Is Massachusetts losing its competitive economic edge?
Mass. Taxpayers Foundation flags high business costs
THE MASSACHUSETTS Taxpayers Foundation released a dire warning Friday that the state’s competitive economic edge is being jeopardized by the high cost of living and working in Massachusetts.
The core of the argument is not new, but the 44-page report marshals a host of statistics and evidence to argue that pandemic-related factors like the ability to work remotely threaten to worsen existing problems.
Massachusetts has generally enjoyed a reputation as an economically thriving state, which is a hub of activity in the life sciences, health care, and education.
But the report says the reasons Massachusetts’s competitiveness may be at risk can be seen in the numbers. According to the report, Massachusetts has the sixth-highest cost of family health insurance (nearly $22,000 in 2020), the highest cost for unemployment insurance (an average of $692 per employee in 2021), the highest cost for childcare (nearly $21,000 a year for infant care), and the fourth-worst congestion. Boston is the metro area with the second highest cost of housing, after San Francisco. Wages are the nation’s second highest, with an average private sector wage of $65,100, trailing only California – which helps workers but increases the cost of business. Commercial and industrial electricity rates were 60 and 125 percent above the national average in 2021.
It notes that people are already leaving, with 750,000 more people moving out of the state than moving in over the last three decades, a trend made starker during the pandemic as people with white-collar jobs who could work remotely became the group most likely to leave. Since the pandemic, the reports says, more people than in past years have quit their jobs in Massachusetts, and job openings exceeded the available labor force – meaning employers will have to attract workers from out-of-state.
“Employers and employees are reassessing the costs of staying in Massachusetts as they think through their increasingly flexible work options,” the report says.
The report is timed to make a difference in two tax debates. The business-based Massachusetts Taxpayers Foundation is among the opponents of the Fair Share Amendment, a constitutional amendment that will appear on the November ballot that would raise the tax rate on income over $1 million.
Gov. Charlie Baker and the Legislature have been considering whether to change the estate tax, which is now among the most onerous estate taxes in the country. Action was delayed when lawmakers failed to pass an economic development bill that contained a package of tax breaks in the last days of the legislative session.
The question of economic competitiveness will also be considered by various candidates for state office running in November. Republican gubernatorial candidate Chris Doughty recently spotlighted the issue in rolling out his proposal to cut a raft of taxes including the sales tax and corporate tax rates.Baker has made expanding housing development a major priority throughout his tenure, citing the need for workers to be able to afford to live here.
The Massachusetts Taxpayers Foundation offers its own solutions, including improving the MBTA, addressing the cost of childcare, reforming the unemployment insurance system, and better training workers for available jobs.