The middle-class squeeze

The much-heralded demographic change seen in the latest Massachusetts census numbers is at least partly the reflection of a decade of economic change that was particularly challenging for the state’s middle class.

The 2010 Census data reveal a significant shift in the state’s racial and ethnic composition. Over the decade, Massachusetts added large numbers of Hispanic (+198,925, 46 percent), Asian (+110,709, 47 percent), and African American (+73,364, 26 percent) residents. These increases were accompanied by a significant drop in the state’s white population (-213,559, 2 percent). The net result: Massachusetts ended the decade more diverse than it started (82% vs. 86% non-Hispanic white in 2000), but with very limited population growth (3 percent).

While demographic change is complex, if these trends are consistent with past MassINC research (see Mass Migration, Dec. 2003), this shift is at least partially driven by economic change that has left Massachusetts with an “hour-glass” economy: many low-wage jobs at the bottom, many high-wage jobs at the top, but few middle-wages jobs in between.

In Massachusetts, the middle-wage jobs that have become harder to find were historically held by white residents. The loss of these jobs, therefore, disproportionately translates into white population decline. Past research suggests some white families are leaving the state in search of work elsewhere. In a struggle to maintain a middle-class lifestyle, others are responding by delaying family to pursue higher education and meet career goals. This means many ultimately have fewer children than in generations past.

At the same time, economic change is making the Commonwealth more diverse. The “job shed” (i.e., the geographic area from which employers draw workers) once extended no further than a factory’s surrounding neighborhood. Today, Massachusetts companies hiring at the top of the hour-glass recruit worldwide to find the talent they need to compete in knowledge driven industries. Meanwhile, the state’s growing service sectors continue to provide opportunities for lower-skilled immigrants. At least until the recent downturn, economic migrants were arriving to fill positions at the bottom of the employment hourglass.

The recent Census numbers lend support for revisiting state policy priorities. While it is clear the state’s comparative advantage lies in high-tech industries, attention must also be placed on addressing the disparities that the drive toward a knowledge economy has created. State tax incentives are heavily focused on supporting growth in high-tech companies, but the Census data suggest existing residents are not deriving real benefit from these public investments. Balanced economic development policies are clearly needed to ensure the Bay State provides mobility for people starting out at the bottom rung of the economic ladder as well as stability for the state’s middle class.

In many respects, the economic and demographic change Massachusetts is experiencing is felt most acutely in our state’s cities, where these trends present both an opportunity as well as a challenge. Immigrants are clearly sustaining our cities, particularly mid-size “Gateway Cities” like Worcester, Lawrence, and Lowell. New arrivals infuse these communities with distinct culture and entrepreneurial energy.

While many families continue to find economic mobility and success in Gateway Cities, there is real concern that these communities may not provide the same escalators to the middle class they once offered. In today’s economy, they lack jobs providing lower-skilled workers family-sustaining pay. And children raised in economically unstable families have a harder time gaining the skills needed to compete in the state’s 21^st century economy.

Fortunately, the last 15 years of effort working to close the achievement gap has taught us a great deal about the kinds of support needed to help low-income students succeed. With the recent launch of the Boston Opportunity Agenda, a comprehensive set of support programs funded by Boston’s major foundations and philanthropies, the state’s capital city is well-positioned to provide these services. Gateway Cities, on the other hand, often lack this capacity, but the state education secretary, Paul Reville, is working on a blueprint that could provide more strategic focus to support these communities.

A further challenge that requires attention is incorporating new arrivals into Massachusetts communities. Adjusting to demographic change can be difficult, even in communities that see diversity as an asset and work hard to embrace multiculturalism. New models and strategies are needed to knit back together the fabric of our changing communities so that they can build cohesive coalitions to pursue their future with a common vision.