Beyond Red & Blue

Starbucks still high on Boston

Governing.com's Josh Goodman looks at the geographical distribution of doomed Starbucks stores. Turns out the Nevada, North Dakota, and Minnesota will suffer the greatest, proportionally, from the impending 600-store shutdown.

Surprisingly, Massachusetts will lose only six outlets (so far), and none are in Boston, Brookline, Cambridge, or Somerville, even though there are 19 of them within walking distance of my office near Government Center. (See store locator.) The Bay State closings are in Burlington, Dartmouth, North Attleborough, Sharon, Stoughton, and Worcester.

Most other larger cities, including Manhattan, Chicago, Washington, and San Francisco are losing at least one of the cafes. Are we standing grande in Starbucks' eyes because Boston's economy is relatively strong, or because we're especially caffeine-addicted? Or is the Seattle-based company simply determined not to give Canton, Mass.-based Dunkin' Donuts the satisfaction of closing stores in New England?

Massachusetts is a mecca for architects

The National Endowment for the Arts has just released Artists in the Workforce: 1990-2005, essentially a census of just how many Americans make a living from creating things. There are lots of fascinating stats, but for now I'll concentrate on concentration of certain professions by state. Massachusetts ranks 3rd overall in the number of artists per 10,000 people; we have 91, behind only New York (101) and California (98).

The Bay State is first in the US in the prevalence of architects (13 per 10,000 people) and designers (37 per 10,000) and third in the number of writers and authors (9.8 per 10,000). We are in the top 15 states in every category except entertainers/performers, announcers, and dancers/choreographers. Here are the top three states for each profession on a per-capita basis:

Architects: Massachusetts, Colorado, Washington
Designers: Massachusetts, Connecticut, Rhode Island
Photographers: Hawaii, Rhode Island, New York
Actors: California, New York, Nevada
Fine artists, art directors, and animators: New Mexico, Vermont, Hawaii
Entertainers and performers: Nevada, Florida, Hawaii
Producers and directors: New York, California, Maryland
Announcers: North Dakota, Montana, Alaska
Dancers and choreographers: Nevada, Hawaii, Alaska
Musicians: Tennessee, Hawaii, Nevada
Writers and authors: Vermont, New York, Massachusetts

Massachusetts outgrows New Hampshire

There' s more evidence that Massachusetts is doing better than the rest of the country in the current economic slump. Yesterday the US Department of Commerce released final numbers on GDP (gross domestic product) growth by state in 2007. Overall, US economic growth slowed from 3.1 percent in 2006 to 2.0 percent last year, but Massachusetts went from being slightly behind the curve (3.0 percent growth in 2006) to significantly ahead of it (2.5 percent in 2007).

Massachusetts was hurt by a decline in the construction industry (something that happened in every state but Wyoming), but benefited from growth in both the manufacturing and the professional/technical services sector.

The picture was quite different in our neighbor to the north. New Hampshire's 0.1 percent decline in GDP was the worst showing in the US outside of Delaware and Michigan. The slump in construction was among the sharpest in the nation (only Arizona, Florida, and Nevada posted bigger declines), and New Hampshire had the country's biggest slide in the "real estate, rental, and leasing" sector. Curiously, the real estate sector went up slightly in Massachusetts at the same time. Is the idea of moving farther and farther away from Boston losing its appeal? 

Student loan forgiveness for do-gooders

In today's Boston Globe, Harvard Law professor Elizabeth Warren and student Ganesh Sitaraman have a good summary of the repercussions from soaring student loans:

The high costs of carrying student loans echo through dozens of life-shaping decisions. Big student loans? Don't become a public school teacher, a firefighter, or a police officer - the pay is too low. Better not go into business for yourself - too risky when you have big loan payments every month. Don't apply to graduate school - just more debt. And don't even think of moving back to Iowa or Oklahoma - pay scales aren't high enough to support debt payments. Today's students talk about delaying marriage, not buying a home, and working full-time when babies are born, just so they can keep paying those student loans.

Their solution is to offer graduates full or partial loan forgiveness in exchange for a few years' work in public service. Not a new idea, but one that may get more support as the costs of education continue to rise.

Warren's op-ed fits into her larger thesis that housing and education -- not frivolous spending on TVs and cars -- are pushing the typical American family into debt. Read her interview with former CommonWealth editor Bob Keough from 2003, in which she notes how the desire for a home in the suburbs is about more than social status:

[P]arents are trying to pick among the ruins to find the school districts they believe represent a decent chance for their children to make it safely through school, get a good education, and launch them toward college. But as it becomes harder and harder to find good school districts, the prices in those particular zip codes keep going up.

Warren also participated in the CommonWealth forum titled "Going for Broke: Middle Class Families on the Financial Edge." Read the transcript here.

Revenue Dept. says film tax credit could cost Mass. millions

From CommonWealth editor Bruce Mohl:

The Massachusetts Revenue Department says the state's 25 percent film tax credit would not come close to paying for itself in terms of generating new tax revenues, even including economic multipliers.

In its analysis, the Revenue Department assumed $100 million in film tax credits would generate qualifying movie expenditures in Massachusetts of $400 million. The analysis indicated the film tax expenditures would generate at best $23 million in new state taxes, resulting in a net tax loss to the state of $77 million.

Hypothetical numbers were used in the analysis because not enough actual data is available yet, but the Revenue Department said the hypothetical numbers were consistent with the information on film tax credit applications obtained by the agency so far this year.

The analysis assumed $256 million in payroll spending, with half of the money paid to big-name stars and directors who don't live in Massachusetts and are unlikely to spend most of their salaries inside the state. The analysis also assumed that $20 million to $40 million of the movie spending would occur in Massachusetts even without the tax credits.

The Revenue Department plugged the numbers and assumptions into a model developed by Regional Economic Models Inc. and concluded the tax credits would boost the state's gross domestic product by $349 million and increase state employment by as much as 3,658, with as many as 2,963 jobs in the film industry and the rest in support areas.

The analysis concluded the movie spending would generate new income, corporate, sales, meals, room, and other state taxes of $17.9 million, or as much as $23 million if the state wasn't required to reduce spending to pay for the film tax credits.

The film tax credit analysis was contained in a letter sent May 19 to Rep. Steven D'Amico of Seekonk, a critic of the film tax credit who had requested the study. D'Amico said supporters of a bill that would offer a 20 percent tax credit to companies that build movie studios in Massachusetts were trying to push the bill out of committee before members could read the Revenue Department analysis.

D'Amico said the state needs to be make sure that any tax credits offered by the state generate tax revenue gains for the state. "This is corporate welfare for highly profitable corporations that are playing one state off against another," he said.

Tax breaks and transparency in Quebec

New Brunswick Business Journal columnist David Campbell notes the reputation of Québec as a "bad boy" in terms of stealing jobs from other provinces (and, presumably, the United States) by offering generous tax incentives and grants to private industry. But he lauds the Québec government for releasing generous amounts of public data about the effectiveness of these business incentives. ("Despite offering the most lucrative business incentives in Canada, Investissement Québec claims to have a cost-benefit ratio of 3.74 to 1. In other words, for each tax dollar spent by the Quebéc government it collected $3.74 in tax and incidental tax revenues.")

Indeed, the Investissement Quebéc website is a bountiful source of information on the government's efforts to lure business to La Belle Province. It includes a 112-page annual report detailing the agency's 1,451 "financing operations" over 2006-07, which supposedly created 10,959 jobs and "retained" 10,722 jobs.

As far as I know, Massachusetts does not have an equivalent source of data (though the Department of Housing and Economic Development touts infrastructure grants and other resources for new businesses). But perhaps more transparency about the benefits of business incentives would mean more political support for them.

CommonWealth editor Bruce Mohl asked whether the state is coming out ahead from tax breaks for the film and life sciences industries in our Spring issue; read his cover story here. 

Tough times ahead for Mass. government

MassINC is sponsoring a forum next Thursday that promises some spirited debate -- and, no doubt, an audience with some passionate opinions. Will the fiscal crisis encourage the major political players in Massachusetts to work together on reform measures? Come to the event and find out whether change is in the air. Also, get the PDF of the MassINC policy brief "Point of Reckoning: Two Decades of State Budget Trends."

The Politics of Tough Choices During Tough Fiscal Times

Date: April 10th, 2008
Time: 8:00-9:30AM
Location: Omni Parker House Boston, MA

Click here to RSVP or call (617) 742-6800 x120.

Join us for this special MassINC event on the Massachusetts budget and the choices facing the governor and legislature as they look toward the future. Moderated by Jim Braude from WTTK and NECN, panelists include former Senate president Thomas Birmingham, former Senate Ways and Means chairwoman Patricia McGovern, former secretary of Administration and Finance and MassINC board member Thomas Trimarco and former secretary of Administration and Finance Steve Crosby.

Arkansas cracks down on high interest "payday loans"

Via Governing.com, the attorney general of Arkansas is ordering the shutdown of 156 "payday lending outlets" that make personal loans, with extremely high interest rates, against a borrower's future paychecks. According to the Arkansas News Bureau:

The state constitution's usury provision prohibits anyone from charging more than 17 percent interest. But payday lenders have said the triple-digit interest rates they charge are allowed by the 1999 Check Cashers Act, which says a fee paid for holding a check written before the date it is to be cashed "shall not be deemed interest."

Arkansas' highest court addressed the conflict in two opinions this year.

Justices said the 1999 law did not give payday lenders "blanket protection" to exceed the usury limit. Additionally, in both cases, the court ruled that customers can collect the surety bond from a payday lender found to have violated the state constitution's usury limit.

A group called Arkansans Against Abusive Payday Lending is trying to get banks to offer short-term loans at more reasonable rates, but the payday lenders aren't likely to go quietly. This could be an interesting fight in the attempt to keep the "predatory economy" from getting out of control.

New Mexico: Land of Enchantment for businesswomen?

March is Women's History Month, and the Census Bureau is marking the occasion by bundling data on gender differences in education, job earnings, voting participation and the like. One report (668-page PDF here) gives state-by-state figures on how many businesses are owned by men, by women, and by a combination of the two as of 2002. (See the chart below to avoid lots and lots of scrolling.)

According to the data, women without male co-owners are in charge of more than 30 percent of all businesses in just three states (Hawaii, Maryland, and New Mexico), plus the District of Columbia. They own less than 25 percent of all businesses in Arkansas, Delaware, Idaho, Maine, Montana, New Hampshire, North Dakota, South Dakota, and Wyoming.

Businesses with both male and female owners -- presumably including a lot of literal mom-and-pop stores -- are most prevalent in Idaho (21 percent of all businesses), Montana (18 percent), and Nebraska (17 percent). They're least common in the District of Columbia (6 percent) and Massachusetts and New York (both 8 percent).

Men and only men own more than 60 percent of all businesses in Alabama, Connecticut, Massachusetts, New Hampshire, New Jersey, Pennsylvania, South Carolina, and Tennessee. (So much for the enlightened Northeast.) New Mexico is the only state where it is even theoretically possible that less than half of all businesses are owned solely by men; a shade under 50 percent are classified as "male-owned," but the numbers for each state don't add up to 100 percent because a small number of businesses are "not classifiable by gender," according to the Census Bureau.

	All firms	Male-owned	% Male-owned	Female-owned	% Female owned	Equally-owned	% Equally owned
US Total	22,974,655	13,184,033	57.39%	6,489,259	28.25%	2,693,360	11.72%
Alabama	309,544	188,389	60.86%	81,821	26.43%	30,000	9.69%
Alaska	62,145	32,108	51.67%	16,308	26.24%	10,427	16.78%
Arizona	381,180	199,506	52.34%	109,748	28.79%	59,797	15.69%
Arkansas	209,010	119,927	57.38%	49,618	23.74%	33,624	16.09%
California	2,908,758	1,625,297	55.88%	870,496	29.93%	346,753	11.92%
Colorado	464,982	253,266	54.47%	135,220	29.08%	63,149	13.58%
Connecticut	301,571	181,355	60.14%	82,118	27.23%	26,698	8.85%
Delaware	63,570	34,548	54.35%	15,344	24.14%	7,800	12.27%
District of Columbia	47,172	24,616	52.18%	15,675	33.23%	2,626	5.57%
Florida	1,539,207	884,919	57.49%	437,355	28.41%	181,246	11.78%
Georgia	674,521	395,156	58.58%	196,195	29.09%	64,669	9.59%
Hawaii	99,224	50,984	51.38%	29,943	30.18%	13,684	13.79%
Idaho	121,560	62,432	51.36%	28,824	23.71%	25,643	21.09%
Illinois	958,120	540,349	56.40%	284,954	29.74%	104,266	10.88%