Is Massachusetts losing its competitive economic edge?

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.

Employees considering staying here after college or moving from other states experience sticker shock at the exorbitant housing costs. “The option to live outside of the urban core loses appeal due to the state’s resurgent traffic congestion and dysfunctional public transit system. And for those employees already living here, many are opting out of, or cashing in on, their current residences for lower cost locations and/or shorter commutes in other states,” the report says.

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.

SHIRA SCHOENBERG

 

FROM COMMONWEALTH

Checks or credits? Gov. Charlie Baker moves to change the rules for returning $3 billion in excess tax collections to taxpayers. He opts for refunds this fall (while he is still in office) rather than credits on next year’s tax returns (after he leaves office). Experts say the voter-approved 1986 tax cap law doesn’t allow the governor to do what he is contemplating. Read more.

Baker signs climate bill: The governor signs the climate change/energy bill into law despite “deep misgivings” about its 10-community experiment with no fossil fuel infrastructure in new construction, redundant commissions and advisory groups, and lack of funding for electric vehicle subsidies. Read more.

Marijuana legislation 2.0: Legislation addressing some of the major shortcomings of the state’s marijuana law wins Baker’s approval. The new bill creates a Social EquityTrust  Fund to support minority-run businesses and gives the Cannabis Control Commission oversight of community impact fees. Also, marijuana cafes are coming. Read more

2 done, 2 to go: The Federal Transit Administration has approved two of the MBTA’s corrective action plans for addressing the federal agency’s safety directives, but work remains on two others. The two approvals focus on delayed critical maintenance (the Orange and Green Line shutdowns are designed to address that) and safety recertifications. The two that still need work deal with the operations control center and the handling of disabled trains in maintenance yards. Read more.

Kids need help: New data indicate Massachusett is tops in child welfare, but near the bottom in national rankings when it comes to pediatric mental health. Read more.

 

FROM AROUND THE WEB

 

BEACON HILL

The Baker administration has pared back some of the requirements on smaller towns in new zoning rules aimed at getting more housing built near transit stops. (Boston Globe)

The Massachusetts Gaming Commission begins charting a path to implement the new law legalizing sports betting. (MassLive)

MUNICIPAL MATTERS  

P-town became nowhere-to-pee-town as a sewer emergency forced the closure of scores of Provincetown restaurants and public restrooms at the height of the summer tourist season. (Boston Globe) Town officials are working around the clock to get the system back in order but closures could remain in place into Saturday. (Cape Cod Times)

Boston will expand remote work options for city employees affected by the looming Orange Line shutdown. (Boston Herald)

Middleborough’s Little League U12 All-Stars are the first Massachusetts team in 13 years to advance to the Little League World Series. (The Enterprise

HEALTH/HEALTH CARE

The US Centers for Disease Control and Prevention issues new, more relaxed guidance for living with COVID. (NPR)

A new study from UMass Medical School and the NIH says one negative antigen test is not enough to determine when someone is not infectious with COVID, and recommends repeat testing. (Telegram & Gazette)

The Massachusetts congressional delegation urges Gov. Charlie Baker to declare a monkeypox emergency. (Daily Item)

WASHINGTON/NATIONAL/INTERNATIONAL

The FBI was searching former president Donald Trump’s Florida home for classified documents related to nuclear weapons, according to the Washington Post

ELECTIONS

In a strongly worded commentary piece, John Pucci, a trial attorney and the former head of the US Attorney’s office in Springfield, says he voted for Andrea Harrington for Berkshire County DA when she first ran for office but won’t be doing so this year because of her office’s woeful record on prosecutions. (Berkshire Eagle)

The Globe dropped in on Geoff Diehl’s Wednesday night fund-raiser with conservative South Dakota Gov. Kristi Noem, “a red dot among deep blue.” 

The ACLU releases candidate survey results from its Know Your Sheriff campaign. (Standard-Times)

TRANSPORTATION

The MBTA and Boston officials are scrambling to put in place alternative transportation plans that will make the most of a bad situation when the Orange Line shuts down for 30 days, starting in a week. (Boston Globe)

CRIMINAL JUSTICE/COURTS

A Peabody police officer is arrested for breaking into his estranged girlfriend’s house while on duty. (Salem News)

New Hampshire law enforcement officials now believe missing 5-year-old Harmony Montgomery was killed in 2019, and they are turning their search into a homicide investigation. (MassLive)

MEDIA

In search of news, a Berkshire Eagle reporter is walking 90 miles on the Massachusetts section of the Appalachian Trail.