from Southern New Hampshire to Worcester, Massachusetts and Providence, Rhode Island — making up the "Boston Consolidated Metropolitan Statistical Area," according to the US Census Bureau. At slightly less than 600,000 inhabitants, Boston is the 20th largest US city, yet it has one of the nation’s highest concentrations of population, jobs and income, doubling the size of its population each day as commuters flow into the city to work. Boston’s historic character, world-class museums, reinvigorated cultural sector, new Convention and Exhibition Center, hotels, extensive transit system, international airport and deep-water port, vibrant neighborhoods and natural beauty also make it a destination for tourists and the gateway to New England.
Completion of the Big Dig is reconnecting the city to its waterfront, Harbor and island parks — and making land in the heart of the old city available for a range of exciting new cultural facilities, parks and amenities. Revitalized neighborhood business districts reflect Community Development Corporation (CDC) activity, the City’s Main Streets Initiative, and a spate of new supermarkets, while major new commercial development is transforming many neighborhoods and strengthening Boston’s light industrial sector. In past decades, Boston has shifted from a manufacturing economy to a knowledge-based economy rooted in the research and development emerging from the area’s institutions of higher education and health care as well as the financial, governmental, business, professional and human services sectors. This shift is also reflected in a dynamic and growing nonprofit sector.
The knowledge economy strongly favors educated workers, while the city’s high cost of living, driven by housing costs, has put intense pressure on households headed by those with less education. Growing income inequality is also expressed in disparities in health outcomes. Despite these challenges, one in three Bostonians is between the ages of 20 and 34, and the city’s percentage of college-educated residents is one of the highest in the nation. Boston is also increasingly ethnically diverse, with one-quarter of its residents foreign born. Despite unprecedented economic expansion in the late 1990s, Boston’s economy today reflects the impacts and pressures of globalization and a recent economic downturn, with increasing competition, high office vacancy rates, and, in the past several years, the off-shoring of start-ups and jobs, a spate of mergers, and the sale of Boston’s largest and most iconic corporate headquarters to companies located elsewhere, creating a sense of uncertainly about the future.
KEY TRENDS AND FINDINGS
The same forces of technological innovation and globalization that drove the economic boom in Greater Boston in the 1990s are continuing to evolve, but now are creating a more competitive environment for Boston and the region. Greater Boston continues to offer great competitive advantages through its concentration of higher education, knowledge workers, research and development capacity, and venture capital. Yet lower-cost US regions are competing for knowledge economy jobs. In addition, the economies of China, India, and Eastern Europe, with growing numbers of highly-educated knowledge workers, particularly in engineering and the sciences (where the US is weak), are attracting investment capital, research and development capacity, and increasingly sophisticated jobs and industry sectors. Greater Boston is also experiencing the effects of rising rates of industry consolidation, outsourcing, and off-shoring.
Boston has one of the highest educational attainments rates in the nation — the result of a four-decade trend reflecting a shift from a manufacturing economy to a knowledge economy — and educational attainment levels are driving individual economic outcomes. As the Boston economy has progressively shifted away from its traditional manufacturing base, it has disproportionately favored those best prepared to access professional jobs. Between 1989 and 1999, real mean income in Boston rose by 25% for those with a bachelor degree or higher, but fell by 3% for individuals with only a high school diploma or some college education. Higher education attainment rates rose in Boston from 10.4% in 1970 to 35.5% in 2000, according to the US Department of Commerce, ranking Boston 5th among large US cities for bachelor’s degree holders. (see indicator 3.5.1)
Consumer prices in Metro Boston are rising faster than the metropolitan average, making Greater Boston one of the most expensive regions in the nation and making it difficult for many households to make ends meet. Metro Boston’s Consumer Price Index rose faster than the urban average every year between 1997 and 2003. Prices increased for shelter, food and beverages, transport, energy, apparel, and durables. Medical costs rose more than twice as fast as any other component.
Following the tech bubble bust in 2000, Boston has been losing jobs, but the trend is improving. The Boston Redevelopment Authority (BRA) reports that between 1993 and 2000, Boston added over 110,000 jobs and grew at an annual growth rate of 2.2% to reach 688,079 jobs — a record high. Yet the city b
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