Statement by Cathy E. Minehan, President, Federal Reserve Bank of Boston, before the Subcommittee on Consumer Credit and Insurance of the Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, October 12, 1994, in Boston, Massachusetts - Statements to the Congress - Transcript

Federal Reserve Bulletin, Dec, 1994

These trends can be addressed only by solutions that look to building an employment base with the skills that are needed for the jobs now being created.

And make no mistake, those jobs are there. Over the past two weeks, I have met personally with small businessmen, corporate executives, university

administrators, and public service providers all over Massachusetts. About 30 percent to 40 percent of them plan to hire over the coming months. And some reported labor shortages, particularly in skilled labor such as auto technicians, truck drivers, computer specialists, and the like. In Springfield last week, I had the opportunity to tour the Springboard facility, which typifies much of what is going on in Massachusetts today. Located in a former Digital manufacturing facility, Springboard repairs computer hard drives and has doubled its small service firm from seventy-five to one hundred fifty employees. Although the seventy-five new service jobs alone will not offset the loss of the Digital plant, many firms each following the Springboard model may do just that. Springboard reports that it is doing its own training now, but for the future New England needs programs to train and retrain workers for the skilled jobs that are available now and will become available in the future.

We also know that although stronger growth feels better in the short run, it can have damaging consequences over time. New England of the 1980s, in fact, provides an extreme, but useful, example of the dangers of too rapid growth. During that time, the unemployment rate fell to 3 percent in the region. Wages and other costs rose faster in the region than elsewhere, undermining the competitive position of New England businesses and setting us up for problems in the long run. Real estate prices soared, encouraging speculation and further price increases. It may have been great while it lasted, but the aftermath was devastating. It is possible to have too much of a good thing.

In closing, let me note that we at the Federal Reserve Bank of Boston are aware that economic progress in Massachusetts has been uneven. Although the overall unemployment rate is quite low, pockets of high unemployment exist in certain parts of the state and in certain neighborhoods within more prosperous metropolitan areas. We remain committed to expanding economic opportunities in these locations, whether it be through our own powers and responsibilities or through our cooperation with national, state, and local government agencies and private organizations.