Mass. is losing its competitive edge
Warnings signs are everywhere, particularly with people leaving the state
IT IS A WELL-ESTABLISHED fact that Massachusetts sits at the top of many lists which rank how we compare to other states – on healthcare, on education, on the economy (not to mention our sports teams). And by many of these measures, we have historically done well.
But it is also well known that we are an incredibly high-cost state – not only to live, work, and raise families, but also for businesses to operate. The effects of COVID on the workplace, together with the already-high cost of living and doing business in the state, makes it extremely challenging to recruit and maintain the skilled workforce that is essential to growth. As a result, the long-held belief that Massachusetts’ talent base would always anchor our economy is breaking down, and the concentration of high-skilled jobs that tethered our highly educated workforce to Massachusetts has begun to fray.
A report from the Massachusetts Taxpayers Foundation lays out all of these “warning signs” which, if not heeded by policymakers, threaten to undermine the state’s historic advantage in attracting and retaining both businesses and talent, and could ultimately jeopardize our economic edge over other states.
For starters, businesses have long faced financial headwinds in Massachusetts, which is among the most expensive states in the country to do business. While compensation rates are high, that comes with higher-than-average health and unemployment insurance costs and soaring commercial and industrial electricity rates. Add to this record high resignations and a growing number of quits continuing in 2022, companies can expect to be plagued by labor shortages and their associated costs.
And the cost of living in Massachusetts, among the highest in the US, makes it more difficult to attract talent. According to the latest data from the Warren Group, the median sale price for single-family homes reached $610,000 in Massachusetts in June, the first time the median sale price has exceeded $600,000 since recordkeeping began in 1987.
In Boston, the numbers are more startling – the median single family home price is now $900,000 and a condo is $700,000. This may be good news for people who already own homes, but it makes home ownership further from reach for those entering the market.
If people cannot afford to live here, they won’t. And they’re leaving Massachusetts, with no signs of slowing down. Massachusetts has experienced net outmigration of 750,000 people over the past three decades, reflecting a trend made even more stark by the pandemic. Regions like Greater Boston that have high living costs with a concentration of white-collar jobs that can be performed remotely, such as financial services and tech sector jobs, are experiencing the largest outmigration.
In recent years, we’ve made a lot of progress in Massachusetts – particularly in the areas of housing, jobs, and workforce development, and we need to continue what has been started to prepare our workforce for the jobs of tomorrow – and arrest some troubling trends.
Massachusetts policymakers, including our next governor, must find new ways to manage business and living costs, expand the state’s skilled workforce, grow the economy, and position the state for future success – not lose ground, which may already be happening.
The warning signs are there. It is up to policymakers to heed these warning signs, for very future of our Commonwealth could be at stake.
Eileen McAnneny is president of the Massachusetts Taxpayer Foundation.