Massachusetts Economic Overview

INTRODUCTION  The Stata Center at MIT Ranked third among all U.S. states in per capital gross state product (GSP), Massachusetts has a varied and robust economy that flourishes amidst a rich mixture of history, culture, sports, education, and medicine. The state is famous as one of the world’s best medical research centers, and its universities and colleges are major employers. In addition, technology, electronics, and financial services contribute heavily to the state’s GSP of approximately $352 billion. Massachusetts is also a major commercial fishing state, with New Bedford producing around half of the scallops in the country. Boston has been the economic and cultural hub of the state since colonial times, and tourists from around the globe make it one of the world’s most popular destinations. ECONOMIC HISTORY In the 17th and 18th centuries, the economy of Massachusetts was mostly based on agriculture and maritime trade, and its ships were sometimes the victims of the Golden Age of Piracy. Massachusetts was the first state in the country to abolish slavery, and by the 1870s, it had become the first state in which more people lived in urban areas than on farms, as more immigrants became part of the workforce. During the 19th century, Massachusetts was one of the leading states in the Industrial Revolution, as textile factories and manufacturing industries developed and the agricultural economy changed to an industrial one. Shoes, furniture, and textiles were produced in these factories, which were powered by steam engines. Historic Mill Turbine in Suffolk County By the early 20th century, the economy shifted to heavy manufacturing, especially for the military. As science-based industries and technology developed, by the 1970s many high-tech companies employed graduates of Massachusetts universities. Today the economy is based on technological research and development and the service sector, including health care and tourism, especially in the Boston and Cape Cod areas. AGRICULTURE Ranked second in the country in the production of cranberries and blueberries, Massachusetts’s agricultural sector provides 40 percent of the total direct sales of farm products in New England. More than 80 percent of the farms in Massachusetts are family-owned, and the average direct market sales are $25,356 per farm, the second highest in the country. Annual revenues from agriculture are some $6 billion, and agritourism accounts for $5.3 million annually. The leading agricultural products in the state are greenhouse and nursery plants (35 percent), dairy products (15.6 percent), cranberries (17 percent), sweet corn (4 percent), and apples (3.5 percent). There are more than 13,500 workers in the agriculture sector with a combined annual payroll of $99 million. BANKING AND FINANCE Boston Is a Major Financial Center Boston, the Massachusetts state capital, is also its financial capital, hosting the Boston Stock Exchange and serving as one of the nation’s major financial centers. The Massachusetts Banking Association represents more than 200 banks in the state with a combined total of more than $1.8 trillion in assets. These banks include commercial banks, savings and cooperative banks, and savings and loan institutions. Altogether, there are more than 3,000 banking institutions in Massachusetts with more than 78,000 employees, who earn a combined annual payroll of some $4.5 billion. About 80 percent of insured financial institutions are savings institutions. COMMUNICATIONS The first overseas mail depot in the U.S. was established in Boston in 1639, and Alexander Graham Bell first demonstrated the telephone there in 1876. All major networks are represented in the two television markets in the Boston and Springfield areas. Some 100 newspapers are published in Massachusetts in both print and online versions. Airvana, a firm that builds mobile broadband access, recently won the Company of the Year Award from the Massachusetts Network Communications Council due to its revenues of more than $100 million. CONSTRUCTION The construction industry in Massachusetts currently employs roughly 108,400 workers, a drop from 2006 figures of 143,600. (Many residential and commercial real estate projects were cancelled or postponed due to the recent worldwide recession.) The average annual pay of a construction worker in the state is around $59,000. Nonresidential construction spending totaled around $13 billion, with direct construction spending accounting for $27 billion. Out of the 19,000 construction companies in Massachusetts, most (93 percent) are small businesses with fewer than 20 employees. EDUCATION Harvard Medical School With more than 40 colleges in the Boston area alone, Massachusetts has always been a leader in education. In 1852 it was the first state to pass compulsory school attendance laws. Massachusetts was also the first state to open a training school for teachers, a college for women, a state school for special education children, and a school for the blind. There are more than 974,000 students enrolled in the public elementary and secondary schools, and more than 473,000 students enrolled in more than 110 degree-granting institutions. Harvard University, the country's first college, has more than 20,200 students, a faculty of about 2,100, a staff of more than 13,000, and an endowment of almost $26 billion. The neighboring Massachusetts Institute of Technology (MIT) has more than 10,300 students enrolled, a faculty of more than 1,000, and an endowment of $8 billion. ENERGY Massachusetts is committed to exploring renewable energy with the aim of reducing waste and pollution. The state’s clean energy sector provides 14,400 jobs, and Massachusetts is an incubator for clean energy firms, with 32 percent reporting annual revenues of more than $10 million. Electricity is supplied via hydropower by large dams and pumped storage facilities with capacities of more than 151 million kilowatts. Since 2008, the number of wind turbine installations has more than doubled, with 21 turbines supplying 15,220 kW of electricity. The Massachusetts Sustainable Forest Bioenergy Initiative, funded by the U.S. Department of Energy and the Massachusetts Technology Collaborative, is working on utilizing some of the four million tons of woody biomass in Massachusetts to generate 150 million watts of electricity. One nuclear power plant operates in Plymouth, with an average capacity of 557 million watts. ENTERTAINMENT Similar to other states, Massachusetts offers film industry tax incentives to encourage film production in the state. Tax credits of $113 million were generated in 2008, 91 percent of which went for feature films. Some 18 percent of the $289 million in industry wages paid in 2008 went to Massachusetts residents. Almost 2,000 full-time jobs were created by the film industry the same year, which added $52 million in 2008 to the GSP, not including wages paid to nonresidents of Massachusetts. Income tax paid on direct film production activity was $17.5 million. INSURANCE The Old John Hancock Building (left) and the New John Hancock Building (right) Some of the largest life, property, and casualty insurance firms in the country have their headquarters in Boston, such as John Hancock Mutual Life and New England Mutual Life Insurance Company. More than 3.2 million life insurance policies worth $277.2 billion can be in force in a given year, with death benefits paid in a year totaling $1.2 billion. Massachusetts was the first state to implement a no-fault automobile insurance law, but was the last state in the country to change from state-set auto insurance rates to a competitive rating system. In 2008, insurance companies in Massachusetts collected $1.7 billion in premiums for home insurance policies. MANUFACTURING There are more than 10,000 manufacturers in Massachusetts producing over $77 billion worth of goods. More than 266,000 employees work in this sector at an annual combined payroll of $15 billion. Some of the top manufactured products in Massachusetts are computers and electronic equipment, and there are more than 2,100 companies in this state that work in the sector. Together these companies employ some 91,900 workers and have estimated annual sales of more than $78.4 billion. In addition, Massachusetts houses nine branches of General Electric, ranked by Forbes in 2009 as the world’s biggest company. Military communications systems, fabricated metal products (knives and valves), and pharmaceuticals are also important manufactured products in this state. Alkermes, a pharmaceutical company based in Waltham, employs more than 500 workers and has revenues of more than $326 million. MINING AND EXTRACTION Some 1,200 employees currently work in Massachusetts’ mining and logging industry, producing nonfuel minerals worth about $210 million. Their average annual salary is around $49,000. Although the state accounts for less than one percent of the total U.S. nonfuel minerals produced, it ranks fifth in the production of dimension stone, worth nearly $12 million. The annual production value of crushed stone is approximately $109 million, sand and gravel are worth $90 million, clay around $321,000, and gemstones account for $1,000. NONPROFIT Boston Medical Center There are more than 24,000 nonprofit organizations in Massachusetts, some 9,000 of which have combined assets of more than $161.5 billion and expenditures of more than $52.1 billion. Institutes of higher education and hospitals have 57 percent and 12 percent of the assets, respectively. Human services account for most of the charitable nonprofits, at 25 percent, and include job training, shelters for the homeless, and soup kitchens; arts, culture, and entertainment make up another 21 percent, and educational services add another 20 percent. Around 65 percent of the revenue from nonprofits comes from the sale of goods or services, while private donations account for another 24 percent. Some 420,000 people are employed by these organizations, with an annual average income of $68,800. RETAIL The retail sector in Massachusetts employs approximately 569,000 residents and has total annual sales of $112 billion. Around $4 billion a year is collected as sales tax. The motor vehicles subsector posts the most sales, followed by food and beverages and general merchandise stores. Walmart, with nine supercenters and 37 discount stores in Massachusetts, employs a combined total of more than 12,300 workers at an average wage of $12.66 an hour. Aside from the $72.7 million in sales taxes to Massachusetts that Walmart collects, it also pays more than $18.5 million in corporate income tax. TECHNOLOGY The information technology sector in Massachusetts consists of more than 3,000 companies employing more than 170,000 workers. The state's IT sector spent some $65 billion in 2008, and the cumulative effects of spending by the industry, suppliers, and employees contributes some $14.7 billion in fees and taxes to the federal, state, and local governments. There are vigorous industry associations providing support for IT businesses and hold networking and educational events, such as the Massachusetts Technology Leadership Council, Inc., Massachusetts Innovation and Technology Exchange, and MassNetComms. In addition, 280 biotechnology companies such as Pfizer, Novartis, Merck, and Abbott Laboratories have locations in Massachusetts, employing approximately 26,300 workers. TRANSPORTATION MBTA's Forest Hills Station Logan International Airport is the major airport in Massachusetts. More than 25 million passengers travel through it annually, making it the 12th busiest airport in the country in terms of international travel. Some 12,000 workers are employed by the airport, which has an annual impact of $7 billion on the area’s economy. In addition, there are more than 40 public airfields and 200 private landing strips in the state. Twelve interstate highways traverse Massachusetts, and the Massachusetts Bay Transportation Authority (MBTA) runs subway, bus, and ferry systems in the Metropolitan Boston area. The MBTA is the country’s fifth largest mass transit system in terms of daily riders, and around 36 percent of its total revenue comes from fares. Every week there are approximately 1.1 million passenger trips taken on the MBTA system. The federal government provides about $23 million in grants and the state of Massachusetts contributes $112 million toward the running of the MBTA. Amtrak runs trains from Massachusetts to other states, and as of 2009, there are still 13 common carrier railways that are hauling freight in Massachusetts. The Port of Boston handles more than 15 million metric tons of cargo every year in addition to cruises for more than 233,000 tourists annually. TRAVEL AND TOURISM Old Sturbridge Village Some 26 million visitors tour Massachusetts annually, spending around $11.7 billion and supporting more than 147,600 jobs. About 43 percent of tourists visit its eastern coast, including Boston, Cape Cod, Nantucket Island, and Martha’s Vineyard. The World Wildlife Fund has named Massachusetts one of the world’s top 10 whale-watching spots, with a variety of species of whales found just off the coast. Attractions in the western part of the state are the Basketball Hall of Fame and the Dr. Seuss National Memorial (both in Springfield) and the battlegrounds of Lexington and Concord in Middlesex County. Every December, Boston residents dress up in colonial attire to re-enact the historic Boston Tea Party. For more history, Old Sturbridge Village is a recreated New England village from the 1830s where visitors can talk with costumed historians and see how colonial farmers, blacksmiths, and housewives lived. SPECIAL INDUSTRIES Since the Springfield Armory was chosen by president George Washington to produce guns for the U.S. Army, the economy of Western Massachusetts has been based on firearms production. Founded in 1852, Smith & Wesson produces firearms for most of the police departments in the nation and is the largest gun manufacturer in the country. Smith & Wesson employs more than 1,450 workers and has annual revenues of more than $296 million. The Savage Arms Company, located in Westfield, Massachusetts, also manufactures a variety of firearms. The arms and ammunition industry of the area has grown from supplying the U.S. Army to become a worldwide supplier of arms to thousands of police stations and commercial dealers. More than 1.8 million firearms are turned out annually from the region. -World Trade Press