John O. Harney: Powering a slow recovery

The economic recovery  from the Great Recession is not jobless as economists once warned, but it is slow and uneven. Every month, the Hamilton Project at the Brookings Institution reports on the number of jobs the U.S. economy will have to create to return employment levels to where they were when the Great Recession began in December 2007, while absorbing people who enter the potential labor force. At the end of May, this jobs gap was 3.6 million. If the economy adds about 191,000 jobs a month—the average monthly growth rates since the jobs recovery began in March 2010 — the gap will not close until August 2017.

Meanwhile, in a recent study by the Federal Reserve, nearly half of Americans say they either could not cover an emergency expense costing $400, or would cover it by selling something or borrowing money.

The jobs recovery has been one of the measures that has preoccupied the New England Economic Partnership (NEEP) in recent years.

NEEP is a member-supported nonprofit that provides economic analyses and forecasts. Historically, NEEP published macroeconomic forecasts of the New England region and its six individual states and held semi-annual “Outlook” meetings packed with colorful content about the economy in our backyard: which industries and occupations are expanding, which are shrinking and so forth.

The meetings used to begin with a national context set by big economists such as Moody’s. This was typically followed by state-specific forecasts from New England academic and corporate economists who volunteer to offer a report focused on each state’s economy, but tied to the particular conference theme: in the case of spring 2015, energy. The forecasts always rated a short report in the big daily New England newspapers and AM radio news—mainstays of taking the region’s economic pulse.

But these are somewhat leaner times for the economists' organization that always was a bit unsung. Last year, NEEP decided to do only one forecast per year, though forecast managers offered to do their own updates for this special conference focused on "Building the Backbone of Energy Efficiency" and held in June at the Federal Reserve Bank of Boston. The spring 2015 conference was co-sponsored by the Massachusetts Business Roundtable and Brandeis International Business School, the latter of which has become something like NEEP’s guardian since the New England Council (NEC) ended a short-lived sponsorship in 2013, and Brandeis Prof.  John Ballantine became NEEP president. (The NEC, meanwhile, in partnership with Deloitte Consulting LLP, published a study on the promise of New England’s advanced manufacturing sector to provide jobs to middle-class workers.)

This year, NEEP broke with tradition, skipping the usual national forecast and going straight to the energy theme and the always-informative state forecasts—but this time without one of the six states: Rhode Island.

The energy discussion featured talk of a perceived abundance of oil and gas, much of it drawn from shale, as well as ambivalence about fracking, interest but underachievement on renewable resources and dreams of more pipelines.

New England’s energy prices have long been among the highest in the U.S. All six states rank in the top 10 nationally in terms of highest electric rates. Kevin Lindemer, managing director of IHS Global Insight/Cambridge Energy Research Associates, pointed out that despite so much talk about wind and solar, the region is reliant on gas, which we don’t have enough of, and nuclear, which we have a love-hate relationship with. Indeed, Maine and Vermont each closed nuclear power plants in recent years.

The spring 2015 state gigs were done by: Fairfield University  Prof.-Emeritus Edward Deak (Connecticut); Ryan Wallace of the University of Southern Maine (Maine) in place of his colleague Charlie Colgan (the canny Maine economist whose department's dismissal from the struggling university a year ago was an ominous sign of New England economic uncertainty); Northeastern University Prof. Alan Clayton-Matthews (Massachusetts); New Hampshire Center for Public Policy Studies economist Dennis Delay; and Vermont economist Jeff Carr.

Deak noted that Connecticut has 1.1 percent of the U.S. population, but contributes lower proportions of greenhouse gases. Spurred by fears of climate change, the Connecticut legislature has mandated that 27 percent of the state’s energy be supplied by renewable sources (including solar, wind, hydro, fuel cells and biomass) by 2020. Right now, the renewables portion is less than 5 percent, Deak said.

Deak added that Connecticut’s housing market is still suffering from the distresses of the Great Recession. (Nationally, the Labor Department reported that builders broke ground on new homes in April at a faster rate than at any time since November 2007.)

Wallace reminded the audience that Maine is the nation's oldest state in terms of residents' age and observed that the state is energy-intensive because of its traditional industries of paper (which is in free-fall) and shipbuilding. Fully half of Maine’s electricity comes from renewable sources—hydro, biofuels and wind. The big issue in Maine, Wallace said, is transmission: pipelines and high-voltage power lines to carry energy to and from Maine.

Clayton-Matthews said that while the Massachusetts economy has been outperforming the U.S., youth unemployment is disturbing—nearly 12 percent for people under age 25. And the number of people who want full-time work but have only part-time is more than twice what it was in 2007. Also labor force growth will decline to almost zero by 2018.

Delay reported that the Granite State added jobs, but the problem is job quality: two of three added jobs pay below state average wage. Moreover, Delay pointed out, the Market Basket worker protests of 2014 hit New Hampshire especially hard.

Energy prices in New Hampshire are very volatile, Delay said, noting that what used to be Public Service of New Hampshire is now Eversource. And in an effort to contain energy costs, proposals have surfaced that would pull New Hampshire from the nine-state Regional Greenhouse Gas Initiative designed to reduce carbon emissions.

Carr said that Vermont has very energy-intensive industries form computer chips to famous food businesses including cheese, ice cream, craft beer and coffee. Vermont’s Comprehensive Energy Plan would have 90 percent of the state’s energy use coming from renewables by 2050.

TDI New England wants to build a 1,000-megawatt transmission line to carry electricity generated by Hydro Quebec in Canada to markets in southern New England. The so-called “New England Clean Power Link” would pass under nearly 100 miles of Lake Champlain, and the developer promises to include phosphorus cleanup, habitat restoration and recreational improvements.

“To be competitive in the future, New England must find ways to invest in a flexible grid and a mix of less expensive energy sources—gas, hydro, wind,” said Ballantine. “This requires a coordinated energy policy across the six New England states and investment of billions of dollars to modernize our infrastructure."

Lindemer observed that 60 percent of oil goes into transportation worldwide. Despite all those gas guzzlers you see out there, Lindemar claimed oil and gas are not “exhaustible” like fish and trees, especially with the cost of fracking going down as people learn how to improve the environmentally controversial practice—even pursuing so-called superfracking to crack more and deeper fissures in the earth to release more oil and gas. Talk about cracked.

John O. Harney is executive editor of The New England Journal of Higher Education (nebhe.org), on whose Web site this piece originated.

James Brett/John Hailer: N.E. manufacturing needs workers

BOSTON New England’s manufacturing sector is often viewed as a dwindling, weakened force that is much more a piece of our past than a relevant component of our present economy.

But the reality is manufacturing is still a strong sector for the region: it just looks different. Last year, Rhode Island , for example, exported $1.68 billion in manufactured goods, and manufacturing remains a critical piece of the local economy.

Despite this success, it will take a partnership among New England policymakers, business leaders and academia to fully realize the opportunities presented by modern, high-tech advanced manufacturing.

Today it’s the knowledge economy that drives so much wealth and has become the key to a new industrial age. This is an opportunity for all of the New England states and citizens at all income levels. But we will only reap the benefits by making the correct investments and taking the proper actions.

The use of highly precise components, product customization and complex designs are pushing the need for better technology and a more highly skilled workforce. Already, nearly 60 percent of the more than 640,000 manufacturing jobs region-wide are categorized as “advanced.”

That means  that New England is uniquely positioned to enhance the industry’s success since the most common requirements of emerging and growing technologies are right in our wheelhouse. Consider where our region’s manufacturing strengths lie: aerospace and defense, medical devices and biotechnology, semiconductors and complex electronics. We also have region-wide capabilities in software, artificial intelligence, robotics and advanced materials, which further strengthen these core industry clusters.

But we face challenges that must be addressed. On top of New England’s high cost of doing business, we have a shortage of qualified labor. There is also a general lack of awareness of the employment opportunities in advanced manufacturing.

Small and medium-sized manufacturers also struggle to scale effectively and adopt emerging technologies at the rate demanded by their larger colleagues and competitors. We have the ability to provide vital technical assistance, and we should do so.

Every challenge we face also represents an opportunity to be harnessed. And we can accomplish that with a comprehensive plan.

The New England Council, in partnership with Deloitte Consulting LLP, recently published a study that assesses the state of advanced manufacturing in the region and offers several key recommendations to best position New England to grow its advanced manufacturing sector for future generations of middle-class workers. Indeed, this report acts as a roadmap for New England’s sustained industry advantage.

The first stop: industry partnerships and apprenticeships. Our region must expand collaboration between industry and educational institutions so that students are not only ready to work, but can generate new ideas and spur innovation. We also need more connective tissue in the education pathway. This means a fully integrated system beginning in high school that carries through higher educational institutions, technical and vocational education, internships and work experience. An entire silo of our education system ought to be dedicated to creating the manufacturing workforce of the future.

Additionally, we must develop the programs and support necessary to help small and medium-sized entrepreneurs and manufacturers grow to scale.

New England policymakers must play a leadership role in aligning public policy with the needs of this industry. An important step would be to secure a federally-supported National Network for Manufacturing Innovation (NNMI) institute in our region, a “teaching factory” that would serve as a resource for industry here and nationwide.

Lastly, the report calls for building a better brand. Even when we call it advanced, “manufacturing” sounds old and tired. The truth is we are at the cusp of a real “maker revolution.” And that far better reflects the high pay, critical thinking, advanced technologies and innovative designs that define it.

Our region is at a real turning point and it is critical that stakeholders from industry, academia, and government heed this call to action and respond appropriately. If we are to cement New England’s ongoing legacy as a leader in manufacturing, it will take a collaborative effort from Newport to Bangor.

 John Hailer is chairman of the New England Council, and president and CEO for Natixis Global Asset Management in the Americas and Asia. James Brett is the New England Council’s president and CEO.

This essay originally appeared on The Providence Journal's Commentary pages.