The Great Recession and its aftershocks are just the latest in a series of blows rained down over the past upon our state’s once-thriving middle class.
The cost of making it here in high-priced Massachusetts has gone through the roof over the past decade, from homes that cost far too much to trains that don’t work.
We are fast becoming The Boutique State, a paradise both for the wealthy few who can afford to live here comfortably and a welfare class enjoying one of the few liberal havens left in the country.
Now, thanks to Elizabeth Warren – the irascible Harvard professor who has made middle class woes the centerpiece of her Senate campaign – and some lefty but not entirely loony group of demonstrators in downtown Boston and nationwide, we may finally get a long-neglected debate on these bread-and-butter issues.
It’s a discussion business leaders, especially in the real estate sector, would be wise to tune into.
After all, these are their customers we are talking about, from condo buyers to office tenants.
“Families have survived the ups and downs of economic booms and busts for a long time, but the fall-behind during the busts has gotten worse while the surge-ahead during the booms has stalled out,” Warren wrote in 2009, in a warning even more relevant today.
Without a thriving middle market, there’s likely to be no real rebound in home sales, which have fallen dramatically over the past few years – even if prices haven’t exactly followed suit.
Prices have remained stubbornly high, but sales remain low – off 25 percent from where they were back in 2005. After all, there are only so many buyers out there ready to blow a million or two on a McMansion.
And demand for new office buildings, just starting to show glimmers of a rebound, will remain sluggish.
For the middle class to thrive here – instead of fleeing to lower-cost, lower-hassle states, like New Hampshire – the basics have to work.
And increasingly, they don’t.
Consider:
A Transportation System In Shambles
We have a commonwealth where the trains barely work and the roads are full of potholes. On the commuter rail and on the T too, late trains have become a fact of life, with the number doubling since 2007. In fact, on some lines, including the unfortunate Worcester line that trundles through the heart of the western suburbs, a light snow or rainstorm can leave commuters stranded with no train at all.
It was just this past February that a snowstorm almost derailed the entire system, subjecting one unfortunate batch of commuters from Worcester to a hellish, four hour ride. The state’s new transportation chief, Richard Davey, looks to be a doer, but he inherits a nearly bankrupt operation.
A Third-World Power Grid
It started off as a hurricane, but by the time Irene hit, it was downgraded to a tropical storm. But it was still enough to knock out power for a week in many towns and communities in Greater Boston. It comes after the disastrous ice storm of 2008, which left Fitchburg and other Central Massachusetts communities without power for two weeks during a brutal stretch of frigid winter temperatures. The big power companies contend they are doing the best they can, but repair crews were in short supply after Irene, despite ample warning.
Meanwhile, our electric grid looks increasingly antiquated, relying on bulky, above-ground lines. And of course, as with everything here in the Boutique State, the cost of power just keeps going up, up and up.
Sky-High Home Prices
Greater Boston has seen only a modest decline overall in home prices since the peak of the real estate market in 2005. In fact, the most desirable communities – think Cambridge and Newton – have seen home prices even increase from their already inflated levels. The median price in Cambridge fell a percentage point or two over the past year to $775,000, but that represents a whopping $120,000-plus increase over 2005. And at $789,000, the median price in Winchester is a good $55,000 over 2005, while Wellesley, at $925,000, is a paltry $25,000 off its bubble year peak.
Crushing Health Care Costs
Yes, just about everyone in Massachusetts has health care, but many can barely afford it given relentless annual premium hikes. Health care spending soared 16 percent from 2007 through 2009, a recent Patrick administration report found, far outpacing the national average.
Unfortunately, for the political and economic elites, these are issues that are often too easy to dodge or ignore. If you have the bucks, the Bay State can be one of the best places in the world to live.
If you are looking at multimillion dollar homes, there’s a fair amount of variety, health care premiums are merely an inconvenience and you are probably not depending on the cranky commuter rail to get to work.
In fact, if you’ve chosen to bed down in an elite suburb, your quality of life is being zealously guarded, often at the expense of the regional housing market. Town leaders in these upscale enclaves are devising all sorts of zoning rules to box out middle class families with children and preserve open space. That, in turn, is putting the squeeze on new housing construction and helping keep prices artificially high.
Maybe it’s not quite time yet to give the boot to the Bay State and rename ourselves the Boutique State. But if present trends continue, things don’t look good.
