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Economy Shows Progress, but Workforce Remains a Challenge

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Economic Outlook

Reasons for Optimism — and Concern

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Chris Geehern says there’s been a slight but significant uptick in the Business Confidence Index issued each month by Associated Industries of Massachusetts (AIM).

That increase is one of the many reasons why he and others are … wait for it … cautiously optimistic as the calendar turns to 2023. That phrase has been put to heavy use in recent years and recent months, especially with so much uncertainty regarding the economy due to forces ranging from COVID to inflation to an ongoing workforce crisis.

“If the workforce grows 1.5% and the number of jobs grows by 21% or 22%, as they’re projecting, we have a problem — a big problem.”

Chris Geehern

Chris Geehern

But as the state and region put 2022 in the rear view and focus on a year with even more uncertainty, there are some reasons for optimism, said Geehern, executive vice president of AIM, and that is reflected in the numbers he’s seeing.

“Our members seem pretty confident about the prospects for their own companies,” he said. “And they are reasonably confident about the state and national economies. There are certainly lingering concerns about interest rates and about whether there will be a soft landing or not. But, by and large, we’re finding that Massachusetts companies are resilient, and they seem to be navigating this kind of economic cycle pretty well right now.”

Elaborating, he said unemployment remains comparatively low, and the state’s economy grew in the third quarter, albeit slowly, after two quarters of negative growth — another positive sign. “So, by and large, employers don’t seem to be deeply concerned by the short-term economic cycle.”

Bob Nakosteen, a semi-retired Economics professor at UMass Amherst, agreed. He told BusinessWest that, in addition to growing optimism, inflation is starting to cool, a sign that the Fed’s decision to aggressively raise interest rates may — that’s may — be working. It could also be a harbinger of lower rate hikes in the future, which would certainly help business owners and consumers alike.

“And I think inflation is already a lot lower than is being reported,” said Nakosteen. “The month-to-month figures are pretty low … I think inflation is going to drop, maybe not dramatically, but considerably in the next few reporting periods.”

Elaborating, he said ‘dramatically’ would be a drop to the 2% target set by the Fed (at its height, inflation was closer to 8%), while ‘considerably’ would be to the 3% to 4% range, which is what he expects.

“And if that’s the case, then the Fed is going to ease off on interest rates,” he said, adding that such actions should bolster the stock market and the economy as a whole as the dramatic increases in the cost of borrowing start to ease.

Meanwhile, there are other signs that the picture is improving and the odds for recession in 2023 are moving lower, said Nakosteen, adding that the labor market remains quite strong, and the Atlanta Federal Reserve’s projections for GDP in the fourth quarter are for 3.2% growth — this on top of what has been a strong Christmas season for retailers.

“The signals just aren’t there for a serious recession — or even for a recession at all.”

Bob Nakosteen

Bob Nakosteen

“I think that economic growth is going to slow down, and if we do get into a recession, it will be a mild one,” he said, adding quickly that his track record with projections is decent but not spectacular. “What continues to amaze me is the strength of the labor market; unemployment is still at or just over 3% both nationally and in this state, and in Western Mass. as well. “The signals just aren’t there for a serious recession — or even for a recession at all.”

But while there is cause for some optimism, there are many concerns as well, especially when it comes to the workforce.

Indeed, in 2022, it became obvious to most in business that the problems seen in 2021 when it came to companies being able to fill positions with qualified help were certainly not temporary in nature. They persisted into 2022, and in some cases were exacerbated.

Now, there is what Geehern, summing up the thoughts of AIM’s members, called “deep concern” about what has become a workforce crisis in this state.

“‘I can’t find the people I need to make my business grow’ has become part of the vernacular in this state,” he said, noting that, as part of the Business Confidence Index survey, AIM asks an open-ended question, along the lines of ‘what are you worried about?’

And, increasingly, owners of businesses large and small are worried about workforce.

“I would say that 75% to 80% of the responses to that question every month have to do with talent acquisition, talent retention, and the availability of workers,” he said. “And the concern is that this isn’t the function of an economic cycle; it’s really a deep, structural inflection point for the Massachusetts economy.”

As he explained why, Geehern cited some rather alarming statistics from the Massachusetts Department of Economic Research, which projects that the number of jobs in Massachusetts will grow by 22% between now and 2030. Meanwhile, projections from various economists indicate that the state’s workforce will grow 1.5% by 2030.

“If the workforce grows 1.5% and the number of jobs grows by 21% or 22%, as they’re projecting, we have a problem — a big problem,” Geehern said. “This was going on anyway — it’s partially a function of demographics — but it’s been exacerbated by the newfound independence that remote work has given to employees.”

Given this unsettling math, Geerhern said there are things the state and individual employers must do to make themselves more attractive — not just to businesses, but to workers on all levels.

“Traditionally, we’ve focused on what creates the environment where businesses can start and grow in Massachusetts, and we’re still committed to that,” he said. “But at the same time, we also recognize that you have to create a quality of life that makes people — workers — want to live here in Massachusetts. And that means looking at the cost of living.

“Massachusetts ranks number one in terms of childcare costs, we have the second-highest housing costs, and the fourth-worst traffic congestion — I don’t know how they measure that, but they do,” he went on. “What we’re looking at is a significant outmigration of people from Massachusetts to other areas of the country; a Massachusetts Taxpayers Association report showed that, over the past three decades, there’s been an outmigration of 750,000 people from Massachusetts, and that trend has actually accelerated post-pandemic.”

In some cases, people are leaving the state for lower-cost areas, but keeping their jobs here, a byproduct of the remote-work phenomenon. Moving forward, Geehern said in conclusion, the state has to make itself an attractive place to do business and to live and work — because failure to do so will worsen an already-difficult situation and made it even harder for business owners to sleep at night.

 

 

Weather Dampens, but Doesn’t Wash Out the Golf Season

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When it hasn’t been raining, Mike Fontaine notes, this has been a very solid year for the region’s golf courses.
Sports & Leisure

Swinging in the Rain

 

When it hasn’t been raining, Mike Fontaine notes, this has been a very solid year for the region’s golf courses.

When it hasn’t been raining, Mike Fontaine notes, this has been a very solid year for the region’s golf courses.

 

Mike Fontaine has been working in the golf business for more than three decades now. As the general manager at the Ledges Golf Club in South Hadley, he speaks from experience when he says this season has been unlike anything course owners and managers have seen in a long while, if ever.

The rain has been almost constant, bringing with it lost rounds, lost days, damage to fairways and greens, logistical problems when it comes to all that has been postponed, additional expense on the course-maintenance side, and … well, you get the idea.

“It’s been a challenge at best,” said Fontaine, with a heavy dose of understatement in his voice. “In all my years in golf, this weather pattern has been the toughest I’ve seen. It was probably the wettest July on record, and August brought the humidity and more rain. And with no one wanting to work and it being very difficult to find people in all departments, not just food and beverage…”

His voice tailed off, but he got his key points across: 2021 has been a struggle, in every way.

But it hasn’t been a lost year by any means. Indeed, it’s been a solid season for many golf operations, especially those that are membership-based or are mostly private but allow public play. That’s because a good number of those who took up the game, or rediscovered it, during the pandemic, when there was seemingly nothing else to do, stayed with it.

At least … when the weather would allow them to.

“When we were open, it lived up to the expectations we had at the start of the year,” said Kevin Piecuch, head pro at Country Club of Greenfield, a quasi-public operation, noting that, based on last year’s strong numbers, the bar was set fairly high for 2021. “It wasn’t quite as busy as last year, but it has still been a solid year, although the weather has certainly hurt us.”

Fontaine concurred. “When it’s not raining, we’ve been packed.”

E.J. Altobello, head pro at Springfield Country Club, a private club in West Springfield, went further. He said that, despite the rain, which has taken five whole days from the calendar, by his count, and parts of countless others, the club is doing nearly as well as it did last year, and much better than the years immediately preceding the pandemic.

“When we were open, it lived up to the expectations we had at the start of the year.”

“We didn’t reach 2020 numbers, but we surpassed all our 2019 numbers,” he noted. “And we destroyed 2018 numbers — absolutely clobbered them.”

Like Fontaine and Piecuch, Altobello said the surge the game witnessed in 2020 appears to have staying power, manifesting itself in everything from those impressive numbers of rounds to a waiting list for membership, something this club, and most area clubs, haven’t seen in quite a while.

“We’re back to an initiation fee at the club, for the first time in 15 years or more,” he noted. “Every category is filled up. We’re still taking some social memberships and things like that, but everything else is full; we have 20 people on a waiting list trying to get in for 2022.”

The hope, of course, is that the rain subsides for the last few months of this year and courses continue to build momentum for 2022. But as everyone has seen this past summer, forecasting can be difficult.

 

Clouding the Issue

The 8th hole at Greenfield is a fairly short par 5, while the 9th is a stout par 4 of nearly 400 yards. There were times this year, though, when the former was a par 4 and the latter a par 3, because portions of those fairways were just too wet for play and adjustments had to be made, said Piecuch, who also has 30 years of experience under his belt and can say with hesitation that he’s never seen this much rain.

“We’ve had to flop some holes around and take some other steps,” he said, adding that there has been some shuffling of the schedule as well, especially with league play, which has seen a number of cancellations.

There have been adjustments like this at many area clubs over the course of the year, with the relentless rains taking their toll on courses that were soft most all of the time and waterlogged a good deal of the time.

At many courses, carts were not permitted on some days, and were only permitted on the cart paths on many others. Some holes were simply unplayable, and others had to be shortened. And those were some of the minor steps to be taken.

Indeed, following some of the many heavy downpours, especially those accompanying Hurricane Ida just before Labor Day weekend, courses had to close and dry out.

Fontaine, like others in the business, has kept careful count of the days, and rounds, lost to the weather. “It rained parts of 19 days in July, enough for us to lose revenue each one,” he said, adding that there were other days when it didn’t rain but the course was closed, at least part of the day, because it wasn’t playable.

“There was standing water on holes where we don’t have cart paths, or the cart paths were impassable, or trees came down,” he told BusinessWest, adding that, overall, the couse has held up well through it all.

Often, the rain came with heavy winds. Altobello said a rare microburst took down 17 trees on the Springfield Country Club property in late August.

The rain became more poignant, and even more of a story, because, as noted, this was supposed to be a big year for area courses, a time to build on the momentum gained last season, when, because almost everything done indoors was closed, golf saw a resurgence. It wasn’t like 1997, when Tiger Woods was fueling almost unprecedented interest in the game and new courses — like the Ledges — were conceptualized and built to capitalize on that surge.

But it was certainly, well … greener times for courses in a region that had seen some tracks close — Southwick Country Club and Hickory Ridge in Amherst, for example — and many private courses struggle to find members and actively market themselves (something rarely seen in years past) in search of more.

And while it would have been much better in a normal weather year, 2021 was decent in many respects. Those we talked with said it didn’t rain much on weekends, their most important days, and the clubs were able to salvage at least part of the most of the days when it did rain.

“On most all days, we were able to salvage half a day — play in the morning, get rained out in the afternoon, for example,” said Altobello, noting that, even at private clubs, rounds matter because they add up to cart and food and beverage revenues. “For the amount of rain we received, we did way better than we could have.”

Perhaps more important than the number of rounds recorded this year is the evidence collected that the resurgence the game saw in 2020 might have some legs.

“There’s a ton of interest — people who quit the game for years have gotten back into it,” he said, adding that this interest is across the board, young and old, men and women. “They’re still using it as a way to get out and spend time with people they like or love without being in an indoor setting.”

Piecuch agreed. He said that, as challenging as 2021 has been — and it has been a challenge — it has certainly maintained and in some ways built upon the momentum gained in 2021.

“We rely on our membership, and our membership is up 15% — it’s the highest it’s ever been,” he noted, adding that the pandemic certainly had something to do with this. “We’ve had a solid year overall, despite everything, and I think that bodes well for the future.”

 

When It Rains…

Looking ahead to next year, Fontaine said area courses will likely have considerable work to do to make sure fairways, tees, and greens are in good shape for the spring given all the rain in 2021.

“I think everyone is a little nicked up, a little banged up from all the sitting water on the fairways — when the sun comes out, that just burns the turf,” he explained. “So I’m sure most courses will be overseeding and praying for recovery; there’s going to be extra fertilizer put down and a lot of grass seed planted over the next few weeks.”

Meanwhile, a different kind of seed — a pandemic-fueled resurgence in the game — seems to have already taken root in this region. And it continues its growth spurt despite weather patterns that haven’t been seen in decades, if ever.

And that’s why the future of this business seems, well, sunny.

 

George O’Brien can be reached at [email protected]

COVID-19 Era Presents Unique Challenge for Older Workers

By Contributor
Meredith Wise
Coronavirus

Back on the Clock

By Mark Morris

Meredith Wise

Meredith Wise says companies should regard older workers as valuable assets that can help them ramp up.

David Cruise knows how to help people navigate tough economic times, but admits COVID-19 is a different kind of event.

“Quite frankly, we’re doing this live,” he told BusinessWest. “We have no playbook.”

Since February, more than 1 million workers in Massachusetts have lost jobs as a result of COVID-19, according to the U.S. Department of Labor (DOL). Cruise, president of MassHire Hampden County Workforce Board, said nearly 35,000 workers filed new unemployment claims between February and May in Hampden County alone. One group in particular, workers age 55 and older, accounted for 20% of those new claims.

Job loss due to COVID-19 presents particular challenges for the 55-plus crowd. On top of the concern about finding a new job as an older worker, many worry that, because of their age, they face a higher risk of serious illness if they catch coronavirus.

Cruise expects many older workers will have an opportunity to go back to their prior jobs, but it may take time for that to happen. Because COVID-19 is still actively infecting people, he noted, career conversations with older workers must take into account a “fear factor” many have about returning to work.

“Our staff are trained to help people develop their career plans, and while they can be supportive, they’re not psychologists,” he said, adding that it can be a tough decision whether or not to return to work — one that’s ultimately up to each individual.

Cruise expects there will be more job search activity in July by older workers, but their prospects will depend largely on how successful the phased reopening has been and if employers are ready to start hiring again.

“Going forward, the whole notion of doing work away from the workplace could benefit many older workers, especially in industries where that type of work is encouraged and fostered. It could extend a person’s career and help maintain their financial, as well as their personal, health.”

As a first step, he recommends workers talk to the employer they recently separated from to see what kind of opportunities might be there, even in a different role. If it’s not possible to return to that employer, openings in other industries might be available.

“There are certain industries where I think older workers will find themselves in significant demand, if not full-time, certainly part-time,” he said.

He also thinks many people will seek out training in new fields, including ones that allow working from home. Those who have health concerns about returning to the workplace may find their next opportunity in a remote job. Cruise said this would be good fit for older people with a good work ethic, time-management skills, and self-discipline.

“Going forward, the whole notion of doing work away from the workplace could benefit many older workers, especially in industries where that type of work is encouraged and fostered,” he said. “It could extend a person’s career and help maintain their financial, as well as their personal, health.”

With so many Baby Boomers retiring, experienced workers are wanted and needed, according to Tricia Canavan, president and CEO of United Personnel. Hiring managers recognize that workers in their 50s still have 10 to 15 years of good work ahead of them.

“Employers are interested in people who bring a good work ethic, have skills, and are reliable,” Canavan said. “We have no issue placing older workers because our clients want employees who have those characteristics.”

Cruise advises older workers to think about who in their personal and professional networks are in a position to help them, or at least provide some guidance to finding work. “It’s essential for people to stay connected and to not leave any person untapped who might be helpful, even your dentist or your barber.”

Maintaining technology skills are another key for older workers. If a person was using technology before being laid off, Cruise said their skills are most likely in good shape. On the other hand, those who did not use technology in their job and now only use it socially may want to consider training to boost their skills and expand their job prospects.

“Technology keeps changing, and it’s possible that we all may need to develop new skills in the way we work because of the pandemic,” he added.

Because these skills can be easily updated, Canavan said a person’s “tech savvy” should not be a deal breaker when they are looking for work. “The hiring philosophy I share with my clients is: hire smart, hire the right person for the job. You can teach someone how to use Slack, but finding someone with initiative and the right mindset is harder to teach.”

When to Return?

For now, many careers are up in the air, at least until the state’s reopening progresses further. And in many cases, some are choosing not to return to work immediately.

At the beginning of the pandemic, the DOL encouraged some flexibility with unemployment claims to make it easier to comply with social-distancing guidelines. As a result, the Massachusetts Department of Unemployment Assistance (DUA) put in place emergency regulations that allowed those who could return to work to keep receiving unemployment benefits for personal health reasons or concern about the health of others in their home, even if they had not been diagnosed with COVID-19.

That emergency regulation expired on June 14. As shuttered businesses begin to reopen, workers who are offered their jobs by their prior employer are expected to accept them. Refusal — unless that refusal is deemed reasonable — would mean losing their unemployment benefits and termination by their employer. The DUA said determining what’s reasonable involves a fact-specific inquiry into the person’s health situation and whether they work with or near other employees or the public.

In addition to fear, finances are another disincentive to return to work. Those who lost jobs at the beginning of the pandemic could apply for traditional unemployment benefits, which cover roughly 50% of a person’s average earnings. Then in March, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which added $600 a week in addition to state unemployment benefits.

Business owners who depend on seasonal workers during the spring and summer months have told BusinessWest they are having trouble filling open positions because of the generous payments from the CARES Act. They say it creates a situation where people can make more money unemployed than if they took the seasonal jobs that are available. Unless it’s reauthorized by Congress, however, the CARES Act is scheduled to expire at the end of July.

A company’s ability to reopen — and quickly get back up to speed — may depend in part on how they acted before COVID-19 hit. Meredith Wise, president of the Employers Assoc. of the NorthEast, said some of her organization’s member companies are easily getting people to come back to work because of a well-established culture that keeps people engaged.

“The leaders have stayed in touch with people, they respect their employees, and they’re trying to do everything they can to create a safe environment for them,” she said, adding that, when employees are engaged, they want to be back at work because there is a mutual trust.

It’s a different story when a company has not communicated well and has allowed distrust to take root.

“For example, if a company has done a shoddy job of keeping up their facilities before COVID hit, why should employees trust them with proper cleaning and sanitizing now?”

Canavan echoed the importance of paying attention to worker safety. After visiting several manufacturing clients, she was impressed with the transformation they’ve done to comply with pandemic-related guidelines.

“They’ve completely retooled their facilities to ensure social distancing, and when that’s not possible, they’re putting up physical barriers,” she said. “Many have extensive policies in place regarding hygiene at work, frequency of washing your hands, and even how to get water out of the water cooler.”

Added Value

The impact of COVID-19 on older workers’ employment is something Cruise predicts will become clearer over the next six months. He is concerned that not just older workers, but younger ones — in the 18-to-24 group — may be more likely to permanently lose their jobs due to the pandemic than other groups.

With three and even four generations in some workplaces, Canavan stressed the opportunity to take a collaborative approach and learn from each other. “The members of my team are of different ages, and they all contribute different strengths based on their life and work experience,” she said.

Might companies use COVID-19 as an excuse to shed older workers? Wise said a few might, but many companies will not because they need the institutional knowledge that older individuals bring to the job. She said very few companies have effective succession planning or make a concerted effort to transfer knowledge, so they need experienced workers to get them back up to speed.

“Whether it’s an operator who knows the ins and outs of a machine or a salesperson who knows what certain customers like, companies need these people to come back to the workplace.”

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