BOSTON BUSINESS JOURNAL: Competition key to getting Mass. economy back on track

By Christopher Anderson, Jay Ash, and Jim Stergios
Originally appeared in the Boston Business Journal on October 18, 2024

There’s so much to love about Massachusetts. It’s why so many of us have put down roots here by raising a family, starting a business, or growing a career.

But when people compare their prospects in the Commonwealth to what they could have in another state, Mass. increasingly just cannot compete. If we don’t turn things around, starting with our business climate, it will be bad news for everyone.

This year, Massachusetts fell to 38th place in CNBC’s annual ranking of the best states to do business in. That is a dramatic drop from 5th place in 2010 and even the 15th place ranking Mass. was awarded in 2023; it is the lowest ranking for Mass. since the rankings were introduced in 2007.

To reverse this trend, we must understand what’s driving it.

The truth is, Massachusetts has become a difficult place for businesses of all sizes to thrive. In fact, for the last nine months of available data, there were more business deaths than new births in the commonwealth.

When business can’t prosper, neither can the overall economy. Consider that job growth in Massachusetts last year ranked 36th in the U.S. according to the Bureau of Labor Statistics. That means our employers are growing at a slower rate than most of the country.

That stagnation reduces job prospects for everyone, whether you’re a teenager or recent college grad looking to get your foot in the door, or someone further along in their career ready for the next step.

This lack of opportunity combined with some of the highest taxes of any state in the U.S. is a recipe for economic disaster.

From income tax, estate tax, alcohol taxes and even car taxes, most residents find these costs frustrating. In fact, recent polling from the Mass Opportunity Alliance (a new nonprofit we helped form) found that over 80 percent of residents believe their taxes are too high. It’s not just about the cost – it’s about feeling that the state’s performance does not reflect our investment.

Meanwhile, the cost of living is also on the rise. One recent analysis found that the only state with a higher cost of living than Massachusetts was Hawaii.

Housing prices are one important factor. If you own or rent, the cost of keeping a roof over your head is going up. Massachusetts housing prices are higher than 45 other U.S. states. The same poll found that about 80 percent of residents believed the rising cost of housing prices was a main factor driving people out of state.

It’s true that people are leaving Mass. in droves to states where many believe they have a better chance to prosper. Recent data from Pioneer Institute, Boston University and other analysts show Massachusetts has some of the highest out-migration numbers in the country, and taxable wealth losses have quadrupled in the last decade. It’s no coincidence many choose states like Florida or New Hampshire where there is no income tax or estate tax.

Downplaying this trend or writing it off altogether is not the right response. Losing residents, especially wealthier ones, means the rest of us have to pick up the tab on these high taxes.

But it’s not just about money – keeping people in our state means we keep their creativity and talent here as well. That is particularly true of younger people. 

Polling from MOA shows that last year, almost half of those aged 18-34 had considered leaving the state. And 30 percent of those in that same age bracket noted that their quality of life had decreased over the past year.

This aligns with recent research that shows that the largest group of people leaving our state are 26-35 year olds. That’s the stage of life where most people make the important decision to start a family, buy a house, or otherwise settle down somewhere for the long haul. If they aren’t choosing Massachusetts, the long-term impact will be losing generations of new people and talent to other states.

It’s not all gloom and doom. Our state excels at providing top-notch education and fostering innovation. But without more manageable costs and a welcoming environment for businesses of all sizes, it’s not enough.

The first step is recognizing where we’re going wrong and changing course. The Mass Opportunity Alliance is a new movement committed to strengthening strategies that lower the cost of living and improve the business climate. Through collaborative efforts, the alliance will drive initiatives designed to make life more affordable for residents and create a more favorable environment for businesses to thrive.

Christopher Anderson is president of the Massachusetts High Technology Council, Jay Ash is president and CEO of the Massachusetts Competitive Partnership, and Jim Stergios is executive director of Pioneer Institute. All three helped form the Mass Opportunity Alliance, a nonprofit dedicated to defending and strengthening the Massachusetts business climate and enhancing economic opportunities in the commonwealth.