Since the 1988–1992 downturn, Boston experienced an ongoing economic recovery, with increased employment rates, improvement in the office market, strong sales, and tremendous gains in residential real estate. As in many places across the country, Boston's economy was affected by the events on September 11, 2001. Especially hit were the travel, financial services and high technology sectors, which alone lost nearly 32,000 jobs between 2001 and 2003. Loss of jobs in those areas leveled off in 2004 and began to regain some lost ground, especially in tourism.
Other sectors such as education and health care were not as hard hit. While manufacturing in Boston has lost some ground, it remains an important sector of the economy and is joined by several other traditional industries and some new ones. Boston is considered one of the top places in which to do business in the United States. Major industries include finance, high-technology research and development, tourism, medicine, education, commercial fishing, food processing, printing and publishing, and government.
Early in its history, Boston made its name as a center for the processing of wool and the manufacture of clothing, textiles, shoes, and leather goods. While the shoe and textile industries have suffered in recent decades, they remain significant contributors to Boston's economy.
In the last 20 years, city employment continued to shift from traditional labor intensive manufacturing jobs to technology and service jobs. The economy of metropolitan Boston now primarily rests on high technology, finance, professional and business services, defense, and educational and medical institutions. The city's economy is more specialized in the financial, business and professional services and educational and medical sectors than the suburban economy, which is more specialized in high technology and the defense industry.
Boston's financial district includes major banks such as Fleet Bank, purchased in 2004 by Bank of America, and investment firms like Fidelity Investments. Insurance firms such as John Hancock Financial Services are also a significant presence.
Boston is one of the country's top 10 tourist attractions, focusing on the city's 62 historic sites, its nearly 2,000 restaurants, and its hundreds of hotels. Tourism is a year-round industry in Boston, which hosted 16.3 million visitors in 2004, spending $7.9 billion.
The medical schools of both Tufts University and Harvard University are located in Boston, as is Massachusetts General Hospital, the major teaching hospital for both schools. Education is a thriving segment of Boston's economy; within the city limits are 10 colleges and universities, 6 technical schools, 4 art and music schools, and 6 junior colleges. In towns and suburbs surrounding Boston, educational institutions include many prestigious secondary and boarding schools.
More than two million pounds of fish are caught in the waters in and around Boston each year, making fishing, food processing, and food storage prime industries. Boston is one of the nation's foremost fishing port and wool market. Both large and small printing operations employ thousands of workers in the metropolitan area. Boston's print fare includes several national magazines, scholarly and technical journals, and the Christian Science publications. For years, Boston has been home to the
Atlantic Monthly, one of the oldest literary publications in the United States.
As the capital of the Commonwealth of Massachusetts, Boston is the workplace of many state and municipal employees.
Items and goods produced: machinery, medical and navigational instruments, chemicals, metals, rubber products and clothing, computers, software, missiles and missile guidance systems, ships, shoes and boots, textiles.
Boston's Office of Business Development provides key resources to support small business development. The office offers a full range of services—from financial and referral services to business facade improvement to site finder services—so that each business owner receives whatever help is needed. Businesses may obtain loans through the Boston Local Development Corporation, and financing through the Boston Industrial Development Financing Authority, which issues bonds to finance the capital needs of Boston businesses. ReStore Boston provides grants and loans to renovate store fronts, and provides architectural assistance to do so. The office also has a free Commercial Space for Lease finding service.
The Massachusetts Business Resource Team, under the Executive Office of Economic Development, exists to help businesses relocate to the state, expansion of existing businesses, and creation of new businesses. For new companies, there are Small Business Development Centers in Boston and across Massachusetts, which advise and educate entrepreneurs. The Capital Access Program helps businesses secure loans from approved banks. Expanding or relocating businesses can take advantage of a 3 percent investment tax credit against the corporate excise tax for the construction of manufacturing facilities, or the purchase or lease of equipment. Businesses moving to an "economic opportunity area" or an "economically distressed area" have access to special tax credits and incentive programs. For manufacturers looking for working capital, the Economic Stabilization Trust can provide funds to help get the business on the road to recovery. For businesses willing to move or expand into brownfield areas, Massachusetts provides low cost assessment and remediation programs, and alternative financing options. Technology firms can receive assistance with the Research and Development Tax Credit and the Emerging Technology fund, which provides loans for specialized equipment purchases and R & D,, and biotechnology companies can receive funds for new job creation through the Jobs Creation Incentive Payment. All businesses can take advantage of Safety Training grants for education to improve workplace safety. The Massachusetts Export Center provides counseling, education and technical assistance for businesses in global markets. For business involved in the fishing industry, Seafood Loans assist in the construction or renovations of buildings or equipment.
Boston's Office of Jobs and Community Service (JCS) receives funding from the U.S. Department of Labor, HUD, and the Massachusetts Departments of Education and Transitional Assistance. The state provides matching grants from the Workplace Training Fund to pay for employee training. The state's 32 One-Stop Career Centers provide job finding assistance and career counseling for potential employees; and listing services, job fairs, and recruiting assistance for employers. JCS provides planning and oversight to a large network of community-based organizations who provide residents with a rich variety of training programs. These include basic education, GED and diploma programs, English as a Second Language, job readiness, and a variety of skills training. Additionally, JCS is a partner in a one-stop career center called The Work Place, which coordinates the functions of the Boston Neighborhood Jobs Trust, oversees various human service programs, and houses Read Boston, a major literacy initiative to ensure that all children are reading-proficient by the third grade. There are incentive grants for training when hiring an unemployed worker, or someone receiving public assistance.
The real estate market in Boston continues to thrive with multi-million dollar projects. A special focus is development of the South Boston Waterfront area, and the Fort Point Channel Arts District. Artists for Humanity has a new "green," environmentally-aware 23,500 square foot center providing studio and gallery space for teaching art to inner-city youth. In 2006, construction will begin on a 22,000 square foot addition to Boston's Children's Museum, also in South Boston. Nearby will be a 400-room Marriot Renaissance Hotel, expected to cost $140 million, which will open in 2007. Boston Harbor Residences, a high-end, two-tower rental and condominium development, opens in 2005. Breaking ground in 2005 is the massive $230 million Battery Wharf mixed-use project in the North End, which will be composed of four buildings and include high-end condos and the luxury Regent Boston hotel.
In 2004, the Onyx Hotel, a hip, pet-friendly boutique hotel, opened in North Station. The Saltonstall office building at 100 Cambridge St. was completely overhauled, and in 2004 re-opened as a 279,000 square foot mixed-use tower of condominiums, office and retail space. In the Fenway neighborhood, Trilogy, a $200-million, 651,000-square-foot mixed use development, broke ground in 2004 to bring housing, 42,000 square feet of retail space, and underground parking to Boylston St. and Brookline Ave. Construction will begin soon on a new emergency and trauma center for the UMass Memorial Medical Center, in Worchester, which is expected to cost $129 million. In the Longwood Medical Area, Beth Israel Deaconess Medical Center will start construction on a 700,000 square foot research center, the first building of which will open in 2007. Also in Longwood, the Massachusetts Mental Health Center will get a $200 million make-over in 2005, adding medical offices, research space, and housing, both market value and low-income apartments. A new Intercontinental Hotel at 500 Atlantic Avenue will feature 424 hotel rooms on the first 12 floors, with luxury condos on the floors above, in a $255 million development.
Economic Development Information: Boston Redevelopment Authority, One City Hall Square, Boston, MA 02201; telephone (617)722-4300; fax (617)248-1934. MassDevelopment, 160 Federal Street, Boston, MA 02110; toll-free (800)445-8030. Boston Business Journal, 200 High Street,Suite 4B, Boston, MA 02110; telephone (617)330-1000; fax (617)330-1016
Boston is the oldest continuously active port in the America's. Today, Boston's exports include grains and metals and its imports are petroleum products, automobiles, and general container cargo. In 2004 the port handled 1.3 million tons of general cargo, 1.5 million tons of non-fuels bulk cargo and 12.8 million tons of bulk fuel. Boston's popularity as a port is easily understood: it accommodates even the largest ocean going freighters. One of the best natural harbors in the United States, the Fort Point Channel is 40 feet deep and 7 miles long. Nearly 40 miles of docks and wharves line the shores of Boston's inner harbor, mainly between South Boston and Charlestown. The Massachusetts Port Authority operates the docks.
Facilities include the Conley Container Terminal, the center of container handling, with 2000 feet of berthing space; Boston Autoport, processing nearly 100,000 cars a year; Commonwealth Pier, a huge dry dock in South Boston; and Fish Pier, one of the world's largest and oldest in the country. Cruiseport and Black Falcon Cruise Terminal is a stopping point for 15 cruise lines, such as Norwegian and Cunard. Boston's shipping needs are also accommodated by the network of highways running through and around the city, a large commercial trucking fleet, railroads, and delivery services.
As the home of world-renowned colleges and universities, Boston boasts a highly educated work force. The minority population, including the Hispanic population, is on the increase. Educational institutions are an important source of new, highly skilled professionals for the city's labor force.
Wages in the Boston area tend to be high, as are taxes and office lease rates. Entrepreneurial software and biotechnology companies attracted to the assets of the Massachusetts Institute of Technology have tended to locate in East Cambridge, just across the Charles River from Boston. Analysts have given the city high marks in recent years for improvements in management, and a strong academic and research base should continue to stand Boston in good stead.
The following is a summary of data regarding the Boston metropolitan NECTA labor force, 2004 annual averages.
Size of nonagricultural labor force: 2,398,900
Number of workers employed in . . .
natural resources and mining: 1,200
trade, transportation and utilities: 424,100
financial activities: 182,800
professional and business services: 374,200
educational and health services: 431,600
leisure and hospitality: 206,900
other services: 85,700
Average hourly earnings of production workers employed in manufacturing: $18.65
Unemployment rate: 4.9% (March 2005)
|Largest private employers||Number of employees|
|Massachusetts General Hospital Corporation||14,907|
|Beth Israel Deaconess Medical Center||8,568|
|Brigham & Women's Hospital, Inc.||8,421|
|New England Medical Center||5,077|
|John Hancock Life Insurance Co.||4,793|
|Boston Medical Center||4,650|
|Harvard (business and medical schools)||4,557|
When compared with the national average, living in Boston is expensive, even more so than in other New England cities. The high cost of housing contributes to the overall expense. According to the Tax Institute, in 2005 Massachusetts residents had a much lower state and local tax burden than they used to: the state now ranked 32nd in the nation, and its personal income tax ranked it 12th lowest among states who have an income tax.
The following is a summary of data about key cost of living factors for the Boston area.
2004 (3rd Quarter) ACCRA Average House Price: $466,429
2004 (3rd Quarter) ACCRA Cost of Living Index: 135.4 (U.S. average = 100.0)
State income tax rate: 5.3%; 12% on short-term capital gains.
State sales tax rate: 5.0% on most items; does not include food and clothing
Local income tax rate: None
Local sales tax rate: None
Property tax rate: $10.73 per $1,000 valuation (residential); $32.68 per $1,000 valuation (commercial and other)
Economic Information: Greater Boston Chamber of Commerce, One Beacon St., Fourth Floor, Boston, MA 02108; telephone (617)536-4100. Boston Assessor, telephone (617)635-4287. The Tax Foundation, 2001 L Street, N.W. Suite 1050,Washington, D.C. 20036, telephone (202)464-6200