Almost every industry, from hospitals to restaurants, is struggling to hire in Massachusetts. And while some of this may be due to COVID-related factors that will eventually diminish, a new report by the Massachusetts Taxpayers Foundation says one major reason for the challenge is not going away any time soon: demographics.
The new report puts numbers to a problem that economists have long warned about: a shrinking labor force due to declining births, an aging population, and factors related to migration.
“The decline in the birth rate over the past few decades, the aging of our population, the shrinking of our workforce age population, and then the reduction in international immigrants into Massachusetts, all are somewhat troubling because it means our workforce has been and will continue to contract,” said Eileen McAnneny, president of the Massachusetts Taxpayers Foundation, a business-backed group. “I think the trends were ongoing. I think COVID exacerbated some of it.”
According to the report, the workforce-age population in Massachusetts, those ages 20 to 64, peaked at 4.18 million in 2018 and is expected to drop by 180,000 by 2030.
One factor is the low birth rate. At its modern peak, in 1990, there were nearly 92,000 births a year in Massachusetts. In 2020, there were just over 66,000. Massachusetts has the second lowest birth rate in the United States, nearly 20 percent below the national average.
Mark Melnik, director of economic and public policy research at the UMass Donahue Institute, said New England states tend to have older populations than other states, so they have fewer women of prime childbearing age. Massachusetts is also the most educated state in the nation, with women who are educated and participate in the workforce at high rates. Statistically, college-educated women wait longer to have children and have fewer children.
The birth rate dropped during the pandemic, as occurred nationwide, and there was actually an unusual period in 2020 when deaths exceeded births in Massachusetts due to the COVID-19 pandemic.
In general, Massachusetts’ population is aging. From 1970 to 2020, seniors over 65 went from being 11 percent to 17 percent of the population, while the percentage of the population 19 and under dropped from 37 percent to 22 percent. That has strong workforce implications as Baby Boomers retire.
The other factor influencing the size of the workforce is migration. For a long time, Massachusetts has been a state where more US residents are moving out than moving in. Over the past decade, Massachusetts saw 3.6 percent of its population move away. Out-migration spiked during the pandemic, with Massachusetts losing 46,000 residents in 2021, the fourth most of any state.
But Massachusetts has also traditionally benefited from an influx of international immigration, which until recently outpaced domestic migration out of the state. From around 2008 to 2018, the number of international immigrants to Massachusetts grew steadily. However, due to changing federal policy and the pandemic, immigration has dropped since then. In 2021, the number of international immigrants moving to Massachusetts was lower than at any point since 1990. In 2020 and 2021, the number of people leaving the state was higher than the number of people moving in.
Melnick said the problem of Baby Boomers retiring without a younger population coming in to take their jobs is one researchers have long identified. But COVID exacerbated it by speeding older people toward retirement and limiting immigration.
Melnick spoke to CommonWealth while on his way to Amherst to speak at a training session for incoming legislators. Melnick said he planned to focus on the long-range public policy challenges presented by an aging workforce. He said lawmakers will have to consider how to increase participation by groups that are not working in large numbers, like formerly incarcerated people. Other policies that could help would be teaching workers without high school diplomas new skills to help them enter the workforce, creating more affordable childcare so women can more easily work, and lowering housing prices so more young families can afford to live here.
SHIRA SCHOENBERG
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