Experts think there’s cause to be optimistic about the Massachusetts economy in 2022. Employers are still hiring, high-tech and biotech investments are smashing records, and the state has billions in federal funds to spend on infrastructure and workforce development.
“The economy has had several bright spots recently,” said Jeffrey Thompson, director of the New England Public Policy Center at the Federal Reserve Bank of Boston. “There are many businesses looking to employ.”
However, an omicron surge has imposed additional limits in certain areas of the globe, raising concerns of a coronavirus pandemic. Overall, hospitalizations have increased. We don’t know how this new surge of illnesses will affect our hospitals, citizens, employees, or companies.
WBUR talked to many experts on the state’s economic trends and their forecasts for 2022.
Massachusetts Employers Remain Confident
Employers are more optimistic than a year ago, says the Associated Industries of Massachusetts. In November 2021, business confidence was 57.9, up from 49.3 in November 2020. AIM uses a 100-point scale. Anything above 50 is optimistic.
But COVID worries, supply chain concerns, and inflation have dimmed that summer confidence.
“Confident employers hire individuals,” said AIM’s executive vice president of public relations, Chris Geehern. “Secure employers invest in new factories, offices, and facilities, boosting economic development.”
Software, biopharmaceuticals, and sophisticated manufacturing will continue to rise, according to Geehern. He expects a robust year for construction owing to a $9 billion government infrastructure boost. Geehern also expects an 11.5 percent growth in Christmas sales in 2022.
But sectors that depend on face-to-face communication may have another challenging year. Restaurants, motels, gyms, and arts institutions are included. Even if some of these places are progressively regaining pre-pandemic levels,
Concerns about a dwindling workforce
Most of the workers who left the labor during the epidemic have returned, speeding up the state’s recovery. But Massachusetts is still 6,800 workers short of pre-pandemic levels. With a reduced workforce and increasing employer demand, hiring will certainly increase in 2022.
According to the Federal Reserve Bank of Boston, the US has only gained around half of the employees lost during the epidemic.
The state’s worker shortfall isn’t crisis-level, but Mark Melnik, director of economic and public policy research at the University of Massachusetts Donahue Institute, says it will require effort to maintain it that way.
Melnik thinks the Massachusetts workforce is seeing a major shift, particularly among low-wage employees.
“People are saying, ‘This work isn’t worth the trouble I’m experiencing right now,'” Melnik added.
Participation in the labor force is a crucial indicator of future growth. However, there were indicators of a shrinking workforce long before the epidemic. Since 1990, foreign-born workers accounted for 80% of Massachusetts’ labor force increase. Net migration has declined in the recent five years owing to Trump administration immigration regulations and epidemic lockdowns.
Given the hurdles, Karen Wallace, AIM’s marketing director, argues Massachusetts can establish a new workforce.
“To propel the economy ahead, businesses will need to hire individuals who don’t look like them,” Wallace added.
They may need to explore elsewhere for skill. Train and attract additional employees in areas of the state with low graduation rates.
Massachusetts Will Need To ‘Re-Skill’
The World Economic Forum expects that 50% of all employees will need to retrain or “upskill” to keep up with a rapidly changing economic climate. In Massachusetts, roughly 40% of employment are in the “innovation economy,” according to the state agency MassTech.
“We are more optimistic than other sectors,” said Patrick Larkin, MassTech’s deputy director.
Confidence is unlikely to wane. In 2020, local biotech businesses invested $5.8 billion, according to MassBio. This should result in approximately 40,000 new employment in the following four years.
Astonishing development in the innovation industry is exciting, but it leaves significant sections of the population behind. This includes numerous individuals of color, non-college graduates, and rural inhabitants outside of Boston.
Larkin said the Baker administration would use federal pandemic relief funds to boost workforce revitalization and training.
“They’re aggressively pushing and engaging with us to identify technological requirements,” Larkin added.
Unions May Have A Big Year In 2022
There’s a lot going on in labor. According to Gallup, 66% of Americans support unions. The Massachusetts AFL-Steven CIO’s Tolman thinks the Biden administration is showing indications of progress.
“The new president and administration revolutionized our lives,” Tolman added.
In addition to Starbucks and Amazon, Tolman cites a re-energized labor movement. The “Protecting the Right to Organize Act,” or PRO Act, is one of the most significant pieces of labor law in recent memory. It would also make organization simpler and penalize employers that interfere with it.
In 2022, Massachusetts voters will have a say on labor and the gig economy. Taxi and delivery drivers might be categorized as independent contractors or employees under a proposed state ballot issue. Similar to California’s Proposition 22, which allows corporations like Uber and Lyft to designate their employees as independent contractors.
According to Beth Griffith of the Boston Independent Driver’s Guild, the proposal would “Uberize everything and create a lower strata of worker.”
Griffith thinks what Massachusetts voters decide might impact gig workers throughout the nation.
Companies like DoorDash, Instacart, Lyft, and Uber support the legislation, claiming it provides employees greater freedom and control over things like scheduling and hours.