Getting Back in the Chips
Technology helps Massachusetts revitalize its economy
In an otherwise gloomy economic picture, the state of Massachusetts is a surprisingly bright spot. During the recession of the mid-'70s, it suffered some of the nation's worst unemployment. Its traditional textile and shoe industries, in decline for decades, snuffed out. Yet, last month, when the national unemployment rate hit 10.4%, Massachusetts reported only 7.7%, an actual drop from 9.5% earlier in the year and the lowest rate among the ten largest industrialized states.
What makes the difference in the Bay State? "There's been a complete transformation of our economy," says James Howell, chief economist of the First National Bank of Boston. The vacuum left by the demise of the old mills was gradually filled by such sophisticated service industries as health care, finance and consulting. Tourism plays a part, as do insurance, education, construction and a massive increase in drudging service-sector jobs. But to envious observers in less prosperous states, the magic secret of Massachusetts' success is summed up in one phrase: high tech.
"High tech became to New England what oil is to Houston," says Barry Bluestone, economics professor at Boston College and co-author of the newly published study, The Deindustrialization of America. The scientific revolution of the post-World War II era began in the research labs surrounding Boston and its universities, particularly M.I.T and Harvard. New space-age industries grew up around Boston along Route 128. When the computer age arrived in earnest in the late 1970s, Massachusetts, with an educated but cheap labor pool, was ready. Between 1976 and 1978 alone, 47,000 jobs were generated. Currently, almost 10% of the state's workers, more than twice the national average, are high-tech employees.
Perhaps the most dramatic example of Massachusetts' refocusing is to be found 25 miles north of Boston in Lowell (pop. 92,418). It was there that the first textile mill in the U.S., powered by the waters of the Merrimack River, opened in 1822, and the American industrial revolution really began. Lowell became one of the world's largest textile producers, but by the 1930s slow decline quickened into bankruptcy and industrial flight. By the mid-'70s once humming "Spindle City" had turned into a town too depressed even to tear down its boarded-up mills. Luckily, it so happened that those buildings were the nucleus of Lowell's renaissance.
In 1978 an Urban Development Action Grant helped induce Wang Laboratories, a $900 million computer firm, to move its headquarters to Lowell. By 1982, Wang and other new high-tech firms helped bring 6,000 new jobs to Lowell. Today, companies that assemble computer-age products on the wide-plank floors of restored 19th century mills employ 20% of Lowell's labor force.
"The concern now is, how do you sustain it?" says Massachusetts Democratic Senator Paul Tsongas, who insists that the state's future depends on investment in education, research and training of its human resources. Some worrisome problems remain. The average wage for Massachusetts' largely nonunionized high-tech workers is $7.48 (national average: $8.50), hardly enough to support a family in a state with some of the highest living costs in the nation. Warns Bluestone: "You are getting a dual economy. At one end you have relatively low-wage, highly unstable jobs in retail trades and service. And at the other end you are getting a not insignificant number of skilled, relatively high-wage, relatively secure jobs." Nevertheless, Massachusetts' rally from its dismal situation in the mid-'70s could serve as a future model for those areas blessed with a bit of brainpower and imagination.
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