AUTHOR: Deirdre Fernandes
DATE: October 21, 2016
Unemployment in Massachusetts fell to a jaw-dropping 3.6 percent in September, the lowest in more than 15 years, leaving little doubt the state has recovered from the Great Recession and its economy is steaming ahead.
Massachusetts employers have added 63,800 jobs this year, helping to drive the unemployment rate down 1.2 percentage points since September 2015, the Executive Office of Labor and Workforce Development reported Thursday.
“This sure begins to look like the completion of a recovery from a severe and long recession,” said Andre Mayer, former president of the New England Economic Partnership. “This is looking like a version of the recovery boom that we never had right after the recession. It’s come late.”
Many sectors of the Massachusetts economy added jobs in September, but the largest gains came in education and health services, leisure and hospitality, and manufacturing, according to the state. The Massachusetts unemployment rate dropped from 3.9 percent in August and remains far lower than the nationwide rate of 5 percent.
The improving job market is giving sidelined workers further encouragement to get back into the labor force. The number of state residents over age 16 in the labor force or actively looking for work has ticked up by 0.3 percent from September 2015 and is at 65 percent, the state reported.
Executives across the spectrum, from the technology sector to the tire industry, are more upbeat about the state’s economic outlook.
“I’m confident that the economy is going to get better,” said Barry Steinberg, the owner of Watertown-based Direct Tire and Auto Service. He felt optimistic enough to open his fifth location, in Medway, earlier this year, adding more mechanics and sales people and expanding his workforce to 85.
On Thursday, the Massachusetts High Technology Council released a survey of 60 executives that found nearly all of them felt the business environment in the state was holding steady or improving.
“They say, ‘This is a good place for me to be,’ ” said Mark Gallagher, executive vice president of the council.
But Gallagher, Steinberg, and other employers said they are starting to experience the flip side of a booming economy and a tight labor market: the struggle to fill jobs.
“It’s a good thing for the economy, it’s a good thing for employees, but it’s a challenge for employers,” Gallagher said. “It is a business war for talent.”
Economists said the tightening labor market is likely to put even more pressure on employers to raise wages to compete for workers. Although payrolls have grown since the recession ended in 2009, wages have increased much more slowly, meaning that most workers haven’t felt their standard of living improve. That may finally be changing, said Michael Goodman, executive director of the Public Policy Center at the University of Massachusetts Dartmouth.
Steinberg, the owner of the auto repair chain, said he recently had to offer a mechanic a 10 percent wage increase to ensure that he didn’t leave for a higher-paying job at a car dealership.
Employers are also reintroducing perks that they had shelved during the financial crisis and the sluggish years that followed, including signing and retention bonuses, moving expenses, and help with tuition.
Still, it’s not always easy to find workers. Help-wanted ads are going unanswered, and job vacancies are rising.
“I’ve been here for 14 years and I’ve never seen the staffing challenges this intense,” said Kathleen Jordan, senior vice president of Seven Hills Foundation, a Worcester-based umbrella organization for nine nonprofits that work with children and adults with medical and behavioral issues.
Many human service providers, which receive state funding, are limited in how much they can raise wages to compete for workers, she said.
With the labor market tightening and aging seniors needing more services, Jordan expects the search for workers to become worse, she said.
The organization, which has about 3,800 staffers in Massachusetts and Rhode Island, has about 400 openings. It has hired additional recruiters to travel to places with higher unemployment rates — including Detroit, Florida, Mississippi, and Puerto Rico — to find workers, Jordan said.
“They’re not driving to Lawrence to recruit. They’re more likely than not getting on a plane to go somewhere or heading to a national conference,” Jordan said.
“There are just not enough bodies.”