The Q&A below is the second in a three-part series on the Massachusetts economy. In this discussion, which was introduced and framed by Bruce Figueroa, PUB Head of Nonprofit Banking, David Murphy, PUA Regional Wealth Leader for Massachusetts, talks with Dr. Edward Hardiman, Headmaster of St. John’s Preparatory School in Danvers; Dr. Robert. Tremblay, Superintendent of the Framingham Public Schools; and John Traynor, PUA Chief Investment Officer.
David Murphy: COVID plus social unrest plus economic ups and downs have been enormously challenging. Ed, how has this environment affected your school?
Edward Hardiman: On the one hand, there’s no question that these are challenging times for us. On the other hand, we have risen to the occasion, and so have our students and our teachers. St. John’s has been around for 110 years; we would never have made it if we weren’t able to adapt. In fact, COVID accelerated our thinking about educational models, and the hybrid between in-person and remote learning that we worked out for the pandemic appears to be functioning well. I say this not because we’d promote that model under normal conditions, but because thinking about how to educate in difficult times is something that’s helped us grow. It’s helped keep us agile, which we always want to be.
As important, I think that our values-based focus has been a force for good for our students and their families. It’s true that we’re dependent on tuition, and we know that many of our families are strapped for funds right now, something that we’re definitely keeping in mind. But we actually saw enrollment increase in this academic year.
David Murphy: When you say that your school is values-based, what do you mean?
Edward Hardiman: We’re a Catholic school, so there’s a liturgical aspect to our teaching. But we welcome and we teach students of all faiths. So we emphasize “values” in a broad sense; think of them as a compass and an anchor that any family would like their children to have. In the same vein, we like to think about the education we offer as transformational, not just transactional, though that’s always where good education starts. We want to go beyond that, and reach our students holistically.
David Murphy: And how are your students adapting to the difficulties this year?
Edward Hardiman: By and large, they’re doing great. They’re excited about learning, both on- and off-campus. They’re working together, to the extent possible, on research projects. They’re working alone to increase their knowledge base. On our side, we’re pushing them to continue to achieve academically while coping with lots of challenges.
And it’s not only our students and teachers who are with us. We’re engaging more with families and with alumni. We’d never want to see anything like COVID return, but the pandemic has taught us a lot.
David Murphy: Bob, you head up a large public-school system, in Framingham, which has about 10,000 students. So I assume that your challenges are different from Ed’s; correct?
Robert Tremblay: Yes and no. In the broadest sense, we have had to adapt and quickly, just as they did in Ed’s school. But our funds depend on local and state taxes and federal assistance. While Ed thinks about raising money from families, we keep a close eye on government revenues and outlays. We’ve already spent $2.9 million just to keep our schools open—to make sure they have masks, good ventilation, and so forth. Hopefully, we can re-open soon either fully or partially, but so far most of our students are learning at home—except for our special-needs kids, who have stayed on-site.
David Murphy: And many of your kids who don’t have special needs do have economic and social needs. Like getting food. How are you managing that since the schools are mostly closed?
Robert Tremblay: We worked hard on that issue, because many of our students depend on us for breakfast and lunch, and some for dinner as well. What we did is start by making four schools distribution sites for food; now all of our 15 schools are distributing food. In fact, about 600 of our students are legally homeless—not that they’re living in the street, but with friends or on couches in the homes of other family members or in group homes.
But it isn’t only the basics we have to think about. We arranged for each of our students to have a tech device that enables them to learn remotely. So that’s good. But some of them don’t have Internet access, so we have to figure out how to keep all of them connected to us remotely.
David Murphy: So I’ll ask you the same question I asked Ed: How are your students adapting?
Robert Tremblay: And I, too, will say, by and large, they’re doing great: Our students and our teachers have stepped up their game. The silver lining in this COVID horror is that remote learning allows for a special kind of customized attention—and it’s working. We’ve seen significant growth in reading and math ability, which, frankly, surprised me.
However, the key is to keep the kids engaged, which sometimes is easier said than done. For example, we know that in one of our elementary schools, 92% of the kids are engaged in learning. We know because we keep track of their attendance. It’s that other 8% that I worry about: How can we reach them?
David Murphy: What else do you worry about?
Robert Tremblay: It bothers me that our kids don’t get to see one another, interact with one another, play with one another, at school. Academics always come first. But when you think about school, you don’t recall only the courses and the teachers. You also remember your friendship circles. Of course, our kids probably see one another outside of school, but it’s not the same thing. Not having fun with friends in school isn’t good for the mental health of our students. I look forward to the return of normalcy.
David Murphy: Talking about a return to normalcy, John, is that going to happen to the economy in Massachusetts?
John Traynor: Yes, though I can’t give you an exact date. But we believe that the economy of the state will not only recover, but serve as a template for the rest of the nation. Why? Because Massachusetts has the commodity that will be most important going forward: human talent. But let me begin by saying that the first estimate of real-GDP growth in the third quarter was a mind-boggling 33.1% for the nation as a whole. That was up and away the best number posted since the end of World War II. Of course, that number is annualized, so it overstates the growth—but that’s the way the number is reported. Massachusetts came in at an even more astounding 37.7%. We don’t expect that number to be repeated, but it’s indicative of tremendous growth.
Not that all the Massachusetts numbers are sunny. In September, when the national unemployment rate averaged 7.9%, Massachusetts trailed with 9.6%. Why? Because wage growth suffered. In the second quarter, which are the latest numbers available, while wages declined by 7.1% for the nation overall, Massachusetts clocked in at 11.2%. The reason is the heavy orientation in the Mass economy toward service industries, which have been the hardest hit in the current recession—exactly opposite to the way things usually happen in recessions. But it’s those same service industries that will lead Massachusetts to the forefront of the country.
David Murphy: How exactly will that work?
John Traynor: I can explain with a story. You remember that a few years ago, GE was shopping around for a new headquarters. There was a lot of talk that they would pick a city with a warm climate and low taxes. But—surprise! They went to Boston. At the end of 2018, Amazon was in the market for a second headquarters. Again, instead of heading for the Sunbelt, their choice was to split the pie between New York and a Washington suburb. How come? For the same reason that Amazon just redoubled their commitment to New York by buying the storied Lord & Taylor building in midtown Manhattan for a cool $1 billion. In all these cases, the companies chose locating where there are lots of smart people.
David Murphy: So brains will beat sunshine in the new economy?
John Traynor: Yes—not that big Northeast cities have cornered the market on brains. But places like New York and Boston are what’s called “knowledge clusters” these days: locations with heavy concentrations of brainpower. With an abundance of colleges and universities—not just Harvard and MIT but large and smaller institutions across the state, from Boston and Cambridge to Worcester and Springfield—Massachusetts has the intellectual resources to help grow those knowledge clusters and take a leadership role in the national economy as it evolves.
In fact, I’ve spoken before about what I call the “three Bs” that will drive the Massachusetts economy going forward. “Boston” and “Brains” are two of them. The third is “Biden,” because we need to prepare for what looks like will be a new Administration. And if current trends continue, the Senate will remain in Republican hands. This split government may be a good deal for business, since the more onerous tax hikes that would probably come with a Democratic sweep will likely be held in check by the Senate. As important, we’ll need to see what develops on immigration policy, since it’s critical for Massachusetts to continue attracting and retaining top talent from around the world.
To sum it up, regardless of who winds up with the White House and the Senate, we think that Massachusetts is well-positioned.
The third of the three discussions in this series will be held on December 9. The topic will be the impact on Massachusetts of not having in-person sports audiences at college and professional games.