Competitiveness is the key: Here’s what’s needed

THE TERM “COMPETITIVENESS”  seems to be top of mind as the new legislative session gets underway. Leaders in business, government, labor, and others are talking about it, expressing a range of concerns such as the need for improved housing and transportation, the impact of the passage of an income surtax, the economic outlook for industries both in crisis and high growth, and the trends in the labor market with a work-from-anywhere post-pandemic world.

Competitiveness is more than a buzzword. It is a set of conditions and strategies to attract and retain both people and employers that will determine the future economic viability of the state and region. Fortunately, Massachusetts has a solid foundation to build upon. Massachusetts has historically succeeded due to its unique ecosystem of innovation, a highly educated and trained workforce, and anchor industries such as health care, biotech, education, financial services, and tech.

Yet, even with this solid foundation, there are warning signs we must heed. National and global economies are undergoing seismic shifts as a result of the pandemic, macroeconomic headwinds, and global geopolitical trends. Competition among jurisdictions is fierce for both people and employers, and the future of work remains undefined. In Massachusetts, competitiveness is threatened by the combination of cost structure and mobility. It is a high-cost state, with a high cost of living and a high cost of doing business, that is also experiencing increased mobility and outmigration trends. For an economy built on access to talent, these factors and trends are a direct threat to Massachusetts’ competitiveness.

Let’s consider some recent data. Massachusetts ranks 49th nationally in cost of doing business and 47th in cost of living, according to the 2022 CNBC Competitiveness Rankings. Our housing and childcare costs are among the highest in the nation. An analysis from the Business Journal cites 20,434 fewer tax filers in Massachusetts at the end of 2020 compared to 2018, representing a net loss of $2.5 billion in income—data prior to outmigration resulting from increased mobility due to the pandemic or the passage of the income surtax. This is all consistent with a downward trend in domestic migration that Massachusetts has experienced over the past decade. According to a recent report from the Massachusetts Taxpayers Foundation, Massachusetts lost 46,000 residents in 2021, the 4th greatest state population loss in the country.

So, what should we do about it? At the Massachusetts Business Roundtable, an organization of more than 90 CEOs and senior executives from large employers across the Commonwealth, we believe the answers are fundamentally about people. Our latest report, “A Talent Agenda to Drive Massachusetts’ Competitiveness: Framing How to Attract, Retain, Develop, and Diversify Talent,” provides a roadmap with strategies to do just that.

Policy priorities should center on attracting, retaining, developing, and diversifying our talent pool and pipeline to meet the needs of the current and future economy. First, the Roundtable recommends investing in key enablers that better position workers and job seekers to participate in the economy, such as affordable housing; reliable public transportation; affordable, high-quality childcare; and accessible broadband in every corner of the state.

Second, the state must align workforce development programs with in-demand, high-growth industries and invest in effective strategies such as career technical education, early college, associate degrees and accelerated training offered by a variety of academic institutions, and apprenticeship programs to ensure the state is developing a highly skilled and trained workforce.

Third, we must ensure our talent pool and pipeline is diverse and robust, by removing barriers for education, training, and employment for women, immigrants, people of color, and other marginalized communities.

Fourth, the Commonwealth needs to address the high cost of living, working, and doing business in Massachusetts through tax and regulatory relief. Across these four recommendations, we must also prioritize inclusive, regional growth to ensure equitable access to opportunities across the Commonwealth.

There are promising messages and actions coming from state government. In her inaugural address, Gov. Maura Healey acknowledged that “this is the greatest state in the nation. But people are leaving at some of the highest rates in the country” and that “Our people can’t realize their dreams until we end the nightmare of high costs.”

She goes on to cite housing, tax reform, childcare, clean energy, and other investments to improve the state’s competitiveness — priorities that are shared by the Legislature and, in many cases, issues where they have been leading for years. In her appointments of Yvonne Hao as secretary of economic development and Lauren Jones as secretary of labor and workforce development, the governor has selected two impressive leaders that have collectively started and attracted companies to Massachusetts, created jobs, and implemented programs to ensure workers have the right skills to fill those jobs. It’s an effective combination that, working with our dedicated leaders in the Legislature, offers promise of a productive partnership with the business community to address these challenges head on.

To do so, we must have a shared understanding of what “competitiveness” means. In Massachusetts, our competitiveness is fundamentally about people. It always has been. As a Roundtable member recently said, “If people can’t afford to live here, and can’t get to and from their jobs, nothing else matters.”

As we begin 2023 with a new legislative session and the Healey-Driscoll administration, the Roundtable and business community are committed and willing partners in promoting a competitiveness agenda that prioritizes the attraction, retention, development, and diversity of workers while creating a cost environment that allows for both people and employers to thrive.

J.D. Chesloff is the president and CEO of the Massachusetts Business Roundtable, a public policy organization comprised of CEOs and senior executives from large employers across the Commonwealth with the mission to make Massachusetts the most desirable place to live, work, and do business.