McKinsey report lays out need for ambitious state investment
Derided by some, 'Future of Work' report is actually a strong call to action
MUCH OF THE commentary on the McKinsey report commissioned by Gov. Baker on the future of work in Massachusetts seems to encourage the prospective reader to simply leave the report on a shelf unread. Its findings and forecasts have been criticized as being both predictable and inaccurate. But I hope that advocates for a more equitable and prosperous Commonwealth will not ignore this report.
Like Dickens’ Ghost of Christmas Yet to Come, the McKinsey report describes a Massachusetts future that, unless we change our ways, will be even more inequitable, less affordable and more prone to traffic congestion than it is today. To its credit, the report does not treat this outcome as inevitable, outlining several ways in which a brighter future could be secured. Indeed, the report implicitly but effectively makes the case for a ten-year “Marshall Plan” through which the Commonwealth makes the investments truly needed for everyone across the state to be successful in the coming decade. Advocates looking to make the case for such an ambitious undertaking will find all the support they need in the McKinsey report.
The report is at its best in describing the scale of the changes that Massachusetts is experiencing, due both to the COVID pandemic and to larger, pre-existing trends in our technology, economy, and society. According to the report, as many as 400,000 people in Massachusetts may need to learn how to do a new job over the next 10 years. The Commonwealth will also need up to 200,000 new housing units and 30,000 new childcare workers during that time to adequately meet our residents’ needs. Big changes are coming.
There is no suggestion in the report that we will be able to meet these needs with current policies and programs. Although the report lays out the scale of the challenges to be addressed, it does not calculate the cost of addressing them. But that math is not complicated: the challenges described in the McKinsey report will require major new investments over the next 10 years in the range of $20 billion to $30 billion.
Take the example of housing. Experts in the field will all tell you that, given land prices and construction costs in Massachusetts, a public subsidy of at least $100,000 per unit is generally needed to make a new home (whether house or apartment) truly affordable. An investment of $1 billion might then support the creation of up to 10,000 new affordable housing units. But in a state with almost three million housing units today, a state which (according to the McKinsey report!) needs up to 200,000 new homes in the next 10 years, the right level of investment needs to be closer to $10 billion than $1 billion.
Similarly, retraining 400,000 people (as estimated by the McKinsey report!) at a minimal cost of $5,000 per person (which might reflect, for example, one year of community college) could add up to a total of $2 billion. Each of the six other “core insights” in the report also supports significant corrective interventions. (On transportation, although the report forecasts a decline in use of our current public transit systems, it leaves out any consideration of how new patterns of living and working might require new and different transit investments.)
An honest assessment of the true scale of needed investment in this way puts the current headlines about the “windfall” of federal relief funds and state budget surpluses in a new light. In fact, the full deployment of all those monies against the challenges outlined in the McKinsey report would amount to a mere down payment towards what will be needed over the next 10 years.In a Commonwealth that (according to the McKinsey report!) “benefits from a moderate tax regime” for its residents and businesses, there should be no consideration of treating these funds as “surplus” to be “returned” to the taxpayers. Let’s listen to the McKinsey report, make ambitious plans for a prosperous and equitable Commonwealth, and invest big in our collective future.
Gregory Bialecki is a principal at Redgate, a Boston real estate development firm. He served as secretary of housing and economy development under Gov. Deval Patrick.