LOWELL SUN: Mass. needs new ideas to reboot listless economy

This piece originally appeared in the The Lowell Sun on October 12, 2025.

By seemingly every measure, the Massachusetts economy will likely continue to maintain its sluggish pace for the foreseeable future, losing ground to not only its neighbors, but also competitor states across the country.

Our state remains caught in an intractable business loop caused by its high cost of living, a flat labor market, volatile state tax revenues, a decline in population growth, and restrictive federal policies related to trade, research, and immigration.

That’s the view of policy experts in academia and Beacon Hill.

No wonder that according to the Associated Industries of Massachusetts’ newest monthly Business Confidence Index, sentiment among Bay State employers remained in pessimistic territory through September, the same place it’s been stuck since March.

Michael Goodman, a professor of public policy at the University of Massachusetts Dartmouth, said he does not expect Massachusetts to move into a recession over the coming year, but instead will remain stuck in a “slow growth, higher cost environment.”

“What we’re seeing is sort of a gradual slowing of growth that I think is concerning, but doesn’t appear at this time to look like an imminent recession,” he told state budget writers at a Sept. 30 roundtable.

Tax collections in fiscal year 2025, which ended June 30, came in about $2.1 billion, or 5%, above projections, according to the Department of Revenue. The year-over-year increase was largely driven by the 4% surtax on high earners and revenue from capital gains taxes.

But Administration and Finance Secretary Matthew Gorzkowicz said even though lawmakers balanced fiscal year 2025 spending without taking “any extraordinary measures,” the state treasury netted only about $52 million, or 1%, above projections.

He said sales and corporate taxes — two major categories that signal economic health in Massachusetts — were below benchmark in fiscal year 2025, and the challenges for fiscal year 2026, which ends next summer, “are no easier.”

The state’s unemployment rate in August remained at 4.8% — compared to the 4.3% national percentage — for the fourth straight month, according to the Executive Office of Labor and Workforce Development. Employment was stable, but job growth had slowed, according to the office.

Mike Lynch, an associate director for U.S. economic service at S&P Global Market Intelligence, said labor market challenges will remain in the local professional, scientific, and technology services industries.

Those issues will conspire with a “sharp deceleration” in population and labor force growth, constricting the available talent pool for employers, he said.

But these broad-brush assumptions don’t detail to what degree our state economy has deteriorated.

The Massachusetts Opportunity Alliance reported in September that according to comprehensive new data through the first quarter of 2025, the Bay State’s private sector employment has dropped even further since 2024, remaining far below pre-COVID levels.

The new Bureau of Labor Statistics data paint a bleak picture for Massachusetts. Not only are total private-sector job trends still below pre-COVID levels, Massachusetts jobs have further declined through the first quarter of 2025.

Compared to pre-COVID levels in January 2020, Massachusetts has had net losses of nearly 37,000 private-sector jobs five years later, representing 1.2% of total private employment.

Meanwhile, Connecticut, Maine, New Hampshire, and Rhode Island have all seen net job gains since 2020.

More concerning, key competitor states such as Florida and North Carolina have soared past Massachusetts, with both seeing double or triple the rate of New England’s private sector job growth over the last five years.

Earlier this year, Pioneer Institute reported Massachusetts was one of just four states to lose private sector employment since 2020, based on the BLS monthly data available at the time.

Pioneer’s employment analysis indicated troubling trends in several key industries. According to the latest BLS data, these industries have driven job losses.

From January 2020 to January 2025:

• Retail trade lost nearly 27,300 jobs (-7.8% of jobs in the industry);

• Manufacturing lost more than 14,300 jobs (-5.9%);

• Accommodation and food services lost nearly 18,000 jobs (-6%).

Even a bedrock industry — professional, scientific, and technical services — has seen declines. While the industry gained some jobs after COVID, it reached an employment peak in 2022, and has lost more than 14,600 jobs since (-3.8% of jobs in the industry).

But even these figures can’t measure the psychological toll that Massachusetts’ and other states’ economic contractions have inflicted on recent college grads trying to navigate a daunting job market.

A recent CNBC report noted that a growing body of data shows that recent college grads, feeling the brunt of the weakening labor market, are having a uniquely difficult time trying to clinch their first full-time jobs.

The unemployment rate for “new entrants,” a group that includes recent college grads, hit a nine-year peak this year, federal data show.

It’s the same population that’s likely to flee Massachusetts for more affordable locations with better job prospects, like North Carolina and Florida.

The job search frustration level has led to the coining of a new term, “crashing out,” to describe how rejected job applicants feel emotionally.

Plainly put, Massachusetts needs to draw a new, creative blueprint that capitalizes on the one true ace up its sleeve — intellectual capital.

Enticing and retaining businesses that rely on that brain power will give Massachusetts a fighting chance to reverse its fortunes.