Fidelity office closure may not sting so much
Workers’ commuting habits will keep some taxes in Mass.
When Fidelity Investments closes its Marlborough office next year, with many positions relocating to New Hampshire and Rhode Island, federal employment data will show the event as a loss of as many as 1,100 jobs for Massachusetts.
But other government data could show that moving the jobs out of state won’t affect the Massachusetts unemployment rate much if most of the displaced workers elect to keep their jobs and simply commute in a different direction.
So will Fidelity’s move really be a major blow to the Bay State economy, or inconsequential?
Fidelity’s recent announcement about the Marlborough closing hit like a thunderclap. Governor Deval L. Patrick fumed that Fidelity did not give him an opportunity “to fight for these jobs.’’ Republicans said that Patrick’s presence on an overseas trade mission at the time showed he wasn’t doing enough to protect jobs on the home front. Meanwhile, state senators announced they would review a mutual fund industry tax break that Fidelity has received.
But as the conflict in the federal data demonstrates, moving jobs a few miles across a state border isn’t necessarily a loss to the local economy. The two other Fidelity centers, in Merrimack, N.H., and Smithfield, R.I., are close to Boston’s outer suburbs and served by major roads. Fidelity said a few thousand of its employees already commute from their homes in Massachusetts to Merrimack or Smithfield, underscoring the fact that cross-border commutes are common in the region.
“It’s not as if those 1,100 people are being fired,’’ said Michael Goodman, chairman of the pub lic policy department at the University of Massachusetts Dartmouth.
But borders mean a lot to political leaders, so the loss of hundreds of Fidelity jobs to New Hampshire and Rhode Island still stings.
“Our primary focus is obviously on Massachusetts,’’ said Lieutenant Governor Timothy P. Murray. “We understand these people might be able to keep their jobs, and we try to work regionally on different fronts, such as fishing and transportation.’’
But Murray said he wasn’t happy that any jobs would be leaving the state. “We were elected by the people of Massachusetts.’’
Fidelity said it is making the move primarily because it had too much vacant office space — not because it was disenchanted with the state — and wants to reduce the number of offices it has in New England from four to three.
“This was a decision on how to consolidate our real estate,’’ Fidelity spokeswoman Anne Crowley said.
The company told state leaders that Marlborough was the logical choice to shutter because it was the oldest and smallest of the four sites.
But the news is especially difficult because Massachusetts has already borne the brunt of Fidelity’s worldwide jobs cuts over the past several years as the company responded to the economic downturn.
After the latest consolidation, Fidelity will have only about 7,300 jobs in Massachusetts — down from around 13,000 in 2006. Worldwide, Fidelity has reduced its workforce by one-fifth to 37,000 workers over the past four years.
The greatest damage from this latest move will likely be in the city of Marlborough, which already has a high vacancy rate among its many office parks, and soon will have fewer workers spending money in local restaurants and other businesses.
At the state level, Massachusetts will see a loss in tax revenues, but won’t lose all of the money if Fidelity workers continue to live here after their jobs move across state lines. Massachusetts residents must still pay Massachusetts income taxes so long as they live here — though they can deduct any taxes they pay elsewhere.
Rhode Island generally has higher income tax rates than Massachusetts, which means residents probably won’t pay any income taxes on their Fidelity wages if their job moves to Rhode Island.
But New Hampshire doesn’t have an income tax, so workers relocated to Merrimack would continue to pay the same amount in state income taxes to Massachusetts as before, as long as they continue to live in the state.
Indeed, the federal government often defines the Boston metropolitan area to include part of southern New Hampshire, meaning some federal economic statistics for the region include jobs in both states. Another definition includes the entire state of Rhode Island.
Moreover, the cross-border commutes run in both directions, so many Massachusetts jobs are actually held by New Hampshire or Rhode Island residents.
Indeed, more than 86,000 workers regularly make the commute from New Hampshire to Massachusetts, and close to 58,000 commute from Rhode Island, according to federal data compiled by the American Association of State Highway and Transportation Officials. The same is true in Western Massachusetts where tens of thousands of jobs are held by people living in Connecticut.
The Metropolitan Area Planning Council, a regional planning agency that promotes smart growth in Greater Boston, found that the second-largest source of workers for 18 major employers along Route 128 in Massachusetts was Nashua, N.H., behind only Waltham.
“The state borders don’t matter so much,’’ said Goodman, the UMass Dartmouth associate professor.
Goodman noted that such long commutes were rarer years ago. But the growing suburbanization of Greater Boston, and the search for more affordable homes in an expensive market, have made longer commutes routine for many.
Companies have responded to this by letting employees work flexible schedules or telecommute.
Others, however, said there are hidden costs to this spreading out of jobs across a wider region.
“Longer commutes create more wear and tear on our roadways, cost money, and require people to spend more time in their car and less time with their families,’’ said Timothy G. Reardon, senior regional planner with the Metropolitan Area Planning Council.
Reardon said one of the primary reasons behind the increased commuting times is the lack of affordable housing near jobs. But commuting times have also soared as companies find it easier to move jobs around and workers are forced to switch employers more frequently — making it more difficult for workers to simply buy a house near their job and keep their commutes short.
Todd Wallack can be reached at email@example.com.