And Your Mother Too
Massachusetts is facing an open seat election for state governor. It seems like yesterday that Mitt Romney, fresh from his Olympic victories in Utah moved back and without properly re-establishing residency ran in the last open seat election for state governor. How much has the world changed since then? How healthy is our economy? What is our future going to look like?
For starters, houses cost twice what they did four years ago. Sure, some relatively reasonably priced condo’s are on the market but relative is the word. $150,000 is a lot for three rooms. It’s a good thing that during the same time average income increased from about $38k to $41k for individuals in 2004 (2005 numbers are not yet available.) While real estate prices took off wages barely covered inflation and certainly failed to cover the runaway inflation in housing costs.
Let’s further examine that per capita income rate. The median income tells a different story. At roughly $26k, half the population makes slightly more then half of what the average income is. The other half of the population must be doing significantly better. Factor in an 11% poverty rate and you start to see a dramatic swing in the income distributions. So for the per capita to be so much higher suggests that there really is a gap between incomes. The poor can’t possibly be making enough to survive. The middle class isn’t doing much better. The upper class is making the big bucks.
Some folks are poor and some are very wealthy and there is a big gap in between what the haves and the have-nots are earning. So what are the jobs in Massachusetts? There are about a half million jobs that involve producing goods. Unfortunately “goods” is a vague term. It could mean exportable commodities or houses. There are about two and three quarter million jobs in the service economy.
Let’s break down what those two job categories are, first producing goods. What do we manufacture in Massachusetts? Cars? No. Raw materials like timber, coal or oil? No. Houses? Yes, lots of them, one third of these jobs are construction. Unfortunately we can’t export houses. Then what does the commonwealth produce besides college students? About 300k jobs are in manufacturing and three quarters of those are management and R&D. Medical devices and biotechnology are the big industries, well not so much the devices or drugs themselves but the research behind the products and the technology to make them. So research and specialty scientific equipment are our exports. Those are pretty fragile eggs and a very tiny basket.
What about those service jobs. Education, transportation, finance, health care, leisure and the government are the biggest job categories. Those job categories further break down into sales and management being the top two. Food prep beats out nursing by a wide margin. Janitorial and secretarial follow closely behind.
Just to give you an idea of how lopsided the job market is, there are 144,000+ waiters in Massachusetts and 2,600 chemists. There are 125,000+ janitors and 2,700 pharmacists. It would be somewhat disingenuous for me to mention a 50:1 ratio for these two examples but it does illustrate the wide chasm between highly skilled professions and low paying service jobs. In actuality, the ratio is closer to 10:1.
Let’s get back to salary with our new understanding of what the job market looks like. There are ten low paying jobs for every high paying one. Half of the population makes about half as much money or less then the average paycheck and one tenth lives in poverty. There is no middle class left. It sure looks like every one is doing fine. There are so many new cars and McMansions with new granite countertops. Sadly those were mostly financed through cheap home equity loans, not high paying jobs.
What is the big issue that our gubernatorial candidates are debating today? Slot machines. It turns out that income taxes and property taxes on outrageousely over priced houses aren't enough to keep Massachusetts afloat. And I thought we were doing so well.